The Campaign Issue that was Ignored: Maryland's Economy

THE BALTIMORE SUN

Maryland, "the land of pleasant living," is in deep economic trouble.

But unlike other states facing dire conditions, such as California and Connecticut, even in this key election year, no one in Maryland wants to be so unpleasant as to talk about it in public.

Dominated by the complacent public culture of branch offices and a horsy/duck/ski crowd, foolhardy economic bravado continues to dominate public discussion -- even as private cynicism drives debilitating despair and mean-spiritedness.

Many of Maryland's business, civic and political leaders have struggled for years to change the state's culture of dependency and to begin putting its economic house in order.

But again this year, the lock-'em-up electoral campaigns are ironically timid in squandering the opportunity needed to build a broad constituency necessary for urgently needed sweeping change.

The 1990-1991 recession in Maryland, by far the worst in 50 years, has left the state with no economic engine to drive job growth. Just as the state's economy skyrocketed in the six years from 1982 to 1988, it has plunged in the six years since.

Maryland has already lost all of the gains it achieved during the 1980s in its share of total U.S. jobs, and there is no end in sight to its relative decline.

The state's economic engines of the 1980s, national defense and speculative building construction, created 70,000 net new jobs per year in Maryland. However, the state now has 14,000 fewer private sector jobs than it had in 1988.

Job growth this past year -- 11,000, or 0.5 percent of a 2.1 million-person work force -- is slower than in all but three other states and only one-sixth the national rate of 3.1 percent.

It is worse in greater Baltimore, where the number of jobs has fallen back to 1987 levels. Baltimore's famous renaissance of the 1980s collapsed in 1991 and, now with fewer jobs than at any time on record, the city continues in severe, unprecedented decline.

Even Maryland's Washington suburbs -- the state's one bright economic area -- have not yet fully recovered from the 1990-1991 recession. Jobs there are now growing at less than half the rate of Washington's Virginia suburbs.

Almost every Maryland industry has been hit in recent years. Just since 1990, the state has lost 25 percent of its construction jobs and 15 percent of its manufacturing jobs.

So-called "high-tech" jobs have been especially hard-hit since 1988, with jobs making precision instruments falling by 32 percent (due mostly to Westinghouse cutbacks) and electronics jobs falling more than 33 percent. Maryland now has a smaller proportion of high-tech jobs than the national average.

Among high-wage professional services, even legal, engineering and management services, which some promised would spur growth, have lost jobs since 1990 and continue to decline.

The only industries adding many net jobs in Maryland are health services (21,600 since 1990; 3,700 this year), private educational services, colleges and universities (9,900; 2,600) and state and local governments (7,200; 4,200 -- also mostly related to health and education).

Yet the state already has more jobs in health care than in all of manufacturing, and -- far from being an engine of growth -- the soaring costs of health care are a crippling burden to business, government and consumers. The consumer price index for medical care jumped by 12.3 percent during the past year of anemic economic growth.

Education, of course, is an essential industry that provides better-than-average jobs. But something is clearly wrong when education payrolls are rising many times faster than total jobs in the economy.

Indeed, Maryland's unemployment has remained low (currently 5.5 percent vs. 6.1 percent nationwide) because many of the ambitious unemployed or underemployed have taken their education and talents out of the state to areas of greater opportunity.

Just as talent flooded into the state in the years of strong growth, it is now fleeing. The state's population is again growing far more slowly than the national average, and Maryland's overall labor force (those working or seeking work) has not grown in more than two years.

Of course, Maryland enjoys many powerful advantages, including its proximity to Washington, the incomparable Chesapeake Bay, and the consumer-rich mid-Atlantic region. Although total income growth is now far below the national average, Maryland still has the fifth-highest per capita income in the country, one of the world's most highly educated work forces, and a unique concentration of federal, academic and private research facilities.

All in their own way, Maryland businesses and residents are coping with economic realities. Many continue to prosper.

The General Motors minivan facility in Baltimore, for example, has greatly expanded productivity and sales. Its international exports have more than tripled since 1990 and now account for almost half of Maryland's total merchandise exports.

CEO Norman Augustine seems to be carefully positioning Bethesda-based Martin Marietta for continued growth in the post-Cold War era of intense new national and global competition.

But many of the state's businesses and governments are very poorly positioned for the new era. A large number have been suckered into bad choices or business-as-usual by unrealistic promises, public misinformation and happy talk.

Profit margins continue under severe pressure, and wages remain stagnant for the highly educated and are plummeting for everyone else.

Perhaps the most severe threat to Maryland's pleasant lifestyle is that these economic pressures are feeding destructive polarization by race and income, between labor and management, and by region.

No simple management or public policy fad can immediately remedy Maryland's economic crisis. And clearly, as troubling as the current situation is, it could be made much worse by the wrong actions.

Maryland already has more bureaucratic economic development and training programs than almost anyplace else. What it does not have is an independent entrepreneurial spirit to find and address real world problems and opportunities.

Indeed, five years ago, as the current crisis became visible on the horizon, the legislature's Joint Committee on Economic Development Strategy commissioned the most comprehensive examination ever performed on a state's economy. The 1,500-page report, "The Economic Competitiveness of Maryland," which I directed, was written by 10 teams of nationally prominent experts, including the nation's leading authority on venture capital and the current commissioner of the federal Bureau of Labor Statistics.

Despite more than 100 meetings of business, civic and government leaders across the state, and dozens of legislative hearings, the state's development leaders fought the process every step of the way, denying the problems and refusing to join TTC in the search for solutions.

Despite the resistance, the experts produced more than 100 recommendations -- ways for private and public sector to cooperate in key industries and ways to eliminate counterproductive or duplicative public programs.

Most importantly, the report documents the state's real economic problems and provides a basis for an informed public debate over solutions. It begins to provide an overall strategy for Maryland that would help its business and political leaders say "no" to special interests and "yes" to productive measures.

Unfortunately, this enormous effort, along with several smaller initiatives, has been largely ignored in preference for cynical promotional programs of empty promises and misinformation.

Economic conditions in Maryland have deteriorated dramatically over the past six years. Today, there can be no question of the urgent need for major change.

Yet this year's political candidates -- next year's office-holders -- are wasting the unique opportunity to build the necessary mandate and constituency for change. Now is the time for the rest of us to force them to face Maryland's economic realities.

Charles McMillion is president of MBG Information Services in Washington.

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