A strong economy requires both good jobs and well-supported businesses. However, too often our current system has left workers behind and supported large, well-connected businesses at the expense of small businesses and entrepreneurs, especially women and minorities. These inequities were especially laid bare during the COVID-19 pandemic. Essential workers, often among the lowest paid workers, worked in-person to keep the economy functioning. Small businesses, especially minority-owned businesses, faced hardships, had more difficulty getting PPP loans and closed. And as we recover, the unemployment rate has been higher for minorities than for white Marylanders. A healthy economy post-COVID means one where all Marylanders have access to the opportunities our state has to offer. This means an economy with an increased focus on protecting workers and supporting entrepreneurs. A King-Siri administration will focus on economic development from the bottom up and will:
- Accelerate the increase in the minimum wage and index it to inflation. Maryland is on track to a $15 minimum wage by 2025 – currently it is $12.50. That’s too slow – as the economy recovers, Maryland should accelerate, and reach $15/hour by the end of 2023. Once the $15/hour threshold is met, Maryland should index its minimum wage to keep pace with inflation and rising costs. Maryland should also increase its minimum wage for tipped workers; the current rate is just $3.63 per hour and this should also be increased to a living wage.
- Ensure every Marylander has the right to collectively bargain in their workplace. All Marylanders deserve a job that pays well, has good benefits, and treats workers fairly. One way to ensure this is through collective bargaining. This is especially true for minority and women workers. According to national data from the Bureau of Labor Statistics, in 2021 women saw their incomes rise by more than men if they were part of a union. Similarly, Black and Hispanic workers saw their incomes rise by more than white workers if they were part of a union. Although the federal National Labor Relations Act ensures that most workers can collectively bargain, many workers are not covered by this legislation, including public-sector workers, farm workers, domestic workers, and independent contractors. In 2021, only 11.0 percent of Maryland workers were union members. A King-Siri administration will push to ensure that all Maryland workers who want to participate in collective bargaining have the power to do so.
- Strengthen Maryland’s anti-retaliation laws for workers who rightfully speak up about everything from workplace conditions to overtime pay. A King-Siri administration will work to continue strengthening worker protections in Maryland and to ensure that workers are not fired, demoted, or denied opportunities for speaking up about poor conditions in their workplace. This is especially important for our guest worker communities, who come to Maryland on temporary H-2B visas and live under the threat of deportation if their employer fires them. We saw during the pandemic that many guest workers, often ones who also did not speak English as a first language, were forced to work in cramped and unsafe conditions and did not feel they could speak up under the fear of being fired and losing their visas.
- Make Maryland the number one state for access to capital through a state bank and expansion of existing programs. One of the largest barriers to entrepreneurs hoping to start their own business is having access to startup funds. According to CNBC, Maryland currently ranks 18th in providing access to capital. A King-Siri administration will work to make Maryland number one. Currently, there are a number of public and private programs that help connect potential entrepreneurs with resources needed to start their own business. However, these programs are underfunded and could be significantly expanded. Additionally, a King-Siri administration will develop new programs to ensure entrepreneurs are successful. Examples of how a King-Siri administration will increase access to capital include:
- A state bank. Maryland’s private banks and credit unions do an excellent job at providing banking resources to most Marylanders, but even still, many Marylanders fall through the cracks. In 2019, 3.8 percent of all Marylanders were unbanked and 9.4 percent of Black Marylanders did not have access to a bank account. The primary reason for being unbanked is an inability to reach minimum balance requirements. A state bank will fill in the gaps of the private banking system and provide access to banking for any Maryland resident who wants it. Maryland has a AAA bond rating from all three major bond rating agencies, putting us in an extremely stable position to provide financing opportunities to small businesses and nontraditional borrowers that are not served by traditional banks. A state bank will also serve as a key funder of no- and low-interest loans to Maryland entrepreneurs both directly and indirectly through programs designed to:
- Provide loan guarantees for low-income entrepreneurs not covered by traditional financing,
- Provide support to traditional lenders to finance entrepreneurs whose needs (e.g., lending amounts or exposure thresholds) have grown beyond what their original lender can provide,
- Provide loans directly to entrepreneurs with strong business plans focused on serving historically underserved communities but unable to overcome challenging credit history or other risk factors to secure financing, and
- Provide financing support to developers of mixed-income and affordable housing.
