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Citation: Florida Trend Nov 1998, v41, n7, p122(3)
Author: Klas, Mary Ellen
Title: As the rich get richer. (wage gap in Florida) by Mary
Ellen Klas
------------------------------------------------------------------------
COPYRIGHT 1998 Trend Magazines Inc.
Florida's economic news is not so good for middle- and low-wage workers.
It has been a banner year for Florida. The state's unemployment rate has
hovered at a 25-year low, with some of the most chronically unemployed getting
jobs. Consumer confidence reached an all-time high. Job growth and export
sales exceeded all expectations. Per capita income grew faster here than in
most other states and fastest among Southeast states. And Florida continued to
outperform the nation in job growth for most industries.
But all the good news was not able to reverse a trend that has been going on
for a decade: Middle- and low-wage workers continue to see the real value of
their wages - their earnings measured against inflation - erode. Three-fifths
of the state's workers are working longer to achieve income levels that are,
on average, lower than they were a decade ago. And the number of people
holding those low-end jobs is rising.
The source of that sobering bit of news is a recent report released by Florida
International University's Center for Labor Research and Study. It found that
only the highest income workers - the top 40% of the population - are gaining
in real terms. The highest 20% now average $107,800 a year. Middle income
earners, whose average income is $36,000, are "slowly losing ground,"
according to the study, while low-wage earners, who earn an average of $7,710,
are "rapidly sliding backwards." In short, the distribution of income and
wealth in Florida is getting more uneven.
Other data from the report:
* Average wages in Florida have remained essentially flat in the last decade
and continue to be lower than most other states - 89.6% of the national
average last year.
* Florida has fallen to 42nd out of 50 states in median household income.
That ranking represents a frightening decline: In 1986, the state ranked 23rd.
* FIU's data show a widening gap between those with good-paying jobs and
everyone else: Some 31 other states now have a narrower gap between upper and
middle income earners, and 34 states have a narrower gap between the top
earners and the 20% of the work force that earns the least.
FIU's Bruce Nissen observes, "If we're seeing this growing gap in times of
prosperity and growth and in times of low unemployment, imagine what is going
to happen when we see a downturn."
Bob Bradley doesn't have to imagine. The director of the Governor's Office of
Planning and Budgeting and veteran of the 1991-92 recession has seen what
happens when the economy sours and people who have no savings lose jobs. The
result will be "more people on Medicaid and more people on TANF (temporary.
assistance for needy families) and more people going to the community colleges
(for job training). So, from a state government's perspective, people turn to
government a little more."
The FIU findings on income disparities come as no surprise to those who track
the distribution of income. Florida has been among the top 10 states with the
fastest-growing income gap for the past decade, according to the Washington,
D.C.-based Center on Budget and Policy Priorities. "The average income of the
richest fifth of families increased while the incomes of poor and middle class
families declined," the center wrote of Florida in its publication, "Pulling
Apart: A State-by-State Analysis of Income Trends."
The growing income gap is not unique to Florida. It's a national trend that
has prompted economic development officials across the country, including
Enterprise Florida, to put a premium on the development of high-wage jobs to
help diversify the economy and offset the vulnerability of low-earning
workers. The problem in Florida is that the state starts out at a
disadvantage. The state's per capita income levels hover around the national
average only because of the substantial investment earnings from a small
portion of the population. Per capita income from dividends, interest and rent
is 48% higher in Florida than it is in the U.S. as a whole, according to the
University of Florida's Bureau of Economic and Business Research (BEBR). "This
pulls personal income averages up, while average wages and salaries drag it
down," Nissen writes in the FIU report. "Those living on investments are doing
much better than average for the U.S.; those relying on wages or salaries -
unless they are the highest income brackets - are doing worse than U.S.
averages."
How bad will a slowdown be for Florida? David Denslow, economics professor at
BEBR, thinks a consumer-driven recession will be milder in Florida than in
most of the rest of the nation and far tamer than the recession of 1991-92. He
reasons that Florida's economy isn't as heavily concentrated in cyclical
sectors as it was in 1990-91 - there's not the huge overbuilding of office
complexes and malls that occurred in the 1980s, and there's a smaller share of
the work force in construction. "The region hardest bit would be Orlando,
where construction has been really strong," Denslow predicts. "An abrupt drop
in construction and diminished tourism would hit Orlando with a double
whammy."
Another sector Denslow expects to be hit by a decline in domestic consumer
demand and a drop in exports to Asia and Latin America is high technology -
another area in which Orlando is strong.
There are some bright spots. Since the last recession, Florida has established
a budget stabilization fund - now about $787 million - to help keep government
in the black without cutting programs or increasing taxes. And the years of
economic prosperity have built a healthy reserve in the state's unemployment
and welfare trust funds, according to Bradley. In fact, if there were a
recession today, welfare rolls could double in size and remain that way for
eight to 10 months and the TANF account could handle the increase, says
Bradley.
How far welfare rolls swell is a big question. In the last five years, 35% of
the state's job growth has been in industries that earn an average income of
less than $20,000 - restaurants, retail, lodging and other services. Many of
the workers in those industries don't have health insurance - some 19% of
Florida's population. As the state learned in 1992, when employers drop their
health insurance coverage in times of economic decline, thousands of
Medicaid-eligible people turn to the state to get medical coverage and "the
state gets smashed," Bradley says.
Florida Department of Labor and Employment Security projections show that
Florida's job growth will perpetuate the wage gap long into the next century.
Most of the new jobs through 2005 will be in low-wage positions, such as
waiters and waitresses and retail cashiers, but the fastest job growth will be
in high-skill areas, such as systems analysts and computer engineers.
"Professional occupations and service occupations, two groups on the opposite
ends of the education and earnings spectrum, are expected to provide almost
half of the total projected job growth," says Rebecca Rust, chief of the DOL's
Bureau of Labor Market Information.
Nissen says it's time for state officials and policy leaders to develop a
"worker-centered measure of economic development" intended to raise the
standard of living for the majority of Floridians and discourage the
development of more low-wage jobs. "We keep bringing the low wage in when we
say we're aiming for the high wage," he says.
Tallahassee Editor Mary Ellen Klas can be reached by e-mail at:
[EMAIL PROTECTED]
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