More people are unemployed for more than 27 weeks, and the effects are long lasting

Urban Institute

The terrible rate of long-term unemployment is what makes the aftermath of the Great Recession crueler that past economic downturns. Long-term unemployment is defined as more than 27 weeks. As of 2012, 89,000 Marylanders were unemployed for at least 27 weeks. Prior to the Great Recession, in 2007, only 19,000 Marylanders had been looking for work that long.

Nationally, nearly 35 percent of unemployed persons have been out of work over 27 weeks (41 percent in Maryland). This compares to just 25 percent at the depth of the 1980 recession – the next worse instance since World War II.

The Urban Institute has published "27 Weeks and Counting,” an interactive feature about people facing long-term unemployment. It effectively combines data analysis with the stories of real people who have been unemployed for over six months. The report shows that loss of income isn't the only consequence of unemployment. Being out of work for a long time can lead to permanently lower wages and career setbacks, worse mental and physical health, and higher mortality rates. Workers' skills may erode while they're out of a job, and they may begin to lose touch with the business contacts that could help them find work.

The consequences of long-term unemployment spill over into families and harm whole communities. Kids whose parents are unemployed for a long time tend to perform worse in school than their peers with employed parents. High rates of long-term unemployment in communities can strain public services. Communities with a high concentration of long-term unemployed workers tend to have higher rates of crime and violence.

One way to fight long-term unemployment is with well-targeted training programs. This year, Governor O’Malley proposed and the legislature adopted an initiative called “EARN Maryland.” EARN Maryland is a new state-funded, competitive workforce development grant program that is industry-led with the goal of helping businesses cultivate the skilled workforce they need to compete.

MBTPI has long called for increased investment in employer-driven training programs, like EARN, to provide real opportunities to Maryland workers.

Close-out - revenues slightly under estimate. Maryland ends year with $1.2 billion in the bank.

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 Comptroller Peter Franchot today released the results of the state’s close-out of fiscal year 2013. Fiscal year 2013 began July 1, 2012 and ended June 30, 2013.

The state ended the fiscal year with $510 million in the general fund and $700 million in the “Rainy Day” reserve fund, for a combined balance of $1.2 billion.

General fund revenues fell $62.4 million short of official estimates, growing 4.5 percent over fiscal year 2012. General fund revenues for fiscal year 2013 totaled $14.9 billion.

Favorable variances in expenditures and transfers offset $15.4 million of this loss, so general funds overall finished $46.9 million below the previous estimate.

The Bureau of Revenue Estimates cited poor growth in wages as a cause of the reduction. However, most of the shortfall in revenue was actually in the corporation income tax. Individual income taxes actually finished very slightly above the estimate. Losses in withholding were offset by gains in final payments (or refunds) of 2012 taxes.

The Board of Revenue Estimates will meet on September 17 to release revised revenue estimates for fiscal year 2014 and the preliminary estimate for 2015. The $62.4 million shortfall in fiscal 2013 is less that one half of one percent of general fund revenues. By itself, it does not materially affect the state’s financial picture.

 

Reserves are adequate enough so that mid-year adjustments are unlikely to be needed in the current fiscal year 2014. If the Board of Revenue Estimates determines that federal budget cuts and the state’s overall prospects for income growth will seriously harm future revenue collections, it could make it more difficult for the state to meet current service commitments in fiscal 2015.

A Glossary of Surpluses and Deficits
+$1.2 billion	FY 2013 total balance	The state’s total available reserves as of June 30, 2013, including $511 million in general funds and $700 million in the “Rainy Day” reserve fund
+$511 million	FY 2013 general fund balance	The amount in the state general fund on June 30, 2013
+$247 million	2013 unassigned funds balance	The amount that would be left in the general fund on June 30, 2014 if there were no changes to the FY 2014 enacted budget
-$46.9 million	FY 2013 general fund actual below estimate	The amount by which the fiscal year 2013 ending general fund balance was below the previous official estimate. The $62.4 million shortfall in revenue was partially offset by $14 million in below-estimated expenditures and $1.4 million in transfers in excess of the previous estimate
-$62.4 million	FY 2013 revenue shortfall	The amount by which actual revenues for fiscal year 2013 fell short of the official estimate

The Week Ahead: Back to School Edition.

Today is the first day of school for students in most of Maryland's public schools (17 of the 24 school systems). Prince George's, Frederick, Calvert, St. Mary's, Washington and Cecil counties started last week. Talbot begins Tuesday. (Some individual schools and grades have different start dates. Check with your local school system for more information.)

On the subject of schools, we blogged about the connection between educational attainment and economic growth. If you want a state economy with high-earning jobs, you should invest in good education.

We also blogged about the disappointing employment statistics for July.

