Baltimore has long been in a state of transformative flux. The late 1950s gave rise to a growing desire to leave urban areas for suburban ones. Baltimore was one of many urban causalities; recent population estimates for city residents has yet to match that of the late 1950s. However, new economic incentives could reverse this trend.

High and long-term unemployment has been a problematic issue for Baltimore for several years. As of 2013, Baltimore had the third highest unemployment rate in Maryland, at 10.1 percent, well above the national average for 2013. A paper released by the National Bureau of Economic Research (NBER) noted that unemployment among lower paid workers could be decreased if labor opportunities within their respective regions were increased, supporting the belief that spatial mismatch can lead to long-term unemployment.

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Image credit: Wikimedia Commons

What Is Spatial Mismatch?

It occurs when location of low-skilled, low-wage jobs is so far from the potential employment base that long-term unemployment within urban areas occurs creating a mismatch between employment opportunities and employee availability. The theory was formulated around the rise of suburbia after World War II. Essentially, demand increased for suburban living, and demand for shopping in those areas also increased. Businesses that once thrived in the city began to move away to be closer to their customer bases. Overall, the flight of these employers resulted in a decrease in the availability of lower-skilled, relatively low-wage jobs in cities.

Census records of Baltimore’s population from the 1900s to the present outline this specific trend, with record high population for the city in the 1950s, followed by declines through the 1960s with minor increases in the last twenty years. Getting back to spatial mismatch, the theory suggests that long-term unemployment and joblessness among lower paid workers is attributable to the following factors:

  1. Cost of traveling,
  2. Information accessibility about job openings, and
  3. Search incentives for jobs farther away.

What Initiatives Are Being Used to Combat Spatial Mismatch?

Looking at Baltimore’s current dynamics, we find that there are opportunities for public transit to lower travel costs for these lower paid workers. Information about jobs openings is becoming more easily accessible through One Stop Career Centers promoted by the Department of Labor, Licensing and Regulation. As for search incentives, Baltimore has plans to further expand its rail lines while also continuing to offer business tax credits for companies to develop mixed-use and residential areas in the city. The tax credits offered to businesses are aimed at shortening the distance between employee and employer within Baltimore.

Some of these credits are being utilized to redevelop the Baltimore area. Employment opportunities from new businesses such as the Horseshoe Casino as well as the redevelopment of Old Town Mall are on the horizon, in part from these newly developed opportunities. Additionally, companies are seeking to become part of the city’s culture. A few names include Columbia-based Pandora, First National Bank, R2Integrated, and Lupin Pharmaceuticals.  If this trend continues, Baltimore might be on track for an economic renaissance in the near future. As the gap begins to close, the potential for lowering unemployment durations within the city may increase with these new opportunities.

Image credit: Bmore Media

Image credit: Bmore Media