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Annual Report of the Comptroller, 2000
Volume 363, Page 21   View pdf image (33K)
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impact on Maryland employment should not be substantial. The Verizon strike, however, did have a modest
impact on Maryland employment in August, with over 8,000 individuals on strike for nearly a month. The
convergence of telecommunications, cable, and Internet companies is continuing. While the mergers and
consolidations in this area make employment losses likely, the economic activity in this sector will be large, and
will improve the performance of virtually all other segments of the economy.

In 1999, retail employment grew about 1.7% in Maryland compared with an increase of 2.5% for all sectors
of the Maryland economy. Retail represents about 20% of total Maryland employment and is the second largest
sector in the State. Employment is expected to grow about 2.2% in the retail sector in 2000, and will slow slightly
to between 1.0% and 1.5% in 2001 and 2002. Acceleration in retail employment growth this year is partially
attributed to the grand opening of the Arundel Mills Mall. When complete, the 1.4 million square foot mall is
expected to employ over 3,000 people. The mall will be opening in two stages and is expected to house 15 to 18
anchor tenants and 200 specialty retail stores.

Employment in financial services grew 3.9% in 1999, well above the growth of total employment in Maryland.
Growth is expected to slow significantly this year after several years of above average growth and then remain
below average. Employment growth in 1998 and 1999 reflects the excellent financial conditions experienced
nationwide up until early this year. Although the Federal Reserve began raising interest rates in June 1999, the
economy continued to perform well and real GDP rose over 5.2% through June 2000. The Dow-Jones Industrial
Average actually peaked at over 11,700 in mid-January. In this environment, financial firms were busy and apt to
add to their staffs. Since January, the Federal Reserve has raised the Federal Funds Rate another percentage point
and the DJIA has remained between 10,000 and 11,000. Home sales have slowed and consumers and businesses
have become a bit more cautious.

The outlook for Maryland's financial sector includes a consolidated and slowing banking sector balanced by
somewhat brighter prospects for nonbanking financial institutions given the national outlook for a stable Fed and
less volatile financial markets. Banking mergers and consolidations continued in 2000. Many of these
combinations have shifted jobs to the South, especially to Virginia and South Carolina. At best, employment has
held steady in Maryland. The largest federally chartered banks in Maryland, e.g., Allfirst and Mercantile, have
remained solid and have tried to grow not only by expanding branches but increasing their breadth of services.

On the other hand, nonbanking institutions and brokerages have done well and continue to expand their
assets under management despite a not so positive market outlook. Legg Mason has moved to the U.S.F 8c G.
building on Light Street to obtain more space for its operations, and continues to solidify its position in the
business of retirement planning by acquiring small institutional money managers across the country. T. Rowe
Price is expanding its service operations in O wings Mills and has doubled the size of its investment center
downtown. Price is also awaiting permission to open a savings bank under the bank holding company name of
the T. Rowe Price Group Inc. Combinations between regional brokerages and other nonbank financial
institutions are likely, resulting in a blurring of the traditional banking boundaries and possibly reducing local
employment as operations are consolidated.

Real estate had a banner year in 1999, including both residential and nonresidential activity. Wealth generated
by the stock market and technology companies has been invested in luxury homes. Low vacancy rates and solid
income growth have combined to encourage demand and raise property values. The large number of new and
expanding businesses has generated a great deal of activity in the BWI area, the 1-270 corridor and elsewhere.

Service employment grew a robust 3.5% in 1999 and healthy growth is expected throughout the forecast
period. Over one of every three jobs is a service job, and more than 40% of new jobs are in this sector. Business
and health services are the two largest components of the service sector. Business services include building
maintenance, personnel services and computer and data processing services. Business services grew over 5.0% in
1999 and employment growth is expected to be robust. Technology-related services are providing much of the
growth. USInternetworking, a provider of Internet-based business solutions based in Annapolis, is the fastest-
growing publicly-held company in the State. Business service employment will be given a further boost by the
contracting out of certain telecommunications and computer services by the National Security Agency (NSA).
These roughly 1,000 positions will appear to be a net gain in Maryland employment, since positions at the NSA
are not included in official employment statistics.

Employment in health services rose only 1.0% in 1999, including a small increase in hospital employment.
The consolidation of local hospitals has put pressure on employment growth in Maryland, with many hospitals

Introductory Section 21


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Annual Report of the Comptroller, 2000
Volume 363, Page 21   View pdf image (33K)
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