A tumultuous decade for most Maryland workers
Recession shrank jobs in many sectors while leaving others unscathed
December 26, 2010 — The Baltimore Sun
The past decade not only saw monumental upheaval in the economy but also a reordering of Maryland's work force.
Employers in health care and government steadily added jobs, even through two recessions. But manufacturing, once the cornerstone of the state's economy, shrank by more than a third between the end of 2000 and 2010. Employment in construction, financial services and retail retreated to 1990s levels.
The divergence has been striking. While growth sectors added 200,000 jobs in Maryland over the past 10 years, declining industries shed just over 140,000 jobs, according to a Baltimore Sun analysis of estimates from the U.S. Department of Labor.
That has created a divide in the middle class and widened a gulf between rich and poor, mirroring a national trend. Some have jobs and job security. Others, suddenly, do not.
The shifts also rendered the state less economically diverse, with more residents dependent on the government — directly or indirectly — for their paychecks. That's a problem, with pressure growing for the federal government to curb spending to get a handle on the deficit. Already the Obama administration has moved to freeze federal workers' salaries and rein in contractor spending.
"I'm not saying Maryland will become Detroit," said Richard Clinch, director of economic research at the University of Baltimore's Jacob France Institute, referring to the city whose fortunes rose and fell with the automotive industry. "But the engine of growth for the Maryland economy is going to be removed."
One in every five of the state's jobs is public-sector, an increase from 10 years ago. Nationwide, it's one in six. Professional and business services, a sector that in Maryland includes many government contractors, also grew as a share of the state's job base.
And government plays a sizable role in Maryland's health care and education sector, which passed the 400,000-job mark this year after adding about 90,000 positions. The Johns Hopkins University wins more federal research and development money than any other institution in higher education — year after year.
Public-sector gains helped Maryland's work force grow over the past 10 years — albeit an anemic 2 percent — even as most of the state's private-sector industries cut back.
"We have been far less hit by the last two recessions than the nation, but … the government cannot continue to spend this way," Clinch said.
A deficit-busting, smaller-government sentiment helped sweep Republicans to the majority in the U.S. House of Representatives. The investors who finance the country's debt — China in particular — won't write checks indefinitely, Clinch said.
And state government has its own budget woes. Maryland Gov. Martin O'Malley is offering $15,000 buyout packages to reduce the number of state employees.
Bill Barry, director of labor studies at the Community College of Baltimore County, fears that public-sector cutbacks here and nationally will exacerbate the divide between the haves and have-nots. "My concern is there are going to be 10 [million] to 20 million people who never work again — permanent unemployment," he said.
In a report this month, the Greater Baltimore Committee, a business and civic leadership group, urged elected officials to improve the state's business climate. Maryland's advantages, such as a highly educated work force, aren't enough to outweigh downsides such as uncompetitive taxes and bureaucratic roadblocks, the group said.
"If the recession has taught us anything, it's that the private-sector — not government — is the engine that drives business growth, job creation and ultimately Maryland's economic future," the report states.
A sector-by-sector breakdown shows that while many have ridden the roller coaster of the economy, others are sinking — or thriving — regardless of broader trends.
One major force reshaping the state's economy during the past decade was the housing bubble-turned-bust. Construction firms added 26,000 jobs in the state between 2000 and 2006, only to cut 38,000 over the next four years. Companies specializing in homebuilding took the first hit. Problems then spread into commercial construction as financing dried up and the recession took hold.
"It's been extremely tough," said Rod Easter, president of the Baltimore Building and Construction Trades Council, a coalition of 15 construction unions. "There has just not been any money for big projects, and everyone's scrambling for whatever comes out."
Financial-services employers, rocked by the crisis that toppled lenders and Wall Street firms alike, ended 2010 with about 11,000 fewer jobs in Maryland than a decade earlier. Some cuts are still to come: Money manager Legg Mason announced in May that it would cut 30 percent of its Baltimore-area work force by the end of next year.
And Maryland retailers had just added back the jobs cut during the 2001 recession when the bigger one hit at the end of 2007, forcing consumers to rein in spending. Retail ended 2010 with 26,000 fewer jobs than in 2000, a hit that accounts for a sizable portion of the cuts in the state's trade, transportation and utilities sector.
The past 10 years have been even worse for old-line manufacturing work. Layoffs, outsourcing and productivity gains meant the sector shed jobs even when the economy was firing on all cylinders. Manufacturing employs 60,000 fewer people now than at this point in 2000, compared with a loss of 25,000 jobs in the previous decade.
The Sparrows Point steel mill in Baltimore County is undergoing the largest partial shutdown in recent memory, with more than 1,000 workers temporarily laid off — some since July. Automaker General Motors closed a Baltimore plant in 2005, then filed for bankruptcy protection four years later and shuttered its factory in Wilmington.
Dundalk resident Doug Hanscom, 58, worked at both GM plants. Much of his adult life has been spent with GM, moving around the East Coast in order to keep a job with the company as it closed factories. But when he was offered a position in Wilmington a year after the Baltimore plant shut down, he commuted rather than uproot himself again, driving a group of fellow Baltimore-area co-workers until he was laid off for the final time at the end of 2008.
Now he drives a school bus in Baltimore County. He makes just under half of the $28 an hour that he got at GM. He has a pension, so he's making his budget work, but he wonders how others are getting by.
"I feel sorry for the younger generation," said Hanscom, who said good jobs were plentiful when GM hired him in 1976. "Then, it was easy — you could quit a job and go find another one. But today, if you find a job, even if it's minimum wage, you've got to stick with it. Nobody wants to pay a decent wage anymore."
Not all manufacturing is shrinking. But what's growing doesn't have much in common with the broad-shoulders work that once helped keep the area economy humming.
Paragon Bioservices in Baltimore, which makes proteins for pharmaceutical companies and biotech firms to use in drug research, is a manufacturer that benefits from its intersection with health care. The company hired 17 people this year, increasing its employment to 49. It expects to add 15 to 20 more positions next year as it expands its manufacturing space, said Ron Wilson, the chief financial officer.
Business was basically flat in 2008 and 2009, he said. But activity has picked up markedly since then.
"We definitely felt the recession, although you could certainly say we didn't feel it as much as standard manufacturing or construction," Wilson said. "Pharmaceutical companies have to keep research up because they die if they don't have a pipeline — they'll just die."
Even in economically challenging times, health care holds up because people still get sick, he added. Institutions such as Johns Hopkins Hospital "are almost immune" to recessions, he said.
That hospital, one of the state's largest employers, has 2,200 more people on the payroll now than it did in 2000 — a 30 percent jump. The organization plans to expand further when it opens new clinical buildings in 2012.
"Health care is growing, and it's a wonderful field to be in if you're looking for employment," said Bonnie Windsor, senior director of human resources for the Johns Hopkins Hospital and Health System.
For career changers trying to flee to Johns Hopkins from battered industries, though, the competition is stiff: The hospital gets thousands of applications every month for a few hundred open positions. And Windsor said that "turnover is way down," leaving fewer jobs to fill.
"People don't move around in this type of economy as much as they would normally," Windsor said.