- Increased support for Community Development Financial Institutions (CDFIs). Equity grants or long-term, low-interest loans from the state to CDFIs would allow them to expand their loan portfolios. Such investments could be quickly brought to scale because they build on existing infrastructure, and could be targeted to underserved urban or rural parts of the state. There are 15 CFDIs headquartered in Maryland and they have invested $101.6 million, including $46.2 million invested in Maryland businesses, nonprofits and community facilities in FY 2019. CFDI investments accounted for 431 units of housing financed in FY 2019, meaning increased support for them can be part of a solution to our housing crisis.
- Additional financing to state-run programs to provide access to capital, like TEDCO, especially for underserved populations. Maryland has several excellent programs that provide entrepreneurs with access to capital and lead to a stronger economy. However, these programs are not able to fully meet demand and should be substantially increased. For example, a King-Siri administration will provide additional funding for the Small, Minority, and Women-Owned Business Investment Account. An independent evaluation of the program noted that more than half of business owners who received funding indicated “the program provided funding when traditional sources would not.” Additionally, the evaluation noted “that there is significantly more demand for loans than available funding” and that “additional funds would allow fund managers to provide larger loans and expand the portfolio of companies they serve.” A King-Siri administration will provide increased funding to this program. Additionally, a King-Siri administration will provide the Maryland Technology Development Corporation (TEDCO) with additional funding for its Builder Fund, a program that provides pre-seed funding to economically disadvantaged entrepreneurs. A King-Siri administration will ensure that similar loan programs in place at other state agencies, such as the Department of Housing and Community Development, meet the demand of Maryland businesses.
- Increase funding for incubators and entrepreneur training. Challenges for entrepreneurs do not end once they secure financing. Running a business, especially for a first-time entrepreneur, is difficult and comes with many obstacles. Having access to mentoring through incubators and other training programs can be the difference in whether a company succeeds. Maryland’s existing incubators are successful and have helped create thousands of jobs. However, Maryland needs a more robust incubator network, especially in more rural areas of the state. A more robust network will allow for more specialized incubators that focus on a particular industry that in turn will lead to more effective mentorship, better networks, and increased opportunities for collaboration and knowledge spillover. A King-Siri administration will work with existing incubators, accelerators, and innovation hubs to provide adequate support and will provide new funding through TEDCO and other state agencies. Additionally, a King-Siri administration will work to expand opportunities for participation in incubators and training programs to traditionally underserved populations, including returning citizens.
- Review state–owned properties and identify opportunities to provide space for business supports. Finding the correct physical space for a business is a hurdle for Maryland small businesses and entrepreneurs. A common thread across the state is that Maryland businesses need room to innovate and grow our economy. A King-Siri administration will ease those burdens and will review state-owned properties, identify underutilized buildings, and determine ways for those buildings to support the needs of local businesses. Buildings can provide space for incubators, wet lab space, shared kitchens, coworking and meeting spaces, and more.
- Leverage Maryland’s world class universities and federal facilities to commercialize the research taking place here. According to the 2020 State Technology and Science Index report from the Milken Institute, Maryland ranks number one in the country in terms of a STEM workforce and number two in terms of research and development (R&D) funding. According to the report, Maryland ranks number one in terms of “federal government and academic funding for R&D out of any state.” However, Maryland ranks 18th in terms of “risk capital and entrepreneurial infrastructure” which measures venture capital activity, SBIC funding, patents, and business formation. This means Maryland is doing a relatively poor job at transforming the research done in our universities and federal facilities and generating successful businesses. Maryland should do better. And if Maryland does improve in commercializing the cutting edge research done here, Maryland can position itself to lead the industries of the future.
An example of what Maryland stands to gain from increased technology transfer and commercialization lies in the nascent sector of quantum computing. Quantum computing has massive implications in sectors such as cybersecurity and healthcare. IonQ is a major player in the quantum space and was spun out of the university based on research done by a professor at the University of Maryland, College Park (UMD). Given the strong federal presence in Maryland for these industries, Maryland should benefit from the rise of quantum – but only if the state acts. UMD has launched the Quantum Startup Foundry to help support small businesses in the space. UMD has also been instrumental in launching and facilitating the Mid-Atlantic Quantum Alliance with universities and researchers across the region.
A King-Siri administration will support efforts to build Maryland’s quantum industry and encourage technology transfer and commercialization efforts across a range of industries by:
- Increasing funding for the Maryland E-Novation Initiative Fund (MEIF) administered by the Maryland Department of Commerce which provides matching funds for private funds raised in support of endowed chairs at Maryland’s colleges and universities.
