Maryland’s loss of 6,000 jobs was the largest of any state in the nation last month. Some have been quick to write off the figures as a product of unusual weather patterns affecting seasonal hiring practices, but there is a growing belief that the Maryland economy is not as solid as once thought. In addition to April’s figures, the employment numbers from March, which originally posted a gain of 1,500 jobs, were recently revised and now show a loss of 600.
Although Maryland’s unemployment rate now sits at 6.7%, well below the national average of 8.1%, a number of factors have some worried about the stability of the state’s economy. Among them, the unpredictability in Europe, the state’s dependence on big funding from the federal government, and the recent income tax increase which passed in the Democrat dominated state legislature.
From the Baltimore Sun:
Richard Clinch, director of economic research at the University of Baltimore’s Jacob France Institute, agrees that seasonal adjustments are “wreaking havoc” on the numbers. But the new revisions switching Maryland from gains to losses in March troubles him. When the economy is recovering, revisions tend to add, not subtract, he said.
“I’m worried that the recovery doesn’t have legs,” he said, pointing to more economic problems in Europe, which could ripple across the Atlantic.
Clinch said Maryland politicians’ special-session decision this week to raise income taxes for the highest earners leaves him feeling pessimistic that the state — a big recipient of federal largesse — will be able to chart a smooth course through the choppy waters of looming budget cuts in Washington. Maryland has yet to deal with its own structural budget deficit, and state leaders missed an opportunity to take a harder look at spending, Clinch said.
“The Maryland economy going forward, I think, is going to be quite fragile,” he said.
The new income tax increase may also hinder the economy at a time when private sector job creation is imperative for the state. (Emphasis mine).
Kathleen T. Snyder, president of the Maryland Chamber of Commerce, said the tax increase will have a direct and possibly unintended effect on some businesses because taxes on revenue earned by limited liability companies and other common entities are paid through their owners’ personal income tax returns.
It’s not yet clear what the significance of the last two months is, but it should certainly be on the minds of Maryland voters as we inch closer to November. Ultimately, it could prove to be a valuable area of critique for Republican candidates to use against their Democrat counterparts in Maryland, including the newly discovered candidate for U.S. Senate, Dan Bongino.