Friday Five | April 14, 2023
A recap of this week’s top-five news items and resources from the intersection of business and government.
1. General Assembly caps session that saw passage of top Democratic priorities
The 2023 session of the Maryland General Assembly ended on Monday night. When all was said and done, legislative leaders in the Democratically controlled houses, along with the state’s new governor, declared victory.
“It’s not only the most successful first session for any new governor… [but] we’d argue that it’s the most successful… session for a governor, period,” enthused Gov. Wes Moore said at an afternoon press conference with fewer than eight hours left to go.
Moore did caution that, “nothing’s done until it’s done.” And there was indeed plenty more to do on this year’s adjournment day.
In the end, lawmakers approved the regulatory framework for the sale of recreational cannabis when it becomes legal July 1, passed more restrictive handgun laws over multiple attempts by Republicans to water down the proposals, established a new state authority to oversee thoroughbred horse racing, and expanded the size of the Maryland Stadium Authority board to 11, to include a seat for Prince George’s County.
2. General Assembly wrap-up: Bills passed by the legislature that will affect businesses
With the General Assembly wrapping up, the Democrat-led legislature has set the stage for a number of changes big and small that will affect Maryland businesses and employees.
Newly elected Gov. Wes Moore has already signed legislation that will raise the state’s minimum wage to $15 an hour starting Jan. 1, 2024, and plans to sign a cannabis legalization bill that sets the framework for businesses to legally sell the drug to consumers when it becomes legal on July 1.
One of the highlights of Moore’s economic platform, the minimum wage bill, did see some alterations as legislators removed the provision that future wage increases would be tied to the Consumer Price Index and moved the starting date back from October 2023 to January 2024. Maryland’s minimum wage was originally set to hit $15 in 2025.
The Legislature also passed modifications to the Family and Medical Leave Insurance Program, which originally passed in last year’s session.
These modifications “cleaned up” some of the issues from the 2022 bill, changes that included setting Jan. 1, 2026 as the date for contributions to begin, capping contributions to 1.2% of an employee’s wage and splitting contributions to be shared 50-50 between the employer and employee.
3. Small businesses are less optimistic about the future, survey finds
Small businesses are less optimistic about the future, a newly released survey shows. The National Federation of Independent Businesses released survey results showing their small business optimism index decreased in March, marking the 15th consecutive month below the 49-year average of 98.
“Small business owners are cynical about future economic conditions,” NFIB Chief Economist Bill Dunkelberg said. “Hiring plans fell to their lowest level since May 2020, but strong consumer spending has kept Main Street alive and supported strong labor demand.”
The survey results found other troubling economic indicators.
A net negative 6% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, the group revealed. The net percent of owners expecting higher real sales volumes deteriorated six points to a net negative 15%.
“Main Street cannot afford these new tax increases,” NFIB President Brad Close said. “As expectations for better business conditions remain low, while high inflation and worker shortages continue to plague Main Street, these proposals would hurt small businesses’ ability to recover, grow and create jobs.”
4. End of an era: Popular Maryland retailer closes all stores nationwide
Baltimore-based Shoe City is shutting down, closing all 39 stores in Maryland, Virginia and Washington, D.C.
“Unfortunately, after 74 years in business, the Shoe City legacy has come to an end,” wrote attorney Stanley W. Mastil, the chief restructuring officer in a bankruptcy filing for the company.
Shoe City filed for bankruptcy in federal court in Maryland on April 3. Mastil noted that it “remains a family-owned business to this day as the equity of the Debtor is owned by family members and family trusts of the founders.”
Shoe City was founded in 1949 as Eileen Shoes and rebranded as Shoe City in 1980, becoming “an urban-inspired footwear, apparel, and accessories retailer offering men’s, women’s, and children’s products.” The company is headquartered in Gwynn Oak and has 161 full-time employees and 233 part-time employees.
5. A healthy 236,000 jobs added despite Fed’s rate hikes
America’s employers added a solid 236,000 jobs in March, suggesting that the economy remains on solid footing despite the nine interest rate hikes the Federal Reserve has imposed over the past year in its drive to tame inflation.
The unemployment rate fell to 3.5%, just above the 53-year low of 3.4% set in January.
At the same time, some of the details of Friday’s report from the Labor Department raised the possibility that inflationary pressures might be easing and that the Fed might soon decide to pause its rate hikes. Average hourly wages were up 4.2% from 12 months earlier, down sharply from a 4.6% year-over-year increase in February.
Measured month to month, wages rose 0.3% from February to March, a tick up from a mild 0.2% gain from January to February. But even that figure signaled a slowdown from average wage increases in the final months of 2022.
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