- Providing funding to the Maryland Industrial Partnerships (MIPS) program which leverages university research capabilities to support commercialization and business development.
- Facilitating the development of desperately needed lab space to accelerate the growth of the life sciences industry.
- Increasing funding to the newly established SBIR/Technology Transfer Incentive Program at TEDCO to assist companies innovating with federal partners.
- Setting up the matching program for federal SBIR funding, with the state matching a percentage of federal funding for firms that qualify for federal funds, and expanding it to compete with states like Massachusetts that have larger matching amounts.
- Providing additional funding to TEDCO’s Rural Business Innovation Initiative to support technology transfer and commercialization in Maryland’s rural jurisdictions.
- Keeping TEDCO transparent and accountable, with regular auditing and strict rules on conflicts of interest so members of the advisory committee are not receiving venture funding and other funding for their own companies, and bringing TEDCO policies around employee pay and bonuses in line with those for state government employee pay and bonuses, because while TEDCO is an independent agency it receives state funds that should have stricter oversight.
- Coordinating with federal facilities from labs to military installations to identify how the State can support tech transfer and commercialization efforts.
- Successfully implementing the Climate Catalytic Capital Fund, the “green bank” established by the newly-passed Climate Solutions Now Act, to make Maryland a leader in green energy jobs.
- Streamlining the process of applying to grants, loans, loan guarantees and Maryland’s other business incentives to make it easier to apply for multiple programs at once and to make the process less daunting for small businesses trying to navigate the system.
- Launch a pilot program supported by state-run anchor institutions. One constant across Maryland is the presence of large anchor institutions that drive employment. In rural Garrett County in Western Maryland, Wicomico County on the Eastern Shore, or Baltimore City, a hospital is the largest employer. Maryland’s hospitals, colleges and universities, and major nonprofits serve as direct sources of employment across the state but they also benefit the economy by procuring from local businesses. In Cleveland, the city’s large anchor institutions created a partnership focused around local procurement, as well as local hiring, living and collaboration. Local procurement strategies are important, as anchor institutions by definition have a stable demand for goods and services. Keeping more purchases local creates a more stable base of economic support for local communities. In Cleveland, the Evergreen Cooperative Initiative is a partnership between these anchor institutions and worker-run cooperatives from the surrounding communities to meet the procurement needs. For example, a worker-run laundry employs 50 residents and provides services to hospitals in the area. A King-Siri administration will launch a pilot program to bring this successful method for community wealth building to Maryland starting in Baltimore City. This pilot program will draw upon both public and private anchor institutions, target aid to businesses in some of Baltimore City’s most distressed communities, and provide support for worker collectives in the City. The program will be evaluated with a focus on identifying ways to expand the program to other areas of the state, methods to increase private-sector participation, other ways to leverage state purchasing power to support local businesses, and means to strengthen worker-owned businesses/worker cooperatives. Maryland ranks at the top in many economic indicators, however we need to take steps that allow the success to be spread across the state, from Western Maryland to the Eastern Shore.
Conduct a comprehensive review of Maryland’s existing financial incentive programs and eliminate or reform programs that are not effective, while redefining what we consider an “incentive.” Maryland has a number of incentive programs designed to attract and retain businesses. While well-designed incentive programs can provide critical support to emerging industry clusters, too often these programs are ill-designed and serve as a poor use of taxpayer dollars. For example, a recent review of the Research and Development Tax Credit found that companies received credits of as little as $1, far too little to affect meaningful job growth in the state. This finding prompted changes from the General Assembly to the tax credit and a King-Siri administration will continue this work by reviewing all existing incentives and identifying those that fail to provide a good return on taxpayer dollars. A King-Siri administration will eliminate or reform programs that aren’t working to ensure your dollars are used properly. Maryland has mostly small incentives, but its problem is not actually the number or size of incentives – it’s that they are not well-targeted to industries that create jobs or to industries that create high-paying jobs. Maryland’s incentives actually trend higher for low-wage businesses and lower for high-wage businesses. A King-Siri administration will look beyond what we consider traditional incentives and invest in providing customized services to firms instead of relying on cash and tax subsidies. Research indicates that job training through community colleges that is customized to meet firms’ needs may spur economic development anywhere from 5 to 10 times as much per dollar versus the average tax incentive.