Sadaf Knight
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September 3, 2018

Low Wage Growth and Concentrated Economic Gains Characterize Florida's Economy

Between 2000 and 2017, the demographic and economic makeup of Florida experienced significant changes. The economy, in aggregate, saw some improvements, but the resulting economic gains were not broadly shared. The new State of Working Florida report by the Research Institute on Social and Economic Policy at Florida International University provides a snapshot of Florida’s changing economy.

Florida’s workforce has become more diverse, older and more highly educated:

  • The share of white workers decreased by 20 percent, while the share of Black/African American, Hispanic, Asian/Pacific Islander and other workers increased.
  • The share of the labor force with less than a high school diploma decreased from 14.5 percent to 8 percent, while the share with a bachelor’s degree or higher increased 24 percent.
  • The share of workers age 55 or older has nearly doubled, while the share of prime aged workers (age 25 to 54) and young workers (age 16 to 24) both saw declines of 12 percent and 30 percent, respectively.

These changes represent structural shifts in Florida’s workforce, which the labor market will need to respond to in order to maintain employment opportunities and optimize the skills and experience of its workers. Younger workers, facing competition from older and more experienced workers, may begin their careers at later stages in life, potentially setting back their future earning potential. A more highly educated workforce also means that there must be jobs available to match those skills, so as not to increase under-employment.

As diversity in the state’s workforce increases, it is also critical that access to employment and economic security are broadly shared. But as the data shows, despite some positive changes in Florida’s economy, many workers have not benefited from economic growth.

While the unemployment rate has returned to the pre-recession level, near 4 percent, many Floridians still face higher levels of unemployment. African Americans, for example, have double the unemployment rate as their white counterparts — 6.8 percent compared to 3.3 percent, as of 2017. Hispanics also have a higher rate of unemployment at 4.3 percent.

Wage growth overall was minimal between 2000 and 2017, despite increases in productivity. Though businesses have been able to produce more in goods and services with less, compensation for workers has not kept pace. The average worker gained just $1.26 per hour, in 2017 dollars. African American workers, facing significantly higher rates of unemployment, also have essentially seen no change in hourly wages.

Without significant policy changes, this trend is likely to continue into the future. Florida experienced drastic declines in high-paying industries such as manufacturing and construction, while low-paying industries like leisure and hospitality have increased their share of employment.

In the face of a changing economic and demographic landscape, the state needs to make proactive investments in areas that will help expand economic mobility and opportunity to more Floridians. The State of Working Florida recommends the following:

  • Investing in higher education – Although the educational level of Florida’s workforce is rising, access to education and training should be expanded to workers who face the most significant barriers and have the greatest need for increased skills to adapt to the changing economy.
  • Increasing the minimum wage – More working families in Florida today struggle to make ends meet. In 2016, there were 3.2 million Florida workers making less than $15 per hour, while the wage needed to meet a family’s basic needs is almost twice that amount. Increasing wages for these workers would increase earnings by $29.5 billion, which would have ripple effects throughout the economy.
  • Investing in alternative energy – Leveraging Florida’s shift to a knowledge-driven economy, the state should invest in the development of alternative energy sources. Florida already faces significant environmental challenges, and such an investment would make the Sunshine State a leader in alternative energy while diversifying the state’s industrial make up. A $100 million investment would yield an economic impact of $172 million and result in $68 million in state and local revenue.

Unless these structural cracks in the state’s economy are addressed, Florida will remain on an unstable foundation when the next inevitable economic recession occurs. Huge disparities in economic opportunity jeopardize the future of all Floridians. But making investments today in our families, communities and economy can ensure greater prosperity for the next generation of Floridians.