Tag: jobs

As Wages and Salaries Stagnate in Florida and Its Metro Areas, Growth in Government Aid Props Up the Economy
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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Rejecting Federal Money Results in Health Services Not Delivered and Jobs Not Created
July 6, 2011

Florida’s rejection of at least $54 million in federal dollars for health-care reform hurts Florida in two ways.  Refusing federal money allocated for Florida not only deprives Floridians of necessary services, but also delivers another small blow to a state economy already struggling to create jobs.

The decision to turn down the money, made by the governor and legislature to be consistent with their legal challenge to the Affordable Care Act, conflicts with the overall welfare of Floridians. Furthermore, declining the money results in the federal government redirecting it to another state, even though a portion of it came from Florida taxpayers.

The refused money, contained in several grants, would have provided:

* hospice care for children

* aid to help elderly and disabled Floridians get out of nursing homes and return to their homes

* help for low-income seniors to buy medication

* home visiting with at-risk families

* funding to promote healthy lifestyles and help those with chronic illnesses

* financial assistance with setting up a health insurance exchange program and to monitor health insurance rates

Refusing the money also will do harm to the highest priority of state leadership:  creating new jobs.

Although estimating economic and employment impacts is an inexact science, the fact is that money flowing into a state from external sources recirculates through the economy, creating a multiplier effect.

Most of each dollar paid to a business or worker is spent again for payment of expenses before the money leaks out of the state and no longer adds to the state economy.

Applying a conservative multiplier of 1.5 means that the $54 million in foregone revenue would have generated an additional $27 million of economic activity, for a total of $81 million in indirect and direct benefits.

At the state’s per capita income of about $39,000, the rejected money would have created or supported more than 2,000 jobs as it flowed through the state’s economy.  That number of jobs isn’t huge compared to the more than 900,000 unemployed Floridians, but each job is important in helping put the jobless back to work.

The choice to decline federal money for ideological reasons is shortsighted.  It results in both health services not delivered to Floridians and jobs not created for them. 

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Cutting Corporate Income Tax Unwise, Economist Says
April 20, 2011

Governor Rick Scott has renewed his call for the legislature to adopt big tax cuts even as billions of dollars are being cut from state programs like education and Medicaid. 

“I remain certain that any budget I sign into law will do the following things: reduce the size and scope of government, reduce the cost of government, and pass those savings on to taxpayers in the form of tax cuts,” Scott said in his weekly radio address.

“The budget proposal I sent to the legislature does those three things. I will not compromise on these principles.”

The “no compromise” talk raises the issue of a possible veto of the state budget, the St. Petersburg Times said.

The tax cuts he wants:  "Business and property tax cuts are critical to make Florida No. 1 in job creation. Lowering taxes will attract businesses and jobs to our state. I am confident that, with your help, the Legislature will make the right decision.”

Scott continues to advocate for a cut in the state corporate income tax, even though Florida’s tax is relatively low and so riddled with loopholes that few companies pay it.  

"Slashing the corporate income tax would do little, if anything, to improve an already business-friendly tax structure or to create jobs," FCFEP said in a February report.  "But it would do much to decrease the level of services necessary to support a decent quality of life, which is the foundation of economic development.  (See "Keeping and Modernizing the Corporate Income Tax Will Best Serve Florida; Corporate Tax Cut Would Force More Service Cuts While Doing Little to Create Jobs.") 

So far, legislative leaders have resisted any pressure to adopt sweeping tax cuts.  A prominent Florida economist suggests that they should continue to do so.

“There is not much room for improvement as far as the tax climate in Florida is concerned and trying to be the cheapest date in the country is not going to bolster the number of suitors Florida has,” writes Dr. Sean Snaith, director of the Institute for Economic Effectiveness at the University of Central Florida.                   

“There is very little to win in our race to the tax bottom,” Snaith said in his quarterly Florida and Metro Forecast.  “Those tax revenues could be used more effectively to grow the economy through investment in infrastructure or education.  These things would be far more attractive to business than a marginal improvement in the business tax climate.”

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