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Is Maryland's business scene as bad as Hogan says?

Dan Rodricks compares Maryland's economy to its gubernatorial election.

Larry Hogan, the Republican candidate for governor, smartly focuses his campaign messaging on the need to give the Maryland economy a lift. It's not an original idea, and certainly de rigueur for any Republican in any election year. But as he builds a case for placing a pro-business businessman in the governor's office, Hogan makes Maryland sound like a fetid economic backwater.

So much so he's in danger of bumming out the people he should be firing up.

"Unemployment nearly doubled …"

That's one of Hogan's standard lines. And he's correct. When Martin O'Malley and Anthony Brown took office in January 2007 as governor and lieutenant governor, the unemployment rate was about 3.8 percent. By the time O'Malley-Brown won re-election, in 2010, the state's unemployment rate had risen to 7.8 percent.

So Hogan's claim that Maryland joblessness doubled in O'Malley-Brown's first term is true.

Of course, what voters don't hear in a 30-second television ad is this word: "recession." You don't hear the phrase, "worst economic decline since the Great Depression," but I'm sure you remember it, especially if you got laid off or lost your house.

The housing market tanked, major banks collapsed, businesses downsized or closed, people lost jobs and millions of homeowners faced foreclosure.

"We are in the midst of a once-in-a-century credit tsunami," Alan Greenspan, the former chairman of the Federal Reserve, told a congressional committee in 2008. I love that guy. Greenspan's financial policies had encouraged the free-market practices that led to the housing bubble, and after it burst, he expressed shock that banks had not better regulated themselves.

Anyway, the national unemployment rate in 2007 was 4.6 percent, higher than Maryland's at the time. By 2010, it was 9.6 percent, still higher than ours.

But the national rate is now 5.9 percent while Maryland's is 6.3 percent, lagging behind, at least in part, because of federal budget cuts and last fall's partial government shutdown.

Still, Hogan gets to say that recovery here is slower than across the land.

But his statement — "Unemployment nearly doubled …" — lacks honest perspective. His messaging assumes that independent voters and conservative Democrats, people he needs to defeat Brown on Nov. 4, won't remember that "once-in-a-century" bump a few years ago. It assumes voters don't understand that a governor has little control over the seismic activity in the national and global markets. The forces that created the Great Recession did not develop the day O'Malley-Brown took office.

"Eight thousand businesses lost."

That's another claim Hogan has made in online statements, in debate with Brown, on radio programs and in TV ads. I've heard it enough that I decided to look into it. Offered side-by-side with Hogan's criticisms of taxes and regulation, he seems to suggest that 8,000 companies left Maryland to do business elsewhere. It makes Maryland, one of the wealthiest states in the country, sound like an awful place to run or establish a business.

According to a Hogan spokesman, this number comes from the U.S. Census Bureau, specifically the Census County Business Patterns database, which gives an annual accounting of the total number of business establishments in the country.

According to that accounting, there were 8,688 fewer businesses in Maryland in 2011 than there were in 2007. Again, we're talking about the recession years.

The Maryland number sounds horrible until you consider what happened across the country: The U.S. had 365,231 fewer firms in 2011 than in 2007. (Virginia, by the way, lost 10,579 firms during that time.)

According to the Maryland Department of Business and Economic Development, the state has showed some gains since 2011, putting the net loss of businesses at 7,027 and landing us in the middle of all states with regard to overall business loss during and since the recession.

By another measure, from the Bureau of Labor Statistics, Maryland actually gained 1,772 business "establishments" between 2007 and 2012. (An establishment is not necessarily the same as a "firm" because a firm can consist of multiple establishments.)

Of course, these numbers don't tell us how many businesses folded, merged or, in the Hogan narrative, moved to other states with business-friendlier climates.

I did get some insight on that from the Regional Economic Studies Institute at Towson University. RESI's research shows that from 2007 to 2011, 5,541 firms moved out of Maryland while 4,789 moved in.

And here's one more fact to consider: A Census Bureau report on the births and deaths of Maryland business establishments shows net gains of 1,854 in 2012, and 1,400 the year before.

Again, those are signs of slow recovery from the "once-in-a-century" bump called the Great Recession.

This context might not help Anthony Brown — that's not the point — but I hope it helps everyone else around here as you think about the coming election. The Maryland economy is not great. It might not even be good. It's sort of meh. And, all things considered, even that's not as bad as Larry Hogan makes it out to be.

dan.rodricks@baltsun.com

Dan Rodricks' column runs Tuesday, Thursday and Sunday. He is the host of "Midday" on WYPR-FM.

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