Maryland's job base is finally back to the size it was half a decade ago — before the deep recession gouged a big chunk out of it.
It's a psychologically important milepost in the long slog toward recovery, one reached as the nation is still climbing out of the hole. But numbers released Friday by the U.S. Department of Labor show the state's job market remains far from normal.
About 219,000 Marylanders were out of work and looking for a job in August, 120,000 more than in February 2008, just before the effects of the Great Recession caught up with the state. That number does not account for people who have given up searching because they've had no success.
The state's unemployment rate declined slightly to 7 percent in August, more than twice the 3.3 percent it was in February 2008.
By one Washington think tank's estimate, the state would need more than 200,000 additional jobs materializing overnight to get back to pre-recession levels of employment. It's a nationwide gap that has upended the lives of millions of Americans.
"We're not done — we still have a lot more work to do," Gov. Martin O'Malley said in an interview. "This is a milestone, not mission accomplished."
Still, he celebrated the return of the state's job base to about 2.6 million positions, saying that only 15 other states have returned to their previous peaks.
West Virginia is the region's only other state on that list. Virginia has recovered 88 percent of its job losses, Pennsylvania has recovered 78 percent — the same as the nation as a whole — and Delaware gained back just half, according to Labor Department estimates.
Maryland actually crossed the 100 percent threshold in June. But that wasn't apparent until the Labor Department issued revised numbers along with its first estimates for July — when the state slipped back under again.
Government agencies and private-sector businesses equally contributed to the 9,700-job gain in August that erased the previous month's loss, according to the Labor Department estimates.
There have been lots of such fits and starts in the last several years. But overall, Maryland's economy is "performing pretty well" in less than ideal circumstances, said Gary Keith, M&T; Bank's regional economist.
"It's dodged the sequestration bullet so far," he said, referring to federal budget cuts. "We'll have to see how that plays out. We do have some risk and exposure."
That's because a significant part of Maryland's economy is connected to federal spending — directly through federal employees, contractors and grant-funded researchers, and indirectly as those workers' purchases ripple through other sectors.
Economists say this federal effect helped buffer the state somewhat during the recession. But the bite still was substantial, eliminating 145,000 jobs over a two-year stretch.
Getting back to square one took even longer. And over the entire 51/2-year period since the recession hit, Maryland's population kept growing. New high school and college graduates joined the labor force, looking for work.
The Brookings Institution's Hamilton Project says Maryland would need 209,000 more jobs to get back to late 2007 levels of employment, when two-thirds of residents had work. Nationwide, the number is 8.3 million.
To put that in perspective, Maryland added 43,000 jobs over the last year and the nation added 2.2 million.
"The Great Recession is lingering on," said Michael Greenstone, an economics professor at the Massachusetts Institute of Technology and a former director of the Hamilton Project. "This matters because unemployment has really damaging effects on people's lives."
Getting larger numbers of people back to work is the pressing issue facing states across the country, said Maryland Labor Secretary Leonard J. Howie III. So is recognizing that while some states have recovered the number of jobs lost during the recession, "they are not the exact same jobs," he said.
To push job growth, Maryland's strategy includes encouraging entrepreneurship with programs such as InvestMaryland, which helps fund startup firms, and addressing gaps between the skills employers want and what job seekers have, Howie said.
For example, he pointed to the fledgling EARN Maryland program — Employment Advancement Right Now — because it is intended to get industries dealing with skills gaps to collectively decide how to fix them. Industry groups can apply for grants in October to do such planning work and later qualify for workforce-training funding .
Howie said he's certain the skills gap is part of the problem because Maryland has 86,000 job openings on its online workforce exchange, enough to fill a significant chunk of the demand for work. And he doesn't think that accounts for all the positions employers need to fill.
Just as some residents have stopped searching because they've had no luck, he said, some businesses have told him they stopped posting jobs "because they've been recruiting for a while and have given up for the time being."
An M&T; Bank survey of businesses this summer found more optimism than pessimism in the bank's Mid-Atlantic region — largely Maryland, with a bit of Washington and Virginia. Thirty-four percent of companies surveyed expect to hire by the end of the year, compared with 7 percent expecting to cut.
The Lieber Institute for Brain Development is among those expanding. It's preparing to take over the rest of its floor in a building on the East Baltimore biotech park campus.
The institute, launched in 2010 to focus on clinical advances for developmental brain disorders such as schizophrenia, has 80 employees and plans to add about a dozen in the next few months.
It's not that the organization is bucking the trend of tightening purse strings for federal research grants, said Jean DuBose, a Lieber Institute spokeswoman. In addition to seeking such funding, it's forged partnerships with companies and receives philanthropic support from its founders.
"We are able to close the gap," she said.
Baltimore Sun reporter Michael Dresser contributed to this article.