Maryland unemployment picture rosier than most states'

State rate significantly below national one

Maryland's seasonally adjusted unemployment rate climbed to 4.4 percent in July from 4 percent in June and 3.6 percent in July 2007, according to U.S. Department of Labor figures.

Thomas E. Perez, secretary of the Department of Labor, Licensing and Regulation, cited hiring demand being down in an already tight labor market and more people entering the state's job market.

"The deterioration in national economic conditions clearly continues to take its toll on Maryland's job market," he said in a statement.

Maryland's unemployment rate continues to be well below the national one, which rose to 5.7 percent in July from 5.5 percent in June 2008 and 4.7 percent in July 2007. The difference between the state and national rates is unusually large, said economist Anirban Basu.

"Maryland continues to enjoy one of the nation's lowest unemployment rates thanks to federal government jobs, federal contracting and the health care sector," said Basu, chairman and CEO of the Sage Policy Group, a Baltimore economic and policy consulting firm. He expected the state's unemployment rate to continue to climb this year, approaching 5 percent by the end of 2008, while the national rate should be near 6 percent by then.

Private-sector job creation in Maryland declined in July by 500 from June, while government nonfarm payrolls rose by 1,600 workers. Professional services, health care, and leisure and hospitality sectors saw increases, while finance, construction and manufacturing experienced declines.

Biotechs see declines

The job cuts extend to the state's biotechnology industry, whose companies have reported higher losses than a year ago in their most recent earnings statements. At least one — Avalon Pharmaceuticals of Germantown — is cutting its workforce by one-third, to 35 employees, after losing $5.6 million in the second quarter and further reducing its cash and other assets.

Biotechs are particularly vulnerable to economic downturns because of their ongoing need to raise capital, Basu said. In a tighter economy, investors' cash doesn't flow as freely, he said.

"Many biotechnology companies are still in a race to get a product to market," Basu said. "It is difficult to raise capital for these biotechs in this environment."

While the biotech sector is vital to Maryland, with high-paying jobs, it is relatively small in terms of job numbers when compared with sectors such as health care and the government, he said.

The latest report from MdBio, a division of the Tech Council of Maryland, put biotech employment in the state at 23,200. The government sector has about 490,000 jobs in Maryland; health care and education have some 384,000 combined, according to the Labor Department.

One biotech that saw a smaller second-quarter loss from a year ago — MiddleBrook Pharmaceuticals of Germantown — could beef up its workforce if a $100 million equity infusion from a Chicago investment firm closes as expected next month, executives said in a recent filing with the U.S. Securities and Exchange Commission. The company was down to 33 employees in February from 76 a year earlier, according to its last two annual reports.

"Assuming we close our $100 million equity financing in September 2008, we expect to begin preparing for the commercial launch of Moxatag and to restart our Keflex Pulsys and amoxicillin pediatric clinical development programs, which we expect would require hiring additional employees later in 2008," MiddleBrook executives said.

Surprising gain

in hospitality jobs

A 1,000-job gain in leisure and hospitality services from June to July in Maryland is surprising, as many jobs in that sector are in restaurants, Basu said.

"Restaurants are highly vulnerable to economic downturns," he said. "Consumers tend to reduce discretionary expenses to attempt to keep up with high energy and food prices."

Maryland could see another net decline in private-sector jobs. HSBC Finance Corp., a Mettawa, Ill., subsidiary of financial services giant HSBC Holdings, laid off 445 employees in Owings Mills this month. HSBC Finance reported a net loss of $1.4 billion in its second quarter, compared with net income of $63 million a year earlier, according to an SEC filing.

Others that have recently filed layoff notices with the state include Celebration Foods, maker of Carvel ice cream cakes, 201 employees in Jessup, effective Aug. 17; and Santa Ana, Calif., cell-phone parts maker Powerwave Technologies, 278 employees in Salisbury, effective Aug. 29.

Nationally, about 300,000 employees were laid off during the second quarter, the most in a second quarter since 2003, according to the Labor Department.

Some companies have unveiled expansion plans in the state recently. OpGen, a gene sequencing company that is working on new genome-mapping technology, is moving its headquarters from Wisconsin to Gaithersburg and plans to about double its workforce to 80 employees within two years.

In addition, Stevensville electric-guitar maker Paul Reed Smith Guitars plans to more than quadruple its 25,000-square-foot manufacturing facility and increase its workforce by 60 positions to more than 250 employees. The state recently issued a $10 million bond to assist with the expansion through the Department of Business and Economic Development's industrial development financing authority.

Some 43 states and Washington, D.C., recorded over-the-month unemployment rate jumps, while six states registered declines and one saw no change. States that are doing better tend to be those in the nation's central region that are lower in population and rich in commodities, agriculture or both, Basu noted. South Dakota had the nation's lowest unemployment rate at 3.0 percent last month, while Michigan, still hurting by auto industry woes, recorded the highest at 8.5 percent.

Maryland's unemployment rate in July was the same as Virginia's and Delaware's but lower than most states in the Eastern United States, including Pennsylvania, North Carolina, Massachusetts, New Jersey, New York and Florida.