George Gibbs Center for Economic Prosperity

Flor⁠i⁠da bus⁠i⁠ness leaders op⁠t⁠⁠i⁠m⁠i⁠s⁠t⁠⁠i⁠c desp⁠i⁠⁠t⁠e poss⁠i⁠ble job grow⁠t⁠h slowdown

By: The James Madison Institute / 2018

Miami, Florida | Rudy Umans |

Florida remains on a trajectory to become a $1 trillion economy this year even as the rate of job growth is slowing and public-policy impediments continue to be a drag on business expansion, according to business leaders and researchers.

A Florida Chamber Foundation forecast in January projects that 180,000 new jobs will be created in 2018, but that’s about 15,000 fewer jobs than the state’s economy generated last year. Even so, the foundation was bullish on the state’s future, indicating that the odds of Florida not entering a recession this year were 91 percent.

“While Florida’s job creation overall is slowing down, Florida is still expected to grow at a higher rate than the rest of the nation.” Edie Ousley, the chamber’s vice president of public affairs, told in an email. “Florida also continues to create one in every 10 jobs in the nation.”

The Chamber Foundation study, however, did single out the education system and the state’s legal climate as areas of concern.

“While Florida ranks in the top five in the U.S. for best business climate, we also rank bottom-five for the worst legal climate in the nation,” Ousley said.

Lawsuit abuse makes it more expensive to live and do business in the state. It costs families about $3,400 a year, she said.

Workforce quality also is among the top worries for business leaders in Florida.

“With 261,600 jobs looking for people and 374,000 people looking for jobs, we are continuously working to close the talent gap by increasing educational opportunities for all students and preparing students with the skills they need to succeed in any workforce,” Ousley said.

Other impediments facing the Florida economy include an unstable workers compensation system and the state’s business rent tax, according to Ousley.

Bill Herrle, executive director for the National Federation of Independent Business in Florida, also expressed confidence about the pace of Florida economic growth this year. The NFIB Washington office this month released a survey showing that NFIB members’ optimism about the economy had hit a 43-year high.

“We’re seeing very good numbers, very optimistic numbers,” Herrle said.

The biggest problem expressed by Florida's small businesses is the difficulty they have in finding qualified workers to fill positions, he said. Job growth should continue at the same pace that was reached in 2017, according to Herrle, who challenges predictions that job growth will start to contract this year.

“We’re not seeing it,” he said. “We’re seeing a contraction of the workforce.”

The difficulty businesses have in finding qualified workers points to a mismatch between the education system in Florida and the needs of the economy, Herrle said.

Much of the state’s positive record on economic growth – seven years of outpacing the nation in job creation – can be attributed to pro-business policies advanced by the governor, he said.

“We need to find a way to continue Gov. Rick Scott’s pro-growth agenda,” Herrle said. “He’s delivered on jobs largely through a policy of responsible spending and reducing small business taxes and reducing regulations.”

Some of the optimism Florida business owners are expressing is the result of federal tax reform, he said. The tax package passed by Congress late last year helped to bring down taxes affecting so-called pass-through organizations, many of which are small businesses, Herrle said.

But like the chamber, the NFIB sees the state’s legal system and the influence of trial lawyers in the state capital as a major concern, since a single lawsuit can jeopardize the viability of a small business.

“Certainly, from a small business point of view, the threat of litigation is omnipresent,” Herrle said.

The Florida Chamber Foundation’s report also views federal tax reform and the flow of Puerto Rican refugees into the state in the wake of Hurricane Irma as potentially positive factors for the Florida economy. The result may be a boost in skilled professionals from Puerto Rico and high-tax states such as California and New York permanently relocating to Florida, the report said.

Sal Nuzzo, vice president of policy for the James Madison Institute in Tallahassee, said an important number to keep an eye on is Florida’s gross domestic product per capita, because one of the state’s challenges is to create more well-paying jobs.

“While the pace of job growth in 2018 remains to be seen, the fact that our unemployment rate is currently below 5 percent means we are pretty much at what economists would consider full employment,” Nuzzo told in an email. “The key for Florida’s future … (is to) shift more heavily onto having the right kinds of jobs and jobs with higher-end wage projections.”