Floridians can't get ahead on wages. Blame inflation and a gut punch from Great Recession.
Posted October 28, 2018 6:11 p.m. EDT
Ten years ago, Florida had already begun its alarming descent from full employment to jobless netherworld.
Fueled by a burst housing bubble and resulting banking crisis, the unemployment rate reached a scary 11.3 percent in early 2010. It remained in double digits for another year and a half.
During that time -- and for several years after -- businesses that survived had their pick of new employees. For every open job, there were more than seven Floridians looking for work.
The imbalance kept wages in check. You could argue it was simple supply and demand: Too many workers for too few jobs meant businesses didn't have to pay workers as much. It's harder to get a raise when a bundle of people would be happy to replace you, sometimes for less than what you get paid.
Fast forward to today. Unemployment hit 3.5 percent in September. How low is that? During the entire 1980s, the rate never fell below 5 percent. It's lower than during the dot-com years and almost as low as it reached before the Great Recession a decade ago.
By several measures, there are now more job openings than people looking for work. By some estimates, more than 20,000 jobs remain unfilled in just the state's construction sector.
With the table flipped, most everyone's getting a raise, right?
Take a look at hourly earnings.
The figures, from the Federal Reserve Bank of St. Louis, capture what most workers get paid, whether hourly or salaried. They don't, however, include earnings from self-employment, limited partnerships, or other ways that the wealthy often make money.
Florida's workers earn less on average than the country as a whole. But both lines have made mostly upward progress this decade. In Florida, wages have grown nearly 18 percent since 2010.
That's good news, as far as it goes. But it doesn't account for inflation, which has a pesky way of eroding earning power. Look how the lines change when the consumer price index is folded in.
Both lines suffer, but you can see how the recession left Florida worse off. Not even billions of dollars in federal stimulus spending could boost the state's wages for long. Instead, wages plunged as unemployment remained in double digits. Even when the economy improved, wages stagnated for a few years, until picking up in 2015.
Today, despite years of economic expansion and job growth, the state's inflation-adjusted wages have yet to reach their 2007 highs. The country as a whole is doing better than Florida, but those gains can hardly be described as stellar.
It doesn't help that the average worker puts in fewer hours each week, which cuts into take-home pay.
Florida trails the other largest states. With higher taxes and home prices, you might expect California and New York to outpace us on weekly earnings. But low-cost Texas is eating our lunch, too.
So why aren't employers feeling more pressure to raise wages? A definitive answer remains elusive. As I've detailed in earlier columns, economists point to everything from lower-paid workers replacing high-salary baby boomer retirees to employers handing out more perks like extra vacation instead of raises.
Others point to "slack" in the job market. That is, people who may be working but would like to work more hours or are moving in and out of the workforce more than they want. Diminished labor unions and overseas competition often get blamed, though their direct effect on wage stagnation during the past decade is debatable.
The good news is that Florida has outpaced the nation in wage growth since the beginning of the year. The question becomes whether the state's wages grow fast enough to make up for lost ground or will the next economic downturn end any rally.
Contact Graham Brink at email@example.com. Follow @GrahamBrink.