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'Next economy' envisioned for Baltimore region

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A new report being released today calls on the Baltimore region to rethink economic development, pointing to a worrying trend: a mounting share of low-wage jobs shutting more and more residents out of the middle class.

The number of jobs in largely low-paying industries such as retail and food service grew more than 60 percent in the region between 1980 and 2007, while jobs increased 36 percent in middle-wage fields and just under 10 percent in high-wage fields, according to the Brookings Institution study.

As a result, jobs in low-wage industries accounted for 31 percent of the Baltimore region's employment in 2007, up from 26 percent a generation earlier. The report, funded by the Annie E. Casey Foundation in Baltimore, said the region's median household income remains high — for now.

"It's the trajectory that doesn't look so good," said the study's author, Jennifer S. Vey, a fellow in the Washington think tank's Metropolitan Policy Program. She highlighted 2007 to show how the economy had shifted even before the recession.

The report, being released this morning at a Federal Reserve forum about the local economy's future, says the region has plenty of assets it can tap to change the equation but must overcome an "acute lack of regional vision and coordination."

The study suggests leaders organize to support growth in export and innovation industries — from manufacturing to biosciences.

Such a move would not only increase the number of jobs that pay well but also offer more paths out of poverty, Brookings says. The fields it recommends have openings for workers without bachelor's degrees.

Jason Perkins-Cohen, executive director of the Job Opportunities Task Force in Baltimore, said the possibilities raised by the study are "exciting."

"I hope it leads to something meaningful — that we are making these investments and focusing on the areas that lead to good jobs," he said.

Brookings suggests the region broadly increase the number of firms exporting — to take advantage of overseas growth outpacing the nation's — and help fuel entrepreneurship. The think tank highlighted five sectors it thinks have "the best potential to drive economic growth":

Manufacturing: It's Baltimore's past, but the sector could be a bigger part of the region's future if companies focus on advanced technologies and exporting to faster-growing countries.

Bioscience: The region — which has bioscience clusters such as the University of Maryland BioPark in Baltimore — needs to turn more of its "robust" research into products and companies.

Information technology: Cybersecurity and health care technology products in particular could boost growth.

"Green": Baltimore should grab a bigger piece of clean-economy industries such as energy efficiency and weatherization.

Transportation and logistics: Such industries, including those that serve the port of Baltimore, would benefit from a more broad-based effort to export.

In order to connect low-wage, low-skill workers to such jobs, the region would need to revamp education and occupational training so both are better coordinated with employers looking to hire, Brookings said. The study also suggests transportation and development efforts to make sure lower-income residents can get to jobs, many of which are difficult to reach except by car.

"Greater Baltimore's transition to what we're calling the next economy really has the potential to provide greater and higher quality employment opportunities for low-income residents, if existing barriers to those opportunities are broken down," said Brookings' Vey, a Baltimore resident.

Donald C. Fry, president of the Greater Baltimore Committee, said his organization of business and civic leaders has been calling for many of the changes Brookings recommends.

"A lot of things are in place, they just need to be maximized, and we need to find a way to make that happen," Fry said.

Baltimore tech entrepreneur Dave Troy said the report suggests a different sort of economic development, one less focused on landing big companies and filling empty real estate.

"What we really need to be doing is promoting the formation, creation of new businesses," said Troy, chief executive of 410 Labs and among those Vey interviewed in the year she spent researching the report.

The recommendations delighted Mike Galiazzo, president of the Regional Manufacturing Institute, a local nonprofit. He's been saying for years that writing off manufacturing — which shed 47,000 jobs statewide in the last decade alone — is a bad idea. It's a sector known for jobs that pay good wages.

"We have a moral responsibility to create work that allows people to enjoy a decent standard of living, and we've lost sight of that," he said.

Brookings' call for more entrepreneurial support makes sense to him: "If you've got more companies, then you're going to have more hiring."

The Casey foundation, which focuses on poverty reduction, funded the report to get guidance on how the region could grow economically — and lift all boats with the rising tide.

"The analysis reflects what many of us imagine — that we're doing well but we could do a lot better, and there are many folks in our region who are not getting access to the economy," said Patrice M. Cromwell, the foundation's director of economic development and integration.

Brookings says the Baltimore area has the advantage of "enviable" economic anchors, including major universities, top hospitals and big federal agencies. But most of the 40 or so people Vey interviewed for her report "expressed a similar lament about what seems an inability (or disinclination) of state and metro area leaders—from all sectors—to unite around a set of regional goals," she wrote.

The looming promise of federal budget cuts in a region dependent on Washington spending means better cooperation is critical for everyone, not just low-income residents, Vey said.

Aris Melissaratos, the Johns Hopkins University's point man for commercialization and technology transfer, said he sees reasons to be hopeful. Converting local research and inventions into businesses, one of Brookings' recommendations, is an idea that already has buy-in, he said.

Johns Hopkins is spinning out many more companies and producing more revenue from licenses and royalties than it did four years ago, he said. The University of Maryland intends to create 100 businesses in the next decade. And the state's new InvestMaryland effort raised $84 million in March to boost startups.

He hopes the report and Federal Reserve gathering act as catalysts for more.

"A lot of good things are happening, and I'm very excited about this," said Melissaratos, a former state economic development secretary.

jhopkins@baltsun.com

twitter.com/RealEstateWonk

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