- December 1, 2013
- Maryland Center for Economic Policy
- Staff Report
Amid the slow and uneven recovery from the Great Recession and the gridlock that has become the norm at the federal level, working families in Maryland struggle to move ahead in an uncertain economy. While there has been progress in certain areas, challenges remain.
- Maryland’s unemployment rate has fallen to its lowest rate in 4 years to a rate of 6.4 percent at the end of 2013, slightly below the national rate of 7 percent. However, racial and geographic disparities persist.
- While Maryland benefits from its close proximity to the nation’s capital, federal gridlock has had a negative effect on the state economy. The October 2013 federal shutdown cost Maryland and estimated $5 million per day, and many residents looking for work lost jobless benefits at the end of 2013 after federal law- makers failed to extend emergency Unemployment Insurance.
- The productivity of American workers continues to grow, but wages are growing at a much slower rate. Between the third quarter of 2011 and the third quarter of 2012, productivity increased by 1.7 percent while real hourly compensation increased by just 0.1 percent.
- Union membership is associated with higher wages for workers, meaning a higher standard of living for working families. But like the country as a whole, union membership is steadily declining in Maryland.
- Despite Maryland’s high median household income, there were tremen- dous earning disparities throughout the state. For instance, Howard and Montgomery counties had median household incomes over $90,000; but Allegany and Somerset counties and Baltimore City households were at the other end of the spectrum with median incomes under $40,000. Racial disparities persist as well. In 2012 the median hourly wage for Whites was $21, compared with about $17 for African Americans and $14 for Hispanics. Median wages for all three groups in Maryland have declined slightly since 2008.
- While Maryland’s poverty rate of 10 percent is significantly lower than the national rate of 15.7 percent, 594,000 Marylanders live in poverty, a number greater than the population of Maryland’s eleven smallest counties combined, and racial disparities persist. According to the Census Bureau’s American Community Survey, 6.3 percent of non-Hispanic Whites in Maryland live below the poverty level. Both African Americans and Hispanics were more than twice as likely to be living in poverty, at 13.8 percent and 12.7 percent, respectively.
- Maryland would do well to follow the lead of 23 states and its two largest counties by raising the minimum wage. Raising Maryland’s minimum wage to $10.10 per hour by 2016 would increase the earnings of the state’s lowest-paid workers by $800 million. These higher earnings after accounting for some change in labor costs for business and prices for consumers translates into $456 million in increased economic activity. This additional economic activity could generate and support 1,600 new jobs.
- Housing affordability remains a challenge for Maryland. Marylanders, par- ticularly those with low incomes, spend a disproportionate share of their income on housing. Marylanders who rent spend 31 percent of their income on housing. Homeowners face challenges as well. After a lull, foreclosures increased a staggering 280 percent from the third quarter of 2012 to the third quarter of 2013.
- Unmanageable student debt has become a crisis for the generation of recent college graduates. Maryland students’ debt rose more than 10 percent from 2010 to 2011. About 55 percent of Maryland’s 2012 graduates had student loan debt, with an average debt of $26,000, which was below the national average.
- The high cost of energy continues to be a major burden for Marylanders living below 200 percent of the Federal Poverty Level. Maryland residents with that are least able to afford it are paying up to 40 percent of their incomes on energy costs that continue to increase.
- Between 2010 and 2012, 10.3 percent of Maryland residents—roughly 612,000 individuals—were without health insurance, including 51,000 children. For those that were insured, families’ health insurance premiums as a percentage of median household income have increased 66 percent between 2003 and 2011. However, despite persistent technical difficulties, Maryland’s implementation of the Affordable Care Act is helping to provide health coverage to many thousands of Maryland’s uninsured. Nearly 152,000 residents obtained coverage through the Maryland Health Connection by the end of 2013 when Medicaid and private coverage are combined.
In the coming year, state and national lawmakers should make the investments necessary to foster broad prosperity for all of Maryland’s residents.