Observations on South Florida business
There’s an article making the rounds in economic-development circles that’s a familiar story for anyone who’s lived in Florida for a time.
The Stateline article is titled “Population Growth Doesn’t Equal Wage Growth in These Cities” and you can read it by clicking here.
It’s true that low-wage jobs have vexed government and economic-development folks in the Sunshine State for decades. The article accurately points out that some cities in Florida have experienced significant population growth without accompanying wage gains.
But let’s keep a few things in perspective before we accept the statement by a Federal Reserve analyst that parts of Florida are growing poorer even as their populations rise.
•Florida’s population grows significantly during economic expansions. This means Florida cities will post big gains relative to other U.S. cities, making the eye-popping numbers good fodder for people who write stories about Census data. Longtime observers of Florida’s economy know some version of this story has appeared during every economic expansion in Florida.
•Wages are a lagging indicator. Wage earners are usually among the last to feel an economic expansion as labor markets must first tighten. Fact is, population gains and wage increases don’t usually rise in tandem.
•The wage gains in the chart accompanying the story are adjusted for inflation gains of 41.66%. While this may be appropriate, the adjustment makes the wage gains appear insignificant relative to population growth.
•Tourism drives Florida. Yes, there are plenty of low-wage jobs in the tourism business, but the fact is that the industry drives the rest of the economy and that ultimately leads to higher wages for Floridians. People vacation in Florida and they buy homes here. Once they realize the positive quality of life, they move their businesses, their skills and their wealth here. While the proportion of low-wage and high-wage jobs may still be skewed to the lower end, it’s safe to say there are more higher-paying jobs in Florida today than, say, 10 years ago.
So let’s be wary of conclusions that fast-growing Florida cities are poorer. Population growth is nothing to fear.
Blogging for entrepreneurs in Southwest Florida (SoWeFlo)