To understand the economic angst that helped elect a Republican governor in heavily Democratic Maryland, venture beyond the tony, millionaire-saturated suburbs to the working-class neighborhoods and rural towns where many people are struggling.
This is the Maryland that propelled Larry Hogan, a wealthy businessman who had never held elected office, into the governor’s mansion.
It is a place where a Gaithersburg retiree has no idea how to pay for repairs after a pipe burst in his basement last week. Where a Baltimore woman whose last job paid $11 an hour grapples with long-ago college loans. And where a 39-year-old tile setter who can’t find enough work lives with his wife and daughter in his parents’ basement.
“I don’t see where the recession has been over,” said Willie Rose, the tile setter from Calvert County. “Maybe on Wall Street, but not for the real person.”
Nearly half of Marylanders say their family finances are no better now than they were two years ago, according to a recent Washington Post-University of Maryland poll. A quarter say they are worse off — even with the economy rebounding from a painful recession. And this is in a state with the nation’s highest median household income and concentration of millionaires.
Those who are financially stressed were more likely to vote for Hogan over Democrat Anthony G. Brown in November than those who say they are getting ahead, according to the poll. On the campaign trail, Brown, then the lieutenant governor, talked about how Maryland had thrived for eight years under Gov. Martin O’Malley (D). But Hogan, the prosperous owner of a real estate firm, painted a different picture, one that resonated with residents who were less fortunate.
“Too many Marylanders,” the new governor said in his first State of the State address, “have been struggling, just to get by.”
By many measures, Maryland’s economy is doing much better than most states: Its residents are well-educated — 9 in 10 have a high school diploma, and 16 percent have advanced degrees, one of highest rates in the nation. The median household income is more than $73,500, tops in the country. Maryland’s credit rating remains strong even as bond issuers have downgraded other states.
But there are problems lurking: The federal government is one of Maryland’s largest employers — a life jacket during the recession that has become a liability as federal funding is slashed. Although the state has recovered all of the jobs lost during the economic slowdown, that rebound was largely focused in more-affluent areas; statewide, job creation has slowed.
Given how educated Marylanders are, some say the state’s unemployment rate should be among the lowest in the nation — rather than just below the national average. The state’s gross domestic product stagnated in 2013, the most recent year it was measured. Tax revenue is lower than projected, which has led to budget cuts. And — as with the rest of the country — there’s an ever-growing chasm between Maryland’s wealthiest residents and its poorest.
J.B. Ball, 55, a senior engineer at Patuxent River Naval Air Station, sees this gap each month as he waits for rent checks from tenants at the seven homes he owns in St. Mary’s County. Ball, a Republican who voted for Hogan, has rented to some of his tenants for years — including a dad who works two or three jobs at a time to support six kids.
“These are good people who are struggling to get by,” said Ball, echoing Hogan’s State of the State speech without realizing it. “They’re late every month. By the terms of my lease, I should be charging them late fees. But I can’t bring myself to do it.”
Between 2009 and 2013, personal income in Maryland grew more slowly than the national average, according to an analysis by the state Department of Planning. When adjusting for inflation, Maryland saw a slight decrease in income for 2013, one of the worst performances in the country.
Increases in the cost of living have forced many Marylanders to rein in their spending or take on more debt. Dick Willis, a 70-year-old Navy veteran from Gaithersburg, can’t afford a cellphone. He and his wife of 42 years don’t splurge on dinner at Outback Steakhouse or on a movie date. The couple refinanced their mortgage to pay other bills and won’t finish paying it off for at least two decades. When disaster hits — like the pipe that burst in their basement — they struggle to find cash.
“If all of my bills go up, no one says, ‘We should raise his retirement check, and we should raise his Social Security so that he can keep up with Montgomery County and Maryland,’ ” said Willis, a Republican who voted for Hogan. “It’s not rosy in this state. I don’t care how they paint it.”
On the campaign trail last year, Hogan emphasized three things that he says will boost the economy: cutting waste, rolling back taxes and making the state more business-friendly. Maryland, he repeatedly said, was on the wrong track.