Coming up for August 26 - 30:
August 27, 2013 

• The Community Services Reimbursement Rate Commission  meets in Catonsville.

August 28, 2013

• The US Bureau of Labor Statistics releases employment and unemployment data for metro areas.
• The Administrative, Executive, and Legislative Review (AELR) Committee meets in Annapolis to review nutrient management plan regulations from the Maryland Department of Agriculture.  

 August 29

•  The US Bureau of Economic Analysis releases data on GDP and corporate profits for the second quarter of 2013 (April-June)

August 30

• The US Bureau of Economic Analysis releases data on July personal income and consumer spending.
  

Investing in Education Will Build a Stronger Maryland Economy

It's back-to-school time again. It's a good time to think about how education contributes to our economy and our quality of life.

The best way for Maryland to grow its economy is by continuing to invest in a well-educated workforce, according to a new paper published by EPI for the Economic Analysis and Research Network (EARN—a network of state local and national economic think tanks, including MBTPI).

In A Well Educated Workforce is Key to State Prosperity, Noah Berger, president of the Massachusetts Budget and Policy Center, and Peter Fisher, research director at the Iowa Policy Project, find a strong link between the educational attainment of state workforces and both productivity and median wages. In Maryland, 41 percent of the workforce have college degrees; the US average is 33 percent. Maryland's average hourly earnings are $19.12, almost $3 above the national average.

Expanding access to high quality education will create more economic opportunity for Marylanders and do more to strengthen our overall economy than anything else state government could do.

 Some ways to increase the educational attainment of Maryland’s population include:

•  increasing funds for preschool programs and quality childcare,
•  restoring full inflation increases in the “Thornton” public school funding formula, an
•  keeping college affordable by holding down tuition growth, and increasing need-based financial aid.

Meanwhile, strategies such as cutting taxes to lure employers and capture private investments from other states are shortsighted, and promote a race to the bottom which undermines states’ ability to invest in and attract an educated workforce. The paper finds no clear relationship between a state’s tax rates and its wages.

Maryland Employment Numbers for July were Disappointing

The state employment statistics for July were all disappointing. Employment of Maryland residents (seasonally adjusted) was down 15,000 from June – the third consecutive decline. (That's the number of employed Maryland residents. The number of jobs located in Maryland also went down: by 9,200).

The number of unemployed Marylanders went up by 3000, reaching its highest level since October of 2011.

Maryland’s unemployment rate went up to 7.1 percent from 7.0 in June. It has been edging up since reaching  6.5 percent back in April of this year. Prior to the Great Recession, Maryland’s unemployment rate was below 3.5 percent. Maryland's unemployment rate is now approaching the national rate of 7.4 percent.

Economists are attributing the bad news to the automatic federal budget cuts known as “the sequester,” at least in part.

The state Department of Labor, Licensing and Regulation's analysis finds the glass half full, by pointing out the gains in private sector jobs since the start of the year, and by noting that the unemployment rate for June was not revised downwards.

The Week Ahead - Last Week of Summer Vacation Edition

On Saturday, Governor O’Malley addressed the Maryland Association of Counties’ annual convention. The speech included no specific proposals. It focused on economic issues especially transportation and workforce development. Later this week, we'll have some observation about how education is the best way to promote Maryland's economy in the long term.

Last week we blogged about how increasing Maryland’s minimum wage will help struggling families, with no significant job loss.

Coming up, August 19 -25:

August 19

The US Bureau of Labor Statistics releases state employment and unemployment numbers. We will report the results and tell you what we think they mean in an upcoming blog post.

August 20

Maryland Nonprofits two-day program on grant writing strategies to move your mission forward is August 20 & 21, from 8:30 am - 4:30 pm in Baltimore.

The House Health and Government Operations Committee’s Workgroup on Pharmacy Benefits Managers and Specialty Drugs meets at 11:00 am in Annapolis to discuss potential legislation.

Maryland Nonprofits hosts a happy hour for young nonprofit professionals starting at 5:30 in Baltimore. (Yes, of course you qualify as “young.”)

August 21

The Board of Public Works holds its bi-weekly meeting at 10 am in Annapolis. Agenda items include approval of $4.5 million in emergency purchases of security camera systems and systems for blocking cell phone use at the troubled Baltimore City Detention Center.

Joint Committee on Legislative Ethics meets in Annapolis at 1:00 for a work session.

August 22

The Workgroup on Access to Habilitative Services Benefits meets in Baltimore at 9:30. This study group has three more meetings before issuing its final report in November.

The Maryland Economic Development Commission holds a board meeting at 10 am in Baltimore.

Also at 10 am in Baltimore, the Health Information Exchange Health Information Exchange Policy Board holds its meeting.