- The Baltimore labor market has tightened sharply as people have left its workforce.
- Average wages in the area have not kept up with inflation, making it more difficult for businesses to fill staffing gaps.
- Flexible work with pay above the minimum wage is helping workers to deal with inflation while supplying the extra hours businesses need.
The Baltimore metropolitan area was undergoing a transformation long before the Covid-19 pandemic. People were leaving the city, and the suburbs were picking up new residents, not all of whom worked in the city. Then the pandemic struck, and the trend accelerated. So where will Baltimore businesses find the workers they need now?
A shrinking permanent workforce
For a decade prior to the pandemic, the population of the city of Baltimore had been shrinking. Between 2010 and 2020, the city experienced a total loss of about 35,000 people, or about 6% of its population. But the overall population of the metropolitan area had been rising steadily the whole time, at about 0.5% per year. That changed with the pandemic.
People started leaving the metropolitan area, and the workforce shrank faster than ever before. Between February 2020 and February 2023, the number of employed people in the Baltimore area dropped by roughly 39,000, or almost 3%. Yet this didn't raise the unemployment rate in the area. Far from it – the unemployment rate in Baltimore actually fell as jobseekers replaced the people who left. In fact, the unemployment rate in Baltimore, which was 0.8 percentage points higher than the national average a year ago, is now 0.3 percentage points lower:
The labor market in the Baltimore area is now one of the tightest in the nation, and it is tightest in the sectors that lost the most workers. Using the government's 12-sector breakdown of the workforce, these are the changes in employment in the Baltimore area:
At the national level, leisure and hospitality jobs are almost fully recovered from the pandemic, now down just about 2.2%. But in the Baltimore area, the gap is still more than 10%. Likewise, such a large drop in retail employment without a corresponding fall in the overall population is also unusual. And even employment in manufacturing, which had been rebounding before the pandemic, has started to erode. The only sector with a substantial increase in employment is transportation and utilities, in part a vestige of the early days of the pandemic, when everything had to be delivered.
A turn to the flexible workforce
On the whole, lower employment (measured by the government's surveys of businesses) without a corresponding decrease in population might suggest that the Baltimore area was gradually turning into a collection of bedroom suburbs. But there are still thousands of businesses in the area – like those in retail and leisure – that need workers.
The problem is that wages haven't necessarily risen enough to bring people back into these jobs. Average hourly wages across the private sector in the Baltimore area are about 10% higher than they were at the start of the pandemic, but that increase lags the 17% rise in prices for consumers that occurred during the same three-year period. In terms of spending power, average wages have fallen pretty steeply.
Not surprisingly, a growing number of businesses is looking to flexible labor to fill the gap. Our platform's presence in the area has grown quickly over the past several months, and the hourly pay rates offered to our Pros have typically been much higher than Maryland's new $13.25 minimum wage:
By offering opportunities for Baltimoreans to earn more income, flexible work can help them to deal with inflation while supplying the extra hours businesses need. This is a pattern that we see playing out across the United States, but the need for growth in this segment of the labor market is especially acute in the Baltimore area.
These links offer more information:
These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 4/6/2023 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:
- $0.22 rise in hourly pay
- 1.3% point drop in share of short-notice shifts
- 0.3 hours drop in hours per existing worker