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September 1, 2010

Secret ingredient in Maryland's low jobless rate

Well, it's not really secret. But it's under-appreciated. Jamie Smith Hopkins reports the latest figures on federal procurement spending in Maryland and other states. The Census Bureau is getting better at reporting this stuff on a timely basis. Contractors spent $34 billion in Maryland in fiscal 2009, Smith Hopkins reports, a whopping $9 billion more than in the year before. Credit federal stimulus spending, ongoing boondoggles for homeland security and war and other stuff.

Total federal spending and assistance in Maryland (contracting, Social Security, Medicare, block grants, salaries for federal employees, loan guarantees etc.) surpassed $100 billion. Holy cow! The state's whole economy is only around $300 billion.

Gov. O'Malley likes to take credit for recent job growth and Maryland's low unemployment rate relative to other states. In truth he has little or nothing to do with it. (I would be saying the same thing of a Republican governor making the same claims, as s/he surely would.) The question for Maryland, as I keep saying, is what happens when Washington cuts off the deficit-spending spree?

The data are interesting. ($3.4 million for the "Forensic Casework DNA Backlog Reduction Program." Nearly $1 billion for highway construction. $2.8 million for "earmark grants.") Check out the latest Consolidated Federal Funds Report, which breaks down the numbers by state and spending category and even county, if you want to see them.

Posted by Jay Hancock at 8:35 AM | | Comments (3)
Categories: Government & Business
        

Comments

Yup, love you Jay, but I say it is no secret that DC is surrounded by MD on 3 sides and has 1 Congressmen and 1 Senator on appropriations to help steal from our fellow countrymen. The tragedy is that this masks a hostile, anti-business state regulatory environment. It also masks the fact that for many outside the warm cocoon of government and related government contractors it's rough out there. I know many smart people with good degrees in the real sciences and engineering who are having hard times finding work and when they do it's at wage rates comparable with unskilled labor. Seriously, it's bad out there. 1 library job in Westminster recently got 300+ applications. I know people who work retail for less than the same hourly wage I was making in the exact same position at the exact same store 12 years ago.

@ Captain Obvious
Every tax break or financial incentive for business means an additional tax burden for workers. Which means less money for the workers to spend at MD businesses or their products.

@ Anonymous,

I didn't say anything about tax breaks or financial incentives. I was talking about regulation. Specifically, MD's Department of Labor Licensing and Regulation (DLLR) regulates 23 different industries, at least 7 of which are highly questionable. Check out the list in the right hand column: http://www.dllr.state.md.us/license/

You can be jailed in this state for cutting hair or painting a living room without a license. Truth is most licensing is a government aid for existing/big business. It allows them to function more as a monopoly, than a perfectly competing firm. It raises prices, reduces output, reduces choice, reduces employment, and has a welfare effect of transferring wealth from society as a whole into the hands of the business owners who have hurdled the regulatory barriers. In short, if anyone believes in broad based real wage growth they should view all regulation with a highly scrutinizing eye and acknowledge its high trade-off cost and wealth concentrating effect.

Tidbit: The MD Home Improvement Commission was created in the 1960's at the behest of a Home Improvement company owner so politically connected that he was contracted to redo the governor's mansion. The pretext was to "keep the bad apples out" but the effect was to keep competition out.

*An aside, your argument fails to consider the fact that government never spends money as efficiently as individuals do, therefore the more they control, the more waste, and lost prosperity there is*

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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