Maryland's Business Environment
A state’s business environment is made up of the policy and locational attributes that impact business operations. There is no uniform list of factors that make up or influence a state’s business climate, but there is broad agreement that key policy (state tax and regulatory issues) and locational (market size, location, infrastructure, and quality of life) issues are the key factors considered by businesses in making a business location choice. While firms’ overall perception of Maryland’s business climate is described above, the JFI asked firms to rate Maryland’s competitiveness in five key areas that impact a state’s business climate: taxes, regulations, infrastructure, labor markets, and quality of life.
Overall, Maryland businesses have a less favorable view of Maryland’s tax and regulatory climate than its infrastructure and labor market assets. Firms were first asked to rate Maryland’s competitiveness in taxes, regulations, infrastructure, and labor markets to neighboring states. The results are as follows:
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More Maryland businesses have a negative view of Maryland’s tax climate than a positive view, with 40 percent of responding firms viewing Maryland’s tax climate as somewhat or very uncompetitive and only 35 percent viewing it as somewhat or very competitive.
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Maryland businesses are split on their view of Maryland’s regulatory climate, with 33 percent viewing it as competitive and 30 percent viewing it as uncompetitive compared to neighboring states.
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Firms have a more strongly positive view of Maryland’s infrastructure assets (49 percent viewing it as competitive and only 18 percent as uncompetitive) and labor market assets (48 percent viewing it as competitive and only 17 percent as uncompetitive).
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Perceptions of Maryland’s tax and regulatory climate have improved since 2011, with:
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Perceptions of Maryland’s tax climate improving from 28 percent competitive and 50 percent noncompetitive in 2011 to 35 percent competitive and 40 percent uncompetitive in 2018.
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Perceptions of Maryland’s regulatory climate improving from 28 percent competitive and 38 percent noncompetitive in 2011 to 33 percent competitive and 30 percent uncompetitive in 2018.
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Perceptions of Maryland’s infrastructure and labor market competitiveness worsened slightly since 2011.
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Firms were asked more detailed questions on taxes, regulations, labor force, infrastructure, and quality of life issues and their impact on Maryland’s business environment.
Table 11: How would you compare Maryland business taxes to neighboring states? (Q33-1)
Table 12: How would you compare Maryland’s overall regulations to neighboring states? (Q33-2)
Table 13: How would you compare Maryland Infrastructure to neighboring states? (Q33-3)
Table 14: How would you compare Maryland Labor Markets to neighboring states? (Q33-4)
Taxes
Firms were asked to rate the extent to which state or local taxes hindered their ability to meet their strategic goals. Overall, 64 percent of businesses reported being negatively impacted by Maryland state or local taxes, down slightly from 67 percent of responding firms in 2011. When asked which taxes were most burdensome, nearly half (48 percent) reported taxes in general, 18 percent reported income taxes, 16 percent payroll taxes, and 13 percent reported property taxes.
Table 15: To what extent have state or local taxes hindered the ability of your business to meet its strategic goals? (Q30)
Regulations
Firms were asked to rate the extent to which state regulations hindered their ability to meet their strategic goals. Overall, only 24 percent of businesses reported being negatively impacted by Maryland state regulations, down from 36 percent of responding firms in 2011. When asked which state regulations were most burdensome, most responded regulations in general or all regulations (44 percent combined), with 16 percent reporting labor regulations, and 16 percent tax regulations.
Table 16: Have regulations enacted by Maryland state government hindered the
ability of your business to meet its strategic goals? (Q28)
Labor Market
Firms were asked to characterize overall labor market conditions in Maryland and identify the state’s labor market advantages and disadvantages. Overall, more firms viewed local labor markets as a competitive asset for the state (37 percent) than as a weakness (29 percent). When asked to identify the core labor market advantages and disadvantages in Maryland:
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The availability of skilled workers was cited as an advantage by 36 percent of firms and as a disadvantage by 42 percent of responding firms.
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The education level of workers was cited as an advantage by 32 percent of firms and as a disadvantage by 14 percent of responding firms.
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Wage costs were cited as an advantage by 12 percent of firms and as a disadvantage by 25 percent of responding firms.
These overall results are worse than in 2011 (39 percent viewed labor market conditions as an asset compared to 21 percent as a weakness). This is possibly due to the difficulty firms are experiencing in finding skilled workers in today’s tight labor market (see below) with more firms in 2018 viewing the availability of skilled workers as a disadvantage than an advantage.
Table 17: How would you characterize overall labor market conditions in Maryland?
Maryland Labor Market Advantages and Disadvantages (Q34-35-36)
Infrastructure
Firms were asked to describe the impact of Maryland’s transportation infrastructure on their business. Thirty percent of Maryland businesses viewed Maryland’s transportation infrastructure as a competitive asset for the state and 21 percent viewed it as a competitive disadvantage. Maryland’s highway infrastructure and mass transit system were considered the most import transportation assets by firms with a positive view of Maryland’s transportation infrastructure. For businesses with a negative view of Maryland’s transportation infrastructure, mass transit access issues and congestion were the chief complaints.
Table 18: How would you rank Maryland's transportation infrastructure in terms of its
impact on your business? (Q25)
Quality of Life
Firms were asked to rank the state’s quality of life as being either an asset or a disadvantage and to identify the greatest quality of life asset and the greatest quality of life disadvantage in Maryland.
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Fifty-four percent of responding businesses rated Maryland’s quality of life as either a strong competitive asset or a competitive asset.
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For firms with a positive view of Maryland’s quality of life, the most frequently cited quality of life asset in Maryland was Maryland’s location (28 percent) followed by the vibrant business community/strong economy in the state.
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For firms with a negative view of Maryland’s quality of life, the most frequently cited quality of life disadvantage in Maryland was the cost of living (31 percent), followed by taxes and crime (13 percent each).
Table 19: How would you rank Maryland's quality of life in terms of its impact on your business? (Q24)
