Maryland isn’t getting broader economic growth. It’s getting one industry’s growth while affordability keeps falling.
By Michael Phillips | MDBayNews
Maryland officials have spent much of the past year touting job growth numbers as evidence that the state’s economy is holding up despite federal workforce cuts. The numbers are real. But three independent datasets — one from the Bureau of Labor Statistics, one from a national consumer research firm, and one from the country’s standard cost-of-living index — tell a more specific story than “Maryland is growing.” They show a state where almost all of that growth has come from one sector, where the state’s national ranking as a place to move to has fallen in three consecutive years, and where a new round of state tax increases has landed at the exact moment the state’s affordability numbers began sliding fastest.
The numbers are real. But three independent datasets tell a more specific story than ‘Maryland is growing.’
The Jobs Number Everyone Cites, and the One They Don’t
Maryland’s total nonfarm payroll employment sits at 2,804,100 as of May 2026, up 0.3% from February 2020 — the last month before COVID-era shutdowns began. State officials have pointed to this figure, along with faster-than-national job growth so far in 2026, as evidence that Maryland’s labor market is holding up against federal workforce reductions.
Strip out health care, and Maryland’s nonfarm employment has contracted 1.3% since February 2020.
What that top-line number obscures — first pointed out publicly by X user Greg (@SoundMoneyG), who posted a state-by-state breakdown of job growth excluding health care — is that Maryland’s health care and social assistance sector added 39,600 jobs over the same period, growth of more than 10%. Every other sector in the state’s economy, combined, is down roughly 30,000 jobs since the pre-pandemic baseline. Strip out health care, and Maryland’s nonfarm employment has contracted 1.3% since February 2020, according to BLS Current Employment Statistics data.
Almost all of Maryland’s net job growth has come from one sector.
Maryland is not alone in this pattern — health care has driven job growth nationally since the pandemic. But the scale of Maryland’s dependence on a single sector for its entire net job gain is notable, and it sits alongside continued federal workforce reductions that have hit Maryland harder than most states, given the concentration of federal employment in the D.C. suburbs.
Every other sector in the state’s economy, combined, is down roughly 30,000 jobs since the pre-pandemic baseline.
Three Years, Three Rankings, One Direction
The pattern was first flagged publicly by X user Greg (@SoundMoneyG), who has been tracking Maryland’s ConsumerAffairs rank since it was 11th in 2024. ConsumerAffairs’ annual “Best States to Move To” report — a 50-state composite ranking weighted across affordability, safety, economic strength, healthcare and education, and quality of life — has ranked Maryland:
- 11th in 2024 (score: 60.17)
- 16th in 2025 (score: 55.66)
- 18th in 2026 (score: 55.51)
The seven-spot fall over two years is driven almost entirely by one category. Maryland’s affordability sub-rank collapsed from 11th in 2024 to 23rd in 2025 to 31st in 2026 — by far the sharpest decline of any category the report measures for Maryland, and the primary driver of the state’s overall slide.
Maryland’s affordability sub-rank collapsed from 11th in 2024 to 31st in 2026.
It’s worth being precise about timing here. The 2025 report’s affordability drop (11th to 23rd) reflects conditions largely predating the tax law discussed below, which was signed in May 2025. The steeper story is the follow-through: Maryland’s affordability rank kept falling in the 2026 report (23rd to 31st), the first full ranking cycle to capture a year of the new tax structure in effect.
A composite consumer ranking is not, on its own, hard economic data. But it lines up with two things that are.
The Cost-of-Living Numbers Back It Up
The Missouri Economic Research and Information Center’s Cost of Living Index — the standard reference economists and relocation analysts use, compiled quarterly from the Council for Community and Economic Research’s price survey — puts Maryland’s composite index at 117.4 in the most recent annual average, up from 114.9 in early 2025. That makes Maryland the 7th most expensive state in the country, behind only Hawaii (183.9), Massachusetts (148.5), California (143.1), D.C. (137.8), Alaska (126.7), and New York (125.8).
The affordability problem isn’t runaway price growth. It’s that Maryland was already expensive and stayed that way while other states got relatively cheaper.
