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Private sector buoys Md. job growth

Maryland is often noted for its concentration of federal dollars, workers and agencies, but employment data released Monday demonstrate that the state’s economy isn’t as dependent on Uncle Sam as many residents think.

Job seekers at the National Career Fairs event at the Four Points Sheraton at BWI Thurgood-Marshall International Airport meet with potential employers Monday. In January, Maryland gained 8,200 jobs, keeping its unemployment rate steady at 6.7 percent.

January was another good month for Maryland job seekers. State employers added a net 6,700 positions during the first month of this year, extending the 6.7 percent unemployment rate to a third consecutive month, according to preliminary data released Monday by the U.S. Department of Labor.

The private sector generated 8,200 jobs since the previous month, but that growth was tempered by the loss of 1,500 government positions. Maryland posted better numbers than most other states and beat the national January average of 7.9 percent unemployment.

Stephen Fuller, a public policy professor and director of the Center for Regional Analysis at George Mason University, said Maryland’s economy is diverse, with a more favorable balance of government and private sector activity than some other states, like Virginia.

“Pretty much all of the cylinders in the economy are working,” he said. “They could be working better, but the fact is that Maryland is holding its own in unemployment, holding its own in job growth and is outperforming most of the country, whether in job increases or in the rate of unemployment.”

More than half of the January job gains were in the professional and business services sector, which added 3,700 jobs, many in administrative and support services. The second-largest gains were in the natural resources, construction and mining sector, which added 2,800 jobs, such as HVAC, electric and plumbing positions. Another 2,700 jobs were created in education, health care and social assistance.

With two major metropolitan areas — Baltimore and Washington — as distinct yet complementary drivers of the state’s economy, Maryland is better positioned to weather the storm of “federal government dysfunction” than Virginia. A third of Virginia’s economy relies on Department of Defense dollars, which are particularly vulnerable to budget cuts and the impact of sequestration, Fuller said.

“Virginia is No. 1 in the country for federal spending,” he said. “Maryland is pretty high up, but it’s not No. 1.”

What’s more, he said, Maryland’s ties to the federal government are stronger — at least for now — than Virginia’s. Cybersecurity, an industry that’s flourishing in Maryland, is “on the cutting edge” of current research priorities, and the most recent Base Realignment and Closure, which brought more funding to multiple military installations in Maryland, will ensure continued investment in the state.

“These things have helped stabilize federal spending in Maryland, so it’s not quite the liability that it is in some other states,” Fuller said.

Despite the early signs of strength in 2013, it’s possible the Bureau of Labor Statistics will revise the numbers downward when revisiting the data next month. Lately, however, national numbers have been revised to show greater gains than initially estimated.

January’s jobs numbers and some early indicators from February don’t reflect a major impact from federal budget sequestration, though its effects could be seen in March, Fuller said.

“If the sequester stays put through the year, the effects on job growth will accumulate, particularly on contractors,” Fuller said. “It will show up later in the calendar year, first as federal jobs, and then the private sector will feel the pinch three months from now.”

Nationally, the private sector is performing better than many people expected, he said, with certain fields growing faster than others, such as biotechnology, pharmaceuticals and other medical professions. That also helps explain why job seekers in Maryland are ahead of the game: They’re neighbors with several of the premier health and education institutions in the country.

The state has recovered more than 86 percent of the roughly 144,700 jobs lost during the recession, according to the Maryland Department of Labor, Licensing and Regulation.

But Fuller said the cheery statistic — while more or less accurate — is misleading.

“The jobs that are being created aren’t the jobs that were lost,” he said. “Health and education don’t pay as well as professional business services. … And also, as baby boomers retire, they’re replaced by 30-year-olds who aren’t going to be making the same salary that [those people] had when they retired. … It might seem like we’re in the same place, but we’re not in the same place. So even though the jobs may be back, the disposable income, the spending potential, isn’t back. And that affects retail sales, the housing sector.”

In a statement, DLLR Secretary Leonard J. Howie III lauded a new grant program, called Employment Advantage Right Now that, when it goes into effect in June, will allocate targeted workforce development resources to achieve economic development goals.

“As we document another month of significant jobs gains, we’re pleased that our investments in workforce training are continuing to pay off,” Howie said in a statement. “This is the highest number of jobs on Maryland’s payrolls in nearly five years.”

In January, there were also about 850 more people counted in Maryland’s labor force than in December. Fuller said several factors, such as increased optimism thanks to a healthier stock market, likely enticed more people to start or resume a job search.

January’s numbers are “doubly positive,” though, Fuller said, because when more people are in the market for work, the unemployment rate can increase if there aren’t enough jobs to go around. Because the rate stayed constant, that indicates Maryland’s economy is adaptable enough to accommodate extra job-seekers.