April 21, 2018

Florida's Future: Economy in Transition

The chamber's New Cornerstone Revisited report points to a maturing Florida.

Mark R. Howard | 1/1/2008
Welcome to Florida sign
The state continues to attract Northeasterners and Mid-westerners, while becoming a net exporter of residents to other Southern states.
[Photo: Ray Stanyard]

Findings in the Florida Chamber’s New Cornerstone Revisited report, released in December, suggest a state that is still strongly defined by growth — but one whose economic infrastructure is maturing. The trends: Higher costs. A continued push to diversify the economy and develop higher-value businesses. Rising standards, but still a long way to go on education. Generally, more focus on the nature of growth rather than the traditional embrace of all-growth-is-good.

One highlight: Despite newspaper reports outlining how — for the first time — moving-van companies were reporting more vans leaving the state than entering, growth numbers don’t support conjecture of any kind of mass exodus from Florida. New Cornerstone reports that while growth slowed in 2006, the state still gained 320,000 residents —about as many people as live in the city of Tampa.

The University of Florida’s Bureau of Economic and Business Research reports similar numbers. In a UF press release, Stan Smith, BEBR’s director, says “There have been a number of news articles lately focusing on the idea that population growth has fallen off the table top in Florida and practically come to a standstill, and that simply isn’t true.”

Over the next two to three years, Smith predicts Florida will add about 300,000 residents a year as long as there’s not a recession.

The New Cornerstone Revisited report does suggest a change in the demographics of those coming and leaving, however. The state continues to attract Northeasterners and Midwesterners, while becoming a net exporter of residents to other Southern states. One implication: Those basing their living decisions primarily on cost are choosing to live elsewhere. That conclusion is supported by New Cornerstone’s finding that Florida “is transitioning from being a low-cost state to a higher-cost state” due to increases in property taxes and the costs of transportation, energy and commodities. Going forward, Florida “must compete based on quality and innovation rather than on low costs.”

Elsewhere, the report finds a number of bright spots:

» Per capita income now almost matches the national average. More important, the gains have been led by an increase in wages, which now are 91% of the national average.

» The state led the country in job creation between 2001 and 2006, netting just under a million new jobs. Unemployment fell to 3.3% in 2006.

The state’s economic expansion has led to a 24% decline in poverty rates from 1998 to 2005 and a decrease in the number working poor — both due to economic growth rather than targeted government programs.

» The business services and finance sectors grew at above-average rates, reflecting both strong demand within the state and the state’s growing role as a hub for Latin trade.

» The technology sector shows signs of strengthening, and the arrival of high-profile institutions like Scripps, Torrey Pines, SRI and the Burnham Institute have boosted the state’s research profile.

» Urban centers are investing more heavily in the kind of cultural amenities that attract and keep young, creative workers.
New Cornerstone Revisited also finds some big and persistent gaps, however:

» Most involve investments — the scarcity of venture funding for new and emerging businesses, for example, and low state spending on research and development — less than 1% of the state’s GDP compared with an average of more than 2% nationwide.

» The report also cites continuing issues involving Florida’s human capital — its people and their skills. Educational attainment is improving but is still below the national median, with high school completion rates remaining “low by almost any measure.”

» In addition, “certain critical skill sets remain in short supply — in particular, the number of Ph.D. scientists and engineers,” which as a percentage of total workforce is lower than in all but two states. Disappointingly, the production of new baccalaureate degrees, advanced degrees and science and engineering doctoral degrees haven’t improved significantly since 2000.

» The state can’t take pride in the health and wellness of its residents — Florida ranks in the bottom 25% of states in employer health coverage, access to health professionals, the number of uninsured children and in the bottom half of states in infant mortality and teen pregnancy.

» Growth continues to pose big challenges to communities and the environment as sprawl grows around existing urban areas.

Tags: Politics & Law, Around Florida, Government/Politics & Law

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