Housing is doing almost all of the work. Maryland’s housing sub-index sits at 133.8 against a national baseline of 100 — meaning Maryland housing costs run a third above the national average, even as home price growth in the state has been comparatively modest (Redfin puts Maryland’s May 2026 median sale price at $448,407, up 2.4% year over year — a normal rate of appreciation, not a spike). The affordability problem isn’t runaway price growth. It’s that Maryland was already expensive and stayed that way while other states got relatively cheaper.
The Mechanism: What Changed in 2025
Here is the part of the story that moves this from “Maryland is expensive” — which has been true for years — to “Maryland got more expensive under this administration, and here’s the line item.”
On May 20, 2025, Gov. Wes Moore signed House Bill 352, the Budget Reconciliation and Financing Act of 2025, into law. The administration framed it as a response to a projected $3 billion state budget deficit. The bill added two new top income tax brackets that did not exist before: 6.25% on individual taxable income between $500,001 and $1,000,000, and 6.5% above $1,000,000 (thresholds are $600,001–$1,200,000 and $1,200,000 for joint filers), layered on top of the state’s previous 5.75% top rate. It also added a 2% capital-gains surtax on filers with federal adjusted gross income above $350,000, effective for tax year 2025.
The same bill raised the ceiling on county “piggyback” income tax rates from 3.2% to 3.3% — giving counties room to push local rates even higher. Two counties, Allegany and Kent, have already done so for 2026. It also phases out itemized deductions for filers with federal AGI above $200,000 ($100,000 for those married filing separately), reducing them by 7.5% of income above that threshold — meaning the bill’s reach extends well below the millionaire brackets that got most of the headlines. In fairness to the bill, it also raised Maryland’s standard deduction, from $2,250 to $3,350 for single filers, which offsets some of the impact for lower earners.
Combined with Maryland’s mandatory county income tax — a feature no neighboring state has — a resident of Montgomery, Howard, Prince George’s, or Baltimore City now faces a combined state-and-local top marginal rate of 8.95% on top of federal tax. Virginia’s top combined rate, by contrast, is 5.75% flat — Virginia has no county-level income tax at all. Pennsylvania’s flat 3.07% state rate plus local Earned Income Tax rarely exceeds 6.82% even in Philadelphia, the state’s highest-tax jurisdiction.
Supporters would argue the tax increases closed a real deficit and fell mostly on high earners. But the sequence is documented.
None of this settles whether the tax increases were good policy — supporters would argue they closed a real deficit and fell mostly on high earners. But the sequence is documented: the new brackets, the higher local-tax ceiling, and the deduction phase-out all took effect in 2025, and Maryland’s affordability rank and cost-of-living index both continued moving in the same direction through the first full year the law was in effect — while Virginia, competing for the same base of federal workers and contractors, held a flat 5.75% rate with no local add-on.
The new tax brackets, the higher local-tax ceiling, and the deduction phase-out all took effect in 2025, and Maryland’s affordability rank and cost-of-living index both continued moving in the same direction through the first full year the law was in effect.
Sources: Employment figures are drawn from the U.S. Bureau of Labor Statistics’ Current Employment Statistics program (state and area, seasonally adjusted), covering total nonfarm and health care and social assistance (NAICS 62) payrolls for Maryland, February 2020 through May 2026. State rankings and affordability sub-rankings come from ConsumerAffairs’ “Best States to Move To” reports for 2024, 2025, and 2026. Cost-of-living figures are from the Missouri Economic Research and Information Center’s Cost of Living Index, based on the Council for Community and Economic Research’s quarterly price survey, Annual Average 2025. Home price data is from Redfin’s Data Center, May 2026. Tax provisions come from House Bill 352, the Budget Reconciliation and Financing Act of 2025, signed by Gov. Wes Moore on May 20, 2025, and from the Comptroller of Maryland’s tax alerts and resident tax instructions implementing it; combined state-and-local rate comparisons for Virginia, Pennsylvania, and Delaware are drawn from those states’ revenue departments and the Tax Foundation’s 2026 State Individual Income Tax Rates and Brackets report.
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