According to The Washington Post-Maryland poll, many voters agreed with Hogan’s focus on taxes, including substantial numbers of Democrats and independents. More than 6 in 10 Hogan voters say that for all of the taxes they pay, they don’t feel as if they are getting a big enough bang for their buck.
Hogan voters were about twice as likely to describe themselves as not being well off as those who cast their ballots for Brown, 32 percent vs. 17 percent. Their support for Hogan reflected a political shift that is happening across the nation, with Republican politicians making inroads among working-class voters, in part by trying to define Democrats as the party of the educated elite.
Yet Marylanders overall are divided on whether they are willing to sacrifice funding for key state programs to see taxes reduced. Forty-eight percent say the state should focus on boosting its economy through lower taxes on businesses and individuals, while 46 percent place greater priority on paying for rising education and transportation costs.
As governor, Hogan continues to hammer on the financial uncertainty percolating in the state, sometimes angering Democratic leaders by using exaggerated or outdated statistics. He and the legislature have embarked on a four-year race to create jobs, boost wages and bring more state residents into a higher economic bracket.
Hogan has introduced legislation to halt automatic gas-tax increases, stop taxing military pensions and eliminate personal property taxes for small businesses. Democrats, in turn, have proposed bills to boost the state’s economic development department, profit from university research and increase apprenticeships, while urging more money for public transportation and education.
But jump-starting a sluggish state economy is no easy task.
There are basically three ways to create private-sector jobs: support companies already in the state so they stay put and hire more people; entice businesses from elsewhere to move in; and encourage new companies to start up.
Hogan has said that simply having a Republican governor will set a different tone in Maryland. Shortly after taking office, he ordered the installation of highway signs announcing: “We’re open for business.”
For now, rankings of business-friendly states usually put Maryland in the middle or bottom half of the pack — far behind neighboring Virginia, a right-to-work state with a corporate income tax rate of 6 percent, compared with Maryland’s 8.25 percent. Maryland has only four Fortune 500 companies, according to the latest count, compared with more than 20 each in Virginia and Pennsylvania.
There’s no single “game-changing” thing that Maryland can do, said R. Michael Gill, Hogan’s secretary of business and economic development. Many business owners complain about the state’s onerous regulations and slow bureaucratic machinery, he said, which are among the first things he plans to tackle.
Other changes will be more difficult. The corporate income tax rate is too high and will eventually need to come down, he said, although that could initially mean less tax revenue, so the state must first get spending under control. Tax-incentive programs are necessary to attract new business, Gill said, but the current offerings need review — including a film tax credit that gives millions to the makers of the Netflix show “House of Cards.”
“We need to fire on many, many cylinders,” Gill said.
Such long-term fixes offer little immediate hope to people such as Yvonne Gordon, the 60-year-old unemployed woman from Baltimore who is still paying off loans for a college degree she earned in her 30s.
For 12 years, Gordon worked in customer service for a major transportation company, watching her pay grow from about $7 an hour to $11. She lost her job in 2012. Now she and her husband live on his salary from the city, where he does utility work.
She has been applying for jobs but finding none. Every Saturday, she attends a training program at a church that she said often doubles as a support group.
“I put my faith into the system because I thought if you worked hard, you could get ahead,” said Gordon, a registered Democrat who didn’t vote in November. “But that’s not how it has worked for me.”
Financial stability also seems unattainable now for Rose, the tile setter from Calvert. Construction work dried up during the recession. It has started to pick back up, but not nearly enough to dig himself out of debt. His pay has fallen from $1,500 per week in good times to $500 — if he’s lucky.
Rose, his wife and their 6-year-old daughter rely on food stamps and subsidized health insurance through the Affordable Care Act. He struggles to save for Christmas presents, let alone retirement.
“I just keep hoping things will get better,” said Rose, who usually votes for Democrats but cast his ballot for Hogan. “Or maybe we will hit rock bottom and politicians will have to do something.”
Scott Clement contributed to this report.