Economic Clouds Persist Despite Drop in Unemployment

March 17, 2015 by Kathleen Algire-Fedarcyk in Blog

Maryland’s unemployment rate is lower than the national rate, and more Marylanders are back to work since the recession. However, a closer look at the numbers reveals that Maryland has seen an increase in low-wage jobs and that the recovery is uneven when it comes to people of color and where people live.  In order for Maryland’s economy to grow, we need more jobs that help grow the middle class.

Low-Wage Employment Grows

Maryland has seen an increase in certain low-wage occupations in recent years, such as food services and hospitality. Growing these industries does not necessarily help the state’s economic future or Maryland families. Even in traditionally high-paying industries job growth has been concentrated at the bottom of the pay scale. That doesn’t put families back where they were before the recession. Lower wage jobs also restrict Maryland’s ability to pay for schools and other services, since it doesn’t take in as much revenue. Maryland should focus on growing jobs that put families on the path to the middle-class where they can achieve their full potential and help build a healthy state economy.

Unemployment Rates Only Tell Part of the Story

The unemployment rate is one indication of how our economy is performing. Generally, the lower the unemployment rate, the more people looking for work are able to find it. After the Great Recession, Maryland’s unemployment rate rocketed to almost 8 percent in February 2010. Since then, the rate has steadily declined, dropping to 5.5 percent  in January 2015. That’s on par with the national rate of 5.6 percent.

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But the unemployment rate does not indicate what type of jobs people are getting and it does not include other people, such as those who have stopped looking for work because they can’t find a job. In addition, if a person lost a full-time job and gets a new part-time job, they may  struggle to make ends meet since they are earning less.

Unemployment Varies by Location

Location matters when it comes to finding a job. The state unemployment rate may be 5.5 percent but some Maryland counties’ rates are almost twice that. Baltimore City and Dorchester, Somerset and Worchester counties’ rates are all over 9 percent, with Worchester hitting  11 percent. These areas have a history of having slightly higher unemployment but the rates jumped dramatically after 2009.

People of Color Hit Harder by Unemployment Recovery from the recession was difficult for many Marylanders, but it was especially difficult for people of color. African American or Black Marylanders have the highest rate of unemployment in the state at 11.3 percent, and Hispanics and Latinos have an unemployment rate of 7.4 percent.   unemployment by race

Underemployment Remains a Problem

The falling unemployment rate masks a growing concern about underemployment. This refers to the percentage of working men and women who are:

  • Workers who want full-time jobs but have had to settle for part-time hours
  • Those who have stopped looking for jobs because they are discouraged by the lack of available jobs.
  • Workers who want jobs and have looked for employment in the previous 12 months.

Maryland’s underemployment rate was 10.4 percent in 2014, close to double the unemployment rate. Families with underemployed workers struggle to make ends meet and regain the foothold they had before the recession.

Unemployment Insurance Helps Families, Economy Stay Afloat

Unemployment insurance (UI) is an important financial support  for families who are unemployed, through no fault of their own, making sure they have  money to meet their basic necessities. It also keeps the economy from getting even worse during a recession since beneficiaries patronize local businesses and pay taxes to the state. Claims in Maryland  decreased  from March 2014 to March 2015.The duration of UI benefits had been extended during the slow recovery from the recession but were cut back in 2013. Workers can claim up to 26 weeks of UI in Maryland, at a rate of 5.7 percent of their previous salary. Only two states Massachusetts and Montana– offer workers UI for longer than 26 weeks.industry growth

Today’s blog post continues our State of Working Maryland series looking at demographic and economic trends in the state. Previously, this has been an annual publication. This year we will instead publish occasional blogs and research briefs on topics affecting working families in Maryland.