Maryland Will See a ‘Jobless Recovery,’ Report Warns

As the recession drags on, glimmers of recovery are coming to the benefit of corporations and the wealthy but not the middle class, according to a report analyzing the economic outlook of working families in Maryland.

The annual report from the Maryland Budget and Tax Policy Institute and the Progressive Maryland Education Fund, released Tuesday, warns that Maryland is heading toward a "jobless recovery" where business profits and stock prices rebound without creating commensurate gains in employment and wages.

An array of economic indicators cited in the report paint a grim picture for Maryland's middle class, including:

• Maryland's median income in 2009—$69,272—fell from 2007 and 2008;
• The state's poverty rate climbed from 7.4 percent in 2000 to 9.1 percent in 2009;
• Unemployment continues to hover above 7 percent, with no significant signs of improving.

Meanwhile, the costs of utilities, child care, health care and transportation have increased, the report says. And while productivity has increased—giving businesses more value out of every hour worked—wages have not kept pace with the financial gains.

"It's going into managers' and investors' pockets instead of workers' pockets," said Neil Bersgman, director of the Maryland Budget and Tax Policy Institute. "The recession was long and deep, the recovery was slow and weak and it's not providing noticeable benefits to working households."

The advocates are calling on state lawmakers to shore up Maryland's $1.4 billion budget shortfall without bludgeoning the middle class. Because most of the state's general fund goes toward education and health care, extensive cuts will hit working families the hardest, the groups say.

Their solution includes increasing Maryland's minimum wage, raising the tax rates for gasoline and alcohol, and extending the state's income tax increase on millionaires set to expire this week.

Increasing the minimum wage—which has over the past 30 years fallen out of step with inflation—would help dampen Maryland's high cost of living and be a greater economic boon than tax cuts for the wealthy, said Del. Tom Hucker (D-Dist. 20) of Silver Spring.

"Every dollar you put into a worker's pocket is more likely to be spent in the local economy," Hucker said.

The report's recommended boosts to gas and alcohol would each generate $200 million annually. Maintaining the 6.25 percent tax on millionaires—increased in 2008 from 5.5 percent—will create between $70 million and $90 million per year, according to the report.

The groups also want state lawmakers to retain Maryland's earned income tax credit, preserve funding for mass transit and child care assistance, and invest in job training and college scholarships.