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Anirban Basu, chairman and chief executive officer of Sage Policy Group. (The Daily Record/Maximilian Franz)

Md.’s August jobless rate concerns economists

The increase in Maryland’s unemployment rate reported Friday is particularly mystifying because it signals that the state’s well-educated work force may not be as strongly positioned to drive economic growth as previously thought, economists said.

Maryland’s unemployment rate jumped to 6.4 percent in August, surpassing the national rate for the first time since 1998.

“This is remarkable because we’re among the most educated states in the country and educated people are generally associated with low rates of unemployment,” said Anirban Basu, CEO and chairman of Sage Policy Group Inc. “These are really bad numbers, particularly for Maryland.”

Since June, the state’s unemployment rate has increased by six-tenths of a percentage point, based on a preliminary jobs report from the Bureau of Labor Statistics released Friday.

Maryland gained 600 jobs in August, despite a decline of 3,300 in the private sector. The public sector, including federal, state and local government, added 3,900 jobs.

Unemployment and employment measurements can rise simultaneously because they are based on different surveys. Unemployment numbers come from household reports, while jobs numbers come from the responses of employers within the state.

So Marylanders laid off from out-of-state jobs may contribute to higher unemployment without taking away from the state job count, and workers taking on second jobs could add to the job count without creating a decrease in unemployment.

The discrepancy “is troubling,” said Daraius Irani, chief economist at the Regional Economic Studies Institute at Towson University. “Maybe we’re not creating enough jobs.”

The Bureau of Labor Statistics also revised the state’s jobs count for July, showing a bleaker picture for that month — a loss of 11,500 jobs, compared to the 9,000 originally reported.

“I’m concerned as to the direction we’re heading,” said Irani. “This may be a sign that we may be running out of breath a little bit.”

The greatest private sector job losses in August were in wholesale and retail trade, as well as professional and business services. Together these sectors lost about 4,000 jobs. Educational, health care and social services seemed to remain strong, adding 2,500 jobs in August.

But the state must continue to focus on other industries as well, said Basu, such as energy and manufacturing.

The “feds, meds, eds and beds” approach, he said, “no longer makes as much sense in an environment characterized by sequestration.”

He expects that the state government will take action in response to the numbers.

“I don’t know what other kind of wake-up call one would need for Annapolis,” said Basu. “The current economic development formula for Maryland is just not working … I hope the next governor takes it seriously.”

Both Basu and Irani said legislators will have to address Maryland’s reputation among the business community in order to show improvement. But that will take time.

“I think this is a period where we’re probably not going to be experiencing super growth,” said Irani. “It’s kind of a very hold-your-breath moment.”


About Lizzy McLellan

Lizzy McLellan covers finance, technology, start-ups and small business for The Daily Record.