Wage growth underscores state’s urban-rural divide
East of Susquehanna River unchanged from level in 2006
Recent months have brought a spate of positive economic news, suggesting to many economists that American industry is finally starting to pick up again after a long, post-recession hangover.
Unemployment is holding steady at or slightly below 5 percent, the decline in labor force participation appears to have slowed in the last year and the Census Bureau’s American Community Survey found family income rose 5.2 percent in 2015, the fastest rate on record.
Parts of Maryland are certainly feeling that optimism. Wages in the Baltimore-Washington corridor have been lurching upward over the last decade, up 7.2 percent since 2006, according to the Bureau of Labor Statistics’ Quarterly Survey of Employment and Wages.
But east of the Susquehanna River, it’s a different story. Wages are up just 0.75 percent, essentially unchanged from their level in 2006.
Gains in Caroline County, the Eastern Shore’s lone bright spot, haven’t been enough to overcome tepid growth in nearby Cecil, Dorchester and Kent Counties, where collectively wages are still 6.5 percent below their 2007 peak.
While the recession slashed wages in nearly every Maryland county — wages fell about 2.1 percent statewide between 2007 and 2009 — its toll on the Eastern Shore’s manufacturing sector was particularly devastating, said Angela Visintainer, Caroline County’s director of economic development.
“One of our big industries in Caroline County is manufacturing, particularly manufacturers that make these commodity types of products that have low skill production,” Ms. Visintainer said. “The recession hit manufacturing hard, and a lot of those businesses were either lost or have become a lot smaller.”
Wages fell for six straight years in Kent County, dropping almost 7 percent between 2007 and 2013. In Dorchester County, it was five straight years of free fall, equating to a 9.4 percent loss. And in Cecil County, wages plummeted nearly 20 percent between 2007 and 2011, according to Bureau of Labor Statistics’ data.
Across the Chesapeake Bay, most counties in Maryland’s urban core managed to weather the recession well. Wages fell after the financial crisis in 2008, but started ticking up again within the next two years.
The resilience of the region largely is explained by the presence of the federal government.
Nowhere is this more evident than in St. Mary’s County, perhaps the closest parallel to Cecil County west of the Susquehanna. Both regions have populations just over 100,000 and both are about as far from a major city as a county can be while still falling within its metropolitan area.
But St. Mary’s County is home to the Naval Air Station Patuxent River. With a workforce of more than 22,000, “Pax River” is the third-largest employer among Maryland’s 17 military bases.
“Our economy is very closely tied to federal defense spending,” said Robin Finnacom, St. Mary’s deputy director of economic development. “Pax River is the second-most economically productive base in the state. Median income here is about $88,000, but if we look at the average civil servant income, it’s about $105,000.”
Wages in St. Mary’s County grew 7 percent in 2009 alone, a staggering outlier on both a state and national scale.
It wasn’t until Congress’ failure to agree on a budget in 2013 triggered automatic cuts to defense spending, known as sequestration, that wages took a hit. Despite meteoric growth early in the recovery, wages stayed essentially flat in St. Mary’s County from 2012 to 2014.
“There were some furlough days. Contracts were delayed and even canceled in some cases,” Ms. Finnacom said. “Government revenues are a lagging indicator of our economy and we’re only just now starting to see an uptick in that.”
The sequester highlighted a need in St. Mary’s County to branch out from the public sector, according to Ms. Finnacom. Depending solely on funds from a Congress increasingly resistant to passing much of anything simply isn’t a sustainable strategy, she said.