Employers in Maryland cut 9,200 jobs in July, pushing the state's unemployment rate up to 7.1 percent, the U.S. Department of Labor said Monday.
Maryland, whose jobless rate was 7 percent in June, is among 28 states and the District of Columbia in which unemployment increased in July from the previous month. The job losses here last month were the third largest in the nation, with only New Jersey and Nevada recording steeper drops.
Economists blame Maryland's weaker showing on sequestration — $85 billion in federal across-the-board spending cuts during March through September.
Maryland's economy has long benefited from its proximity to the nation's capital, and the unemployment rate here often has been lower than the national average. But spending cuts, including federal workers being furloughed for days without pay, are now exacting a toll in the state, economists said.
"It's finally here: the sequestration," said Daraius Irani, executive director of the Regional Economic Studies Institute at Towson University. "We are growing, but growing at a slower rate because of sequestration rearing its ugly head."
After three months in a row of rising unemployment, Maryland's rate is inching closer to the national unemployment rate of 7.4 percent for July.
The preliminary numbers released Monday are adjusted for seasonal changes in hiring and layoffs.
Over the past year, Maryland added 39,000 jobs, a 1.5 percent increase. That includes a revision in June's numbers, in which the Labor Department said the number of jobs created was 5,500, instead of the original estimate of 4,300.
"The Maryland labor market has been doing OK, not fantastic," said Gus Faucher, a senior economist with PNC Financial Services Group.
The state will continue to feel the effect of federal budget cuts for the next couple of months, Faucher said. But a new federal fiscal year starts in October, and he said it's unlikely that federal workers will face unpaid furloughs again.
"It's an inefficient way of doing things," he said. "Workers don't want them. Unpaid leave causes uncertainty for them and the agency."
Over the long term, Faucher said, Maryland's unemployment rate will drop. The state should see less of a drag from federal spending cuts, the housing market will improve and consumers will have absorbed those tax increases that hit them earlier in the year, he said.
The Maryland report comes on the heels of Gov. Martin O'Malley touting the state's employment success at the Maryland Association of Counties' conference on Saturday.
On Monday, the governor said in a statement that the jobs report was "disappointing," but added that the state continues to display "tremendous" economic strength.
"Our recovery from the recession has been fueled by a dynamic private sector that led the way by creating nine out of every 10 new jobs," he said.
According to the Labor Department, the public sector lost 4,300 jobs last month, while the private sector cut 4,900 jobs.
Maryland Labor Secretary Leonard J. Howie III said the drop in public-sector employment was in large part due to the loss of education jobs as schools let out for the summer.
Howie said some employers dealing with sequestration were planning ahead to determine how many employees they would need to support their federal contract work.
"We hope our partners down in Washington can come to a resolution and get everybody back to where they need to be," Howie said.
Some sectors in Maryland added jobs last month. Manufacturing grew by 1,800 jobs, while the education and health services sector added 1,500 jobs.
Among the health care companies hiring is Maximus, which has been ramping up its call center for Maryland's new Health Benefit Exchange, one of the state insurance exchanges springing up as a result of the federal Affordable Care Act. Maximus began taking calls Aug. 1 to answer early questions about the exchange that launches in October.
Bruce Caswell, president and general manager of the Virginia-based Maximus' health services segment, said the center in downtown Baltimore had about 25 people on staff as of mid-July and continues to hire. He expects a total of 120 employees once it is fully staffed. The bulk of employees will give information to consumers by phone, with others on staff to handle management, training, finance and the like.
A local call center made sense, Caswell said.
"Marylanders want to talk to Marylanders about their health insurance needs," he said.
Baltimore Sun reporter Jamie Smith Hopkins contributed to this article.Copyright © 2015, The Baltimore Sun