Maryland's unemployment situation took a turn for the worse this spring and hasn't bounced back, with new estimates suggesting that the state lost 11,000 jobs in June — among the worst performances in the country.
The U.S. Department of Labor said Friday that only two states saw bigger declines in June — Wisconsin and Tennessee — after adjusting for seasonal variations, which some economists worry skews the numbers. It was Maryland's fourth month in a row of job declines by that measure, a sharp change after a strong winter.
The state's unemployment rate rose to 6.9 percent from 6.7 percent in May, though it remained below the nation's 8.2 percent rate.
"I just don't see that there's anything pushing the economy forward," said Stephen Fuller, director of the Center for Regional Analysis at George Mason University in Fairfax, Va. "It's just like everything is stalled, just stuck waiting. I think it's the total uncertainty that's settled in."
Belt-tightening by federal agencies — and anxiety among their contractors, who face sharp cuts in January if Congress doesn't act — could be playing a role. Maryland benefits disproportionately from Washington spending.
The employment estimates from the Labor Department's Bureau of Labor Statistics can be volatile and are often revised. On Friday, for instance, the agency said it now believes Maryland lost 2,900 jobs in May rather than 7,500 — altering the state's employment picture from third-worst in the country that month to 11th-worst.
Gov. Martin O'Malley seized on that change Friday and suggested that the June estimates do not match up with other economic measures for Maryland, including the lowest number of new claims for unemployment benefits for the month of June in four years.
"With all our economic indicators demonstrating positive trends, we would not be surprised if the Bureau of Labor Statistics once again significantly revises these preliminary numbers," O'Malley said in a statement. "Last month, they ... reported the loss of 1,500 state government jobs we knew not to be true."
Economists warn that Maryland's job losses in the spring and the big gains that preceded them could both be more extreme than reality. They say construction workers and others who are typically let go stayed on the job through the unusually warm winter, resulting in fewer layoffs at the time and less need for hiring in the spring.
The tricky aspect is that the numbers are adjusted to try to account for normal seasonal patterns in hiring and layoffs. It's the only way a month can be compared to the one before it. But actual gains sometimes become adjusted losses, which happened with the June figures.
The raw numbers suggest that growth was slim — about 2,100 jobs added in a month that typically sees more than 15,000 new jobs. The last time employers added fewer jobs in June was 32 years ago.
Economist Richard Clinch said it gives him pause when a gain is turned into a big loss by dint of seasonal adjustment, an imperfect measure. Clinch, director of economic research at the University of Baltimore's Jacob France Institute, said the unusual winter and the fewer layoffs that came with it could still be rippling through the economy.
"I've seen nothing that [suggests] Maryland lost 11,000 jobs," he said. "I think it's a problematic number."
But the job growth in January and February has been more than canceled out by the losses that followed. The number of jobs in Maryland is down by about 1,000 this year, according to the seasonally adjusted estimates.
And Clinch sees the potential for significant ripple effects in the state if the multibillion-dollar federal budget "sequestration" cuts are allowed to proceed, starting Jan. 2. Per capita, Maryland receives one of the biggest shares of federal dollars in the country, particularly in contracting.
Tax cuts enacted under President George W. Bush are due to expire in January, and Clinch said high-income Maryland would feel the effects more than the average state.
"We in Maryland will get a double whammy," he said.
In a report for the Aerospace Industries Association, a group that includes big government contractors, Fuller said the state could lose nearly 115,000 jobs in the early part of sequestration. That includes not just federal workers and contractors but businesses such as grocery stores that rely on those employees spending money in the community.
Fuller believes that only California, Virginia, Texas and the District of Columbia would see bigger job losses.
Mike Hayes, director of the state economic development department's Office of Military and Federal Affairs, said Maryland's military bases already are dealing with tighter budgets, though not to the extent that sequestration would require. Contractors are pleading for more information about what would be cut, so they can plan.
Despite that, Hayes said, some defense areas are growing still — or attempting to grow. Cybersecurity and intelligence jobs are available in and around Fort Meade, but employers are having difficulty finding enough people with the needed technical know-how and security clearances, he said.
"The demand exceeds the supply," Hayes said.
Most sectors in Maryland shed jobs in June, according to the Labor Department's adjusted estimates. The biggest cuts hit the education sector, hospitality and the retailer-heavy trade, transportation and utilities sector.
Sparrows Point manufacturer RG Steel, which filed for bankruptcy in late May, laid off hundreds of workers in June. Joe Rosel, president of the local United Steelworkers union, said Friday that the Baltimore County mill, which typically has about 2,000 employees, is down to a skeleton crew of 200 to 250 union workers.
The mill could go on the auction block at the end of this month. Workers are hoping for a buyer who will restart the idled facility so the layoffs won't become permanent.
"I'm confident there will be bidders," Rosel said.
twitter.com/RealEstateWonk