Dale Brill: Florida economy on a roll that isn’t sustainable

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Florida’s unemployment rate is at 6 percent. It is hard to imagine a more deliberate focus on job creation than the state witnessed in the past four years. But what happens when we broaden the goal of economic development beyond job creation?

In fairness, there is an obligation to demonstrate first why job creation is not enough. Consider the United Way of Florida’s ALICE Report released on Nov. 11 that revealed that 45 percent of all households in Florida are struggling to make ends meet. Five months earlier, the Information Technology and Innovation Foundation (ITIF) released its bi-annual rankings of how states and regions are performing across 25 indicators in five categories: knowledge jobs, globalization, economic dynamism, the digital economy and innovation capacity. Florida fell from 21 in 2012 to 25 in 2014.

Last February, the LeRoy Collins Institute issued “Tougher Choices” and warned that Florida’s reliance on the growth of our retiree population and tourists comes at a price. Retirees and visitors do induce job creation. However, the Collins Institute report demonstrates that the occupations “are disproportionately linked to lower-paid service jobs” as part of a dangerous labor market “polarization” that seems to be self-reinforcing. Polarization calls attention to wage growth at either end – low and high – with the middle class falling out of the picture.

Job creation is hardly a bad thing. It’s quite necessary. But for what?

Politically speaking, voters expect job creation. When unemployment rates rise, we blame government and those at its helm. But focusing on the unemployment rate alone masks the larger questions of prosperity and quality of life that job creation is supposed to foster. Recall Ronald Reagan’s campaign question, “Are you better off than you were four years ago?” He didn’t ask, “Do you have a job?”

It’s not just academics who view economic development in terms of the bigger picture. The International Economic Development Council (IEDC) identifies the main goal of economic development as “improving the economic well being of a community.” An almost universal strategy used by economic development practitioners pursuing sustainable prosperity is the balanced job creation that comes with diversifying the industry base at local and state levels. Yet success here has been elusive in Florida.

Leisure and hospitality workers made up 11.1 percent of the non-agriculture employment base in October 2004. Ten years later, they accounted for 13.8 percent. Unfortunately, the wages paid to the 1 million workers in Florida’s tourism industry are not keeping pace with inflation. Comparing 2005 and 2013 employment data illustrates that Florida’s average tourism industry worker made $362 less per year than she did eight years ago. This will be a difficult pattern to break.

Working against what economists call “path dependency,” Florida’s historical success in land development, agriculture and tourism creates a great deal of inertia along the same trajectory.  More than 100 years ago, Gov. Napoleon Bonaparte Broward and the Legislature launched what may be considered the state’s first promotion campaign with the plan to drain the Everglades. The potential availability of Everglades “land” followed early development moves by Hamilton Disston and Henry Flagler and brought forth such businessmen as Karl Albritton, Nathan Mayo, Irlo Bronson, Walt Disney and others who set Florida’s “Big-Three Economy” on its course.

Florida’s Big-Three industries still dominate. Fast forward to recent announcements that the state is approaching another year of record tourist activity along with the addition of nearly 33,000 jobs. The U.S. Census’ 2013 State-to-State Migration Flows report estimates Florida gained new residents from other states at a rate of 1,450 per day. Of those moving to the Sarasota and Bradenton areas, for example, 28.4 and 21.8 percent are retirees, respectively. And the state’s November jobs announcement reported construction is the fastest growing industry over the past 12 months at 10.2 percent.

That’s a lot of Big-Three momentum – yet not rolling in the direction of sustainable prosperity.

Dr. Dale Brill is Founder and Obsessive Thinker for Thinkspot Inc., a Florida-based consulting firm. He has previously served as Chief Marketing Officer for VISIT FLORIDA under Gov. Jeb Bush, Director of the Office of Tourism, Trade & Economic Development within the Gov. Charlie Crist Administration and President of the Florida Chamber Foundation. You can reach Dale by e-mail at dale@thinkspot.co.