Local Economic Outlook: Jobs and Income


Commentary by Bob Schaller, Director, St. Mary's County Economic Development

Last week we heard a national call from President Obama that creating jobs is our top economic priority. A few weeks ago we heard a similar emphasis from Governor O'Malley for jobs, jobs, jobs. States and jurisdictions around the country are focusing attention on job creation. Why? The income that flows from a job generates consumer spending that makes up 70% of the economy. The business that receives this spending recognizes it as income and in turn spends it on the business to make payroll and replace inventory. As income increases the business can expand, thus creating more jobs. More jobs mean more income and more spending, creating inertia as the cycle intensifies like the centrifugal force of a playground merry-go-round. Remember those? Jobs and income are two sides of the same coin.

Locally we are well positioned to get this coin spinning faster in 2010. First let's look at the job picture. Final unemployment figures from the state for December and 2009 are now available. As has been the case all year, St. Mary's 5.7% rate ranked 3rd lowest in the state for both the month and the yearly average. Howard and Montgomery both tied for lowest at 5.2% rate average for 2009. Southern Maryland neighbors, Calvert and Charles, both averaged a rate of 5.9%, ranking immediately below us. All other counties and Baltimore City were above 6%. Maryland was at 7.1% annual average. While this is very good news for St. Mary's, it must be pointed out that unemployment had increased across the board in 2009 and the amount of increase was the greatest amount in a single year in recent memory. The state average rate was up 2.7% over 2008. The picture was the same across the state, and worse in most of the country. The relative good news is that at 2%, St. Mary's shared with Montgomery County the lowest annual rate increase. In other words, unemployment was least affected here and in the much larger Montgomery County. The reason, of course, is employability of the workforce. Montgomery and Howard have the most highly educated populations in the state and nation. St. Mary's and Southern Maryland more broadly have the most highly skilled workforce around. Why? The concentration of quality jobs in defense technology, energy, health care and education. Those jobs attract talent, most who choose to settle into our community. Increasingly we are becoming a regional employment center. The twin facts that St. Mary's boasts the youngest population and highest concentration of military veterans in the state support this.

But we have an immediate challenge ahead to get the unemployed back on payrolls. The reality is that 2% annual increase represents almost 1,000 more unemployed now in St. Mary's than a year ago. Many of these are in the construction industry which was one of the hottest sectors just a few years ago. Two of these unemployed are close family relatives. One is a mason, the other a painter. Chances are that you also know some of these 1,000. As newly unemployed, all are willing and able to work. Many are in retraining, whether at the College of Southern Maryland or enrolled in the Jobs Connection program, the Job Match Re-Employment Office, or Southern Maryland Workforce Services. They just need that opportunity to restart. Each hire reduces the 1,000 and creates economic inertia. Both the individual and the economy benefit.

Why should businesses hire in a time of continued uncertainty? The simple answer is increased confidence, something that was lacking throughout 2009. On Friday we learned that the economy expanded by 5.7% in the last quarter of 2009. This was the fastest pace of growth in six years. The increase wasn't driven by government spending. In fact, most of the rise came from the business sector itself through replenishing of inventories. This means businesses are buying again, and soon they will have to rehire. First-time unemployment claims continue to fall, another good leading indicator of the job market. On the consumer side, last week's Consumer Confidence Index report from the Conference Board showed an increase to 55.9, the highest rate in more than a year, adding more hope. The index is still nowhere near the highs of a few years ago but it's more than doubled from this time last year. Closer to home, Chamber of Commerce memberships are on the rise, local business associations and roundtables all over the County are abuzz with interest, and not a week goes by without hearing of a new business being launched. Indeed, confidence is increasing.

Looking ahead, major aviation programs such as the F-35 Joint Strike Fighter, the P-8A Multimission Maritime Aircraft, and X-47B Unmanned Combat Air Systems all arrive at NAS Patuxent River in 2010. Meanwhile, work advances on many other projects on base and at Webster Field. Around the region, the high likelihood of a 3rd reactor starting construction planning at Calvert Cliffs and a new Energetics Technology Center in Indian Head will create additional jobs later this year.

Finally, the many non-profits that have either recently emerged or simply renewed their involvement share a genuine interest in serving the community and will bring attention to the priority for job and income creation. New groups like the Young Professionals Initiative and Leadership Southern Maryland are just two examples. There are certainly many more.

Whatever your involvement in the jobs challenge, every little bit helps. It all starts with hiring someone. The employed will take care of the rest.

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