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Maryland's 'no pain, no gain' decade

THE BALTIMORE SUN

If any adage characterizes the Maryland saga of the 1990s, it would be: "No pain, no gain."

As did the rest of the country, Maryland suffered during the 1990-1991 recession, and suffered wretchedly the jobless recovery that followed. But evidence continues to show that this saga has had a happy ending: Maryland emerged from these tribulations with one of the strongest state economies in the country.

A study set for release today bears this out. Maryland enjoys higher wages, lower unemployment and lower poverty rates than most of its Southern peer states, not to mention the nation.

"Wages in Maryland are ... the best for the region," says Jared Bernstein, an economist with the Economic Policy Institute who is one of the three authors of the study, "State of Working America: 2000-01."

"They are higher than the nation as a whole."

The regularly updated book-length study does more than spill out numbers - it uses those numbers to tell a story about the health of American households.

The 450-page tome looks at families, their work weeks, wages, and levels of savings, debt and taxes - as well as the growing gap between the haves and have-nots. A portion even studies the health of each region, and each state - and how each compares to the others.

Maryland looks encouragingly strong.

Take wages. The median income for a four-person family in Maryland was $71,404 in 1998, the most recent year figures were available. That's well above the U.S. average of $56,061 and is actually the second-highest average in the country, trailing only Connecticut ($75,534). That means that Maryland's middle-class families are well poised for spending and saving.

Maryland's strong-wage story is true from several other vantage points, the study shows. For instance, the state's median hourly income of $14.06 for 1999 was 18 percent higher than the U.S. median of $11.87. What's more, those wages grew 6.2 percent in Maryland from 1989 to 1999, compared with only 2.4 percent nationally.

Strong wages typically stem from a solid job market, and that's truly the case for Maryland, the study found. Between 1989 and 1999, the state's job base grew 10 percent, compared with 19.2 percent for the country as a whole - chiefly because Maryland enjoyed high employment to start.

The state's unemployment rate was only 3.7 percent in 1989, compared with 5.3 percent for the country. The same was true 10 years later when unemployment was 3.6 percent in Maryland and 4.2 percent nationally.

"Maryland just had low unemployment" to begin with, Bernstein says. "It had a much tighter labor market in 1989 than many of the other states. In 1999, it still had a very tight labor market."

Since the Maryland economy is healthier than the national average, it follows that its poverty rates would be lower. And they are.

Not only was the state's two-year average poverty rate of 7.8 percent for 1997-1998 more than 5 percentage points lower than the U.S. average of 13 percent - it was the lowest of any state in the country, according to the study.

And while that national poverty rate increased slightly over the two-year stretch of 1988-1989, Maryland's rate actually dropped nearly 2 percentage points.

Despite the current boom, problems do persist nationwide, Bernstein says the study found. There is a growing "wage gap."

For instance, the wealthiest 10 percent of households have reaped 73 percent of the stock market's gains.

Worse still, while the middle 20 percent of households benefited from only 3 percent of the gains, they were saddled with nearly 39 percent of the unparalleled increase in consumer debt - a potential disaster when the economy finally does head south.

"It's very disproportionate," Bernstein says.

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