WASHINGTON – Recent months have brought a spate of positive economic news, suggesting to many economists that American industry is finally starting to pick up again after a long, post-recession hangover.
Unemployment is holding steady at or slightly below 5 percent, the decline in labor force participation appears to have slowed in the last year and the Census Bureau’s American Community Survey found family income rose 5.2 percent in 2015, the fastest rate on record.
Parts of Maryland are certainly feeling that optimism. Wages in the Baltimore-Washington corridor have been lurching upward over the last decade, up 7.2 percent since 2006, according to the Bureau of Labor Statistics’ Quarterly Survey of Employment and Wages.
But east of the Susquehanna River, it’s a different story. Wages are up just 0.75 percent, essentially unchanged from their level in 2006.
Gains in Caroline County, the Eastern Shore’s lone bright spot, haven’t been enough to overcome tepid growth in nearby Cecil, Dorchester and Kent Counties, where collectively wages are still 6.5 percent below their 2007 peak.
While the recession slashed wages in nearly every Maryland county – wages fell about 2.1 percent statewide between 2007 and 2009 – its toll on the Eastern Shore’s manufacturing sector was particularly devastating, said Angela Visintainer, Caroline County’s director of economic development.
“One of our big industries in Caroline County is manufacturing, particularly manufacturers that make these commodity types of products that have low skill production,” Visintainer said. “The recession hit manufacturing hard, and a lot of those businesses were either lost or have become a lot smaller.”
Wages fell for six straight years in Kent County, dropping almost 7 percent between 2007 and 2013. In Dorchester County, it was five straight years of free fall, equating to a 9.4 percent loss. And in Cecil County, wages plummeted nearly 20 percent between 2007 and 2011, according to Bureau of Labor Statistics’ data.
Across the Chesapeake Bay, most counties in Maryland’s urban core managed to weather the recession well. Wages fell after the financial crisis in 2008, but started ticking up again within the next two years.
The resilience of the region largely is explained by the presence of the federal government.
Nowhere is this more evident than in St. Mary’s County, perhaps the closest parallel to Cecil County west of the Susquehanna. Both regions have populations just over 100,000 and both are about as far from a major city as a county can be while still falling within its metropolitan area.
But St. Mary’s County is home to the Naval Air Station Patuxent River. With a workforce of over 22,000, “Pax River” is the third-largest employer among Maryland’s 17 military bases.
“Our economy is very closely tied to federal defense spending,” said Robin Finnacom, St. Mary’s deputy director of economic development. “Pax River is the second-most economically productive base in the state. Median income here is about $88,000, but if we look at the average civil servant income, it’s about $105,000.”
Wages in St. Mary’s County grew 7 percent in 2009 alone, a staggering outlier on both a state and national scale.
It wasn’t until Congress’ failure to agree on a budget in 2013 triggered automatic cuts to defense spending, known as sequestration, that wages took a hit. Despite meteoric growth early in the recovery, wages stayed essentially flat in St. Mary’s County from 2012 to 2014.
“There were some furlough days. Contracts were delayed and even canceled in some cases,” Finnacom said. “Government revenues are a lagging indicator of our economy and we’re only just now starting to see an uptick in that.”
The sequester highlighted a need in St. Mary’s County to branch out from the public sector, according to Finnacom. Depending solely on funds from a Congress increasingly resistant to passing much of anything simply isn’t a sustainable strategy, she said.
So in recent years, the county has looked to leverage the resources it has to offer: a highly skilled technical workforce and infrastructure to support private aerospace and aviation firms.
A keystone to that effort is the University of Maryland Unmanned Aircraft Systems Test Site. The collaborative project between the University System of Maryland and the Naval Air Systems Command is part of a national research effort on how to implement unmanned aerial systems into the commercial sector.
“The test site created a distinct draw for commercial opportunities,” Finnacom said. “We are now a magnet for this type of work.”
In Maryland’s more centrally located counties, a similar story is unfolding.
Recent consolidation of U.S. cyber intelligence around Fort Meade has been a tremendous boon to the economies of Howard and Anne Arundel Counties, according to Larry Twele, CEO of the Howard County Economic Development Authority. The high-skilled professional technical service workforce that has grown in the region is attracting private companies, and the area is reaping the benefits of that productivity, he said.
Wages in Howard County are up roughly 27 percent in the last nine years and officials are now focused on how to maintain that momentum.
Twele and the Howard County Economic Development Authority see attracting young, well-educated adults — who are increasingly drawn to the amenities of urban life — as the key to sustaining growth. Injecting life into a traditionally sleepy area is the authority’s long-term goal.
“Your classic suburban office park models aren’t as attractive as they used to be,” Twele said. “Companies looking for talent are looking for folks who want to be in these walkable, livable environments.”
Revitalization efforts have already begun in downtown Columbia, where new apartment buildings, shops and restaurants are popping up. The Economic Development Authority is also looking to reinvent the Columbia Gateway, the roughly 900-acre former General Electric manufacturing park, into a vibrant, walkable community with mixed-use real estate.
“Right now, the area is restricted by all sorts of covenants and zoning regulations,” Twele said. “But if we want to attract companies to the area, the talent they’re looking for is wondering ‘Where can I walk to work, bike to work, where can I go nearby to eat?’ You’re starting to see this pattern of companies moving back into urban centers because that’s where they’re finding their talent.”
This shift toward sustained growth highlights a growing divide between Maryland’s urban core and rural border regions. The focus in the east isn’t so much on maintaining growth as it is jumpstarting the dormant economy to avoid falling farther behind the rest of the state.
It’s a task that’s easier said than done. The region’s low population narrows the range of industries it can attract, according to Visintainer, and traditionally reliable forms of employment, like low-skill manufacturing, are increasingly difficult to come by.
“The projects where a manufacturing plant is going to plop down with two- or three-hundred employees, the state has the tools for that through aggressive tax credits, but those opportunities aren’t there like they used to be,” Twele said. “It’s really now a problem of enabling the technology to do business there.”
Visintainer says the Eastern Shore’s most pressing need is help from the state in education and workforce development.
Caroline County sees huge growth opportunity in advanced manufacturing, where order volumes are lower but production requires a higher level of skill.
The creativity and problem-solving skills required for these jobs cannot be found by outsourcing production to lower cost regions, according to Visintainer. But officials are having trouble reconciling state education policy with the skills local employers are demanding.
“I think the state gets stuck defining success as going to college, and that’s not necessarily true for our area,” Visintainer said. “In rural areas like ours, with the industries we’re focused on, some of our best job opportunities don’t require a four-year degree.”
Caroline County has already taken some initiative, with plans to launch a new manufacturing curriculum in its high schools this spring. However, local efforts can only go so far without the financial backing of the state, officials say.
“Some of the state-level target industries require college education and even advanced degrees, so it makes sense that they would be pushing that,” Visintainer said. “But, that doesn’t make sense for the Shore. We’re never going to have the population to support those types of businesses.”