Maryland suburbs lag Virginia, District in job growth

Robert McCartney
Columnist September 8, 2012

After listening to politicians at the conventions argue over which party was better suited to create jobs, I decided to look at who was handling that challenge best in the Washington region.

The politics are complicated, but the geography is clear. Northern Virginia and the District have churned out new jobs at a respectable pace in the past year, while suburban Maryland is lagging far behind.

Robert McCartney’s column on local issues appears Thursdays and Sundays in The Post’s Metro section. View Archive

The imbalance harms the area in numerous ways, particularly by worsening our highway congestion. Many Marylanders who can’t find work in their home state jam the Beltway commuting to jobs in Northern Virginia.

Maryland’s poor showing also adds pressure on state and local authorities to do more to promote economic development. That explains why Prince George’s, which is faring especially badly, has allocated $50 million of county funds to attract business and wants to build a high-end casino that it says would create thousands of jobs.

The slow growth could also prompt more calls in Maryland to lower taxes and relax business regulations — though such moves would face a political head wind in the liberal bastion.

“The respective business climates have become more dissimilar over time, with Virginia’s becoming more attractive than Maryland’s,” said Anirban Basu, chairman of Sage Policy Group, an economic consulting firm in Baltimore.

For instance, Maryland’s corporate tax rate is 8.25 percent, compared with 6 percent in Virginia. Maryland also recently raised state income taxes on individuals earning more than $100,000 a year.

Basu said higher taxes in Maryland have offered the state undeniable advantages, such as protecting education funding. But he said there’s been a cost in employment, at least in the short term.

“It has hurt business confidence in Maryland and has rendered Virginia as a more attractive place to do business,” Basu said.

The contrast in jobs performance is dramatic. Here are the figures on how many full-time jobs each jurisdiction added in the 12 months ended in July, according to the Bureau of Labor Statistics:

Northern Virginia: 32,200 jobs (a 2.4 percent increase);

District of Columbia: 10,000 (up 1.4 percent);

Suburban Maryland: 1,400 (up less than one-fifth of 1 percent).

These raw numbers exaggerate the disparity somewhat. In particular, according to the BLS definition, suburban Maryland doesn’t include Howard and Anne Arundel counties.

Those counties are gaining jobs as military intelligence facilities expand in and around Fort Meade, just 28 miles from the White House — but they’re counted as part of greater Baltimore. Northern Virginia includes counties such as Spotsylvania, more than 50 miles away.

Still, the trend within the region is undeniable. Even economic development officials in Prince George’s and Montgomery, who are most dismayed by the data, concede that Northern Virginia has performed better.

“At the end of the day, I’ll acknowledge the basic point,” said David S. Iannucci, a top adviser to Prince George’s County Executive Rushern Baker.

The District’s performance is especially noteworthy, given its past reputation as being unfriendly to business. The city suffered a decline in government jobs in the past year, but that loss was more than offset by creation of private-sector positions.

“The District of Columbia is emerging as the sleeping giant. Maryland had better watch out, because they’re going to turn around and find they’re the odd man out,” said James Dinegar, chief executive of the Greater Washington Board of Trade.

What about the politics? Which party gets to crow? That’s harder to sort out that one might think.

Suburban Maryland is overwhelmingly Democratic, and Republicans blame the anemic job growth on liberal tax and regulatory policies. Maryland also has strong labor unions, whereas Virginia is a right-to-work state.

But the District has lots of unions, and is even more Democratic than Maryland. It’s added jobs partly because rejuvenated downtown neighborhoods have become popular places for professionals in their 20s and 30s to live.

“They're just doing a really good job in attracting young talent to D.C.,” said Jim Corcoran, president of the Fairfax Chamber of Commerce.

In Northern Virginia, Republicans lead the state government, but Democrats run the largest county (Fairfax).

The fact is, Northern Virginia’s advantage has been growing for years, and has been fostered by both Republicans and business-friendly Democrats.

“It didn’t just happen in the last year. What’s being registered now is the result of a long-term change,” said Stephen Fuller, director of George Mason University’s Center for Regional Analysis.

Unless the Maryland suburbs can find their own successful model, they might have to borrow some ideas from Northern Virginia if they want to keep up.

For previous Robert McCartney columns, go to washingtonpost.com/mccartney.

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