Posted on 06/19/25
| News Source: Maryland Matters
Annapolis, MD - June 19, 2025 - A report released Wednesday by the Maryland Comptroller’s Office confirmed what thousands of Maryland workers already knew: The state’s economy is deeply tied to the federal government.
The 91-page report, which was produced in partnership with the University of Maryland, College Park’s Robert H. Smith School of Business, aimed to establish a “baseline” of how the state’s economy relies on federal jobs, retirement income, grants, direct payments and contracts by studying data from before the start of the second Trump administration. The project team analyzed data from over the past decade, but focused on the last fiscal year, to determine what the federal government “has meant and still means” to the Maryland economy.
The report described the federal government as the state’s “economic engine” and a driver of its employment growth. In the most recent annual data, the report found that Maryland drew more than $150 billion in economic value from the federal government, including $26.9 billion in income alone.
The release of the report comes a week before the inaugural meeting of the General Assembly’s Joint Federal Action Oversight Committee. The 26-member committee, co-chaired by Senate President Bill Ferguson (D-Baltimore City) and House Speaker Adrienne Jones (D-Baltimore County), was established in April by the legislature to “monitor and keep legislators informed” of changes to federal funding, policies and regulations.
In a letter included in the report, Comptroller Brooke Lierman said that for decades, Maryland and the federal government have enjoyed a mutually beneficial economic relationship.
“The Trump Administration’s sweeping cuts to federal government jobs and spending put this longstanding relationship at risk,” Lierman said.
Maryland houses 14 major military installations and more than 60 federal agency offices, including the headquarters of the Food and Drug Administration, the National Institutes of Health, the Social Security Administration and the National Oceanic and Atmospheric Administration, the report said.
Despite being only the 18th largest state in population, Maryland ranks third in the number of federal employees, behind only Virginia and Washington, D.C., with its estimated 229,000 federal workers, according to the report. Those employees make up about 6% of the state’s total workforce and 10% of its wages, with an average salary of $126,468.
In addition to active federal workers, the report said more than 150,000 people receive retirement income, totaling about $8.8 billion each year.
The report said this significant federal presence across the state has fostered a “symbiotic relationship” between federal agencies and state institutions, such as Maryland’s colleges and universities serving as “feeders” for scientists and national security analysts.
But the state lost an estimated 5,300 federal jobs in March and April alone due to Trump administration cuts to federal spending and jobs, cuts that will damage the state’s economy, the report said.
Maryland also ranks third in federal contract spending per capita, again behind Virginia and Washington, D.C. In fiscal 2024, the federal government spent about $46.2 billion on contracts in Maryland and about $31 billion in grants. It also spent $38 billion in direct payments, which include costs such as subsidies to farmers, unemployment benefits, and Social Security and Medicare payments.
While crafting the report, the project team hosted roundtable discussions with federal workers who had been fired, laid off or placed on administrative leave.
The team found that a majority of the workers they spoke to were bracing for a long, challenging job search and expected a pay cut of 10-25% at their new position given the relatively lower salaries for nonprofit or local government jobs. Many were sad leaving their jobs as they were “passionate about their work and the service they provided to the public”.
University of Maryland professor Vojislav Maksimovic, a member of the project’s team, said the report follows one released about 10 years ago which analyzed federal expenditures in Maryland.
“Clearly a lot has changed over the time, and they wanted to take another look and be prepared for whatever might be coming,” Maksimovic said in an interview Wednesday.
He added that the next phase of the project will also include scenario analysis to study the ripple effect of potential federal cuts. For example, he said, if a federal agency sees cuts to its contracts, its workers may not go out to restaurants as often or be able to shop as much.
“This report looks at direct effects,” Maksimovic said. “But the indirect effects are also going to affect everybody, and we’re going to be trying to quantify those effects.”
Maksimovic emphasized the value the partnership between the school and state government provides — both for Maryland as well as the many graduate and doctoral students who contributed to the report.
In the report, Robert H. Smith School of Business Dean Prabhudev Konana said that as a public, land-grant institution, the university has an “unwavering commitment to workforce development and the promotion of business excellence, driven by our fundamental belief that the economic vitality of Maryland is a shared responsibility.”
Wednesday’s report will be followed by a second later this summer which will include analysis of different scenarios to estimate the financial impacts of federal actions on the state’s economy, including the 2026 fiscal year budget and already-implemented federal cuts.
The project’s final output will be an interactive tool which will let users input specific scenarios by agency, program or county, and calculate the resulting lost wages or spending.
Konana said in the report that the “intuitive visual interface” will help policymakers and stakeholders “visualize and understand the cascading impacts of federal funding variations at both state and county levels.”