August 12, 2011

Personal income in Florida and in each of the state’s 20 metropolitan areas rose slightly in 2010 after declining in 2009 for the first time in decades. What’s responsible for the increases indicates the importance of government aid in propping up the state’s struggling economy.

The good news about the state’s income increase is tempered by the fact that it still grew less than the 2.9 percent growth in all of the U.S.  Among Florida’s metro areas, only one grew at a faster rate than the national rate.

Particularly notable at a time of both federal and state budget cuts:  It wasn’t wages and salaries that created Florida’s income growth, but government aid, data from the U.S. Bureau of Economic Analysis shows.

Florida personal income increased by 2.1 percent in 2010, but wages and salaries, which make up more than half of state personal income, rose by less than a percentage point.  Government aid, up 8.2 percent, accounted for almost all the modest rise in personal income. 

(Government aid, formally called “transfer receipts from governments,” includes such programs as Social Security, unemployment compensation, Supplemental Security Income, Medicare, Medicaid, and the Children’s Health Insurance Program.)

In six metropolitan areas income from wages and salaries actually declined in 2010.  In addition, in none of the state’s 20 metros did the rate of increase equal the national growth rate.

But every Florida metro area recorded much higher increases in government aid, ranging from 6.2 percent to 12.8 percent.  (The greatest increases came in three metro areas impacted by the recovery dollars that flowed in after the BP oil spill – Crestview, Panama City, and Pensacola.)

Unemployment in Florida remains higher than the national average with 33 counties maintaining double digit rates.

As the number of jobs continues to lag in Florida along with income from wages and salaries, any decline in government dollars going to the social safety net will hurt income growth. 

Money from these programs is spent quickly for the basics of life.  Businesses benefit and the multiplier effect results in even more bang for the buck as the money turns over in the local economy.  

In addition to making it more difficult for millions of Floridians trying to get by, reducing these programs will make Florida’s overall economic growth slower and more difficult. 

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