Maryland lost 2,500 jobs in August, Labor Department says

Maryland lost 2,500 jobs in August, reversing some of the gains made earlier in the summer and pushing the state unemployment rate to 7.3 percent, the U.S. Department of Labor said Friday.

The reductions hit as growth nationwide came to a standstill. But economists warned that the Maryland estimates are complicated by a pair of anomalies: A 4,400-job drop in the information sector was largely temporary, a result of the two-week strike by Verizon Communications workers, while a 6,600-job gain in local government jobs could be illusory.

About 4,000 Verizon employees in Maryland were on strike during the week of the Labor Department survey, according to their union, the Communications Workers of America. Those jobs should reappear in the employment report for September, state labor officials said.

But economists said the unusual spike in local government jobs appears to be less actual growth than a mathematical quirk.

The Labor Department adjusts its job estimates to try to account for normal seasonal changes and allow for month-by-month comparisons, but those adjustments sometimes go awry. The raw, unadjusted figure for local government employment shows a drop in jobs — 2,300 fewer positions, a typical result for the month of August over the previous decade.

Sara Kline, an associate economist at Moody's Analytics who follows the Maryland economy, called the 6,600-job gain in the adjusted numbers "suspiciously large." It would be the biggest increase in 19 years at a time when most local government agencies are holding the line on hiring, or shrinking.

"I would warn that's probably an overly rosy picture," Kline said.

She expects both Maryland and the nation will be "treading water" on jobs for the rest of the year, but said hiring could begin to pick up next year.

Maryland has added just under 10,000 jobs in 2011, compared with an average of 24,000 jobs during the first eight months of 2004 through 2006, when the economy was growing more rapidly.

The state's labor secretary, Alexander M. Sanchez, said the uneven recent growth "isn't enough to propel Maryland out of this economic downturn."

The state has 90,000 fewer jobs than it did when the last recession began in December 2007, but the need for growth is far larger because new job seekers graduate from high school and college every year. The Brookings Institution's Hamilton Project estimates that Maryland would need to add about 237,000 jobs to get back to its 2007 employment levels.

That's the 15th-largest "job gap" in the nation.

"The job deficit is extremely large," said Adam Looney, policy director at the Hamilton Project. "It's large not just in Maryland, but it's large in the United States in general. It's going to take a lot of years to get back to normal."

That problem is reflected in the state's labor force of workers and job seekers. Rather than growing over the past three years along with the population overall, it has shrunk by nearly 60,000 people.

Those who have given up on the search for work are no longer counted in the labor force.

Charles W. McMillion, president and chief economist at the Washington economic consulting firm MBG Information Services, wonders if some of the loss might be job seekers moving out rather than dropping out.

"Because Maryland is such a high cost-of-living state, it may very well be that workers who are at the lower end of the scale decide that it's easier to be unemployed in West Virginia or someplace else than in Maryland," McMillion said.

The nation as a whole is losing labor force participants. But Maryland's labor force has shrunk at a pace nearly three times as fast as the country's overall since 2008, according to the Labor Department estimates.

That makes the state's unemployment rate look better compared with the nation's than it probably would be if labor force dropouts were counted among the unemployed.

The national unemployment rate was 9.1 percent in August.

Maryland's jobs picture was improving earlier in the summer. July looked especially strong, with 11,400 positions added, according to the federal government's revised estimates. But employers have shed jobs in four of the past eight months, an up-and-down situation that the state's labor secretary blamed on the nation's economic woes.

Gov. Martin O'Malley, a Democrat, urged Congress to pass President Barack Obama's $447 billion jobs plans. The proposal includes tax cuts for employers and employees, funds to work on roads and bridges and money to hire more firefighters, police officers and teachers.

State labor officials believe it would help save or add about 18,000 jobs in Maryland, but it has drawn criticism from Republicans and some Democrats in Washington.

As political leaders wrangle over how best to help the economy grow, some large employers are poised to cut back in a big way.

Bank of America announced this week that it needs to eliminate 30,000 jobs over the next few years, about 10 percent of its workforce. The financial giant employs about 4,000 in Maryland.

The U.S. Postal Service anticipates that it will need to slash 220,000 jobs — by attrition and layoffs — by 2015. That would reduce its career-employee workforce by nearly 40 percent.

The Postal Service, which says it is on the brink of default without drastic changes, has about 6,800 career employees in its Baltimore district, which includes all of Maryland except the Washington suburbs.

Some employers are hiring. Joe Gonzales, Maryland regional vice president for staffing firm Robert Half International, said he's seeing "a lot of cautious optimism" from companies about adding more workers now or soon. Accounting, finance and information-technology skills are all in demand, he said.

"Some of the companies cut so deeply during the downturn, they need to make some really strategic hires now," Gonzales said.