Studer Community Institute

Wage growth remains sluggish in Northwest Florida

June 24, 2015
/ Rick Harper
/ economy

June marks the end of the sixth full year of recovery as the economy exits the Great Recession. The jobs market has improved nationally and is growing even faster at the state and local level. Retail sales have picked up, oil prices have stabilized and housing inventories have fallen in most markets. Yet challenges still remain. Wage growth remains relatively constrained at the state and the local level. This is partly the consequence of a recession that was more severe in Florida than elsewhere, and partly a function of the type of job growth that has led our state out of the recession. Leisure and hospitality employment is up about 150,000 jobs from its pre-recession high. Construction employment, while it has rebounded from its post-recession low, is still about 250,000 jobs short of its pre-recession high. Manufacturing employment is up about 10 percent for the state since turning the corner in early 2010. It is a small sector in our state, relative to its importance in the rest of the nation. That growth took the sector to a total of about 330,000 jobs in the most recent months. Like the rest of the nation, manufacturing employment has been falling through time, decreasing sharply in recessions and recovering only weakly during expansions. Even with the post-recession recovery, manufacturing employment is still over one-third lower than it was a generation ago in 1990. Shifts in the type of employment away from traditional middle-class jobs are among the factors that have constrained wage growth for Floridians. Federal Reserve statistics for May 2015 show that the cumulative growth in average hourly earnings since the recession ended six years ago has been about 4.6 percent in Florida versus 12.6 percent for the nation overall. Earnings are up about 5.4 percent for the Pensacola metro area over that time, although they would have risen further had it not been for the slight decrease in the most recent months. Some occupations see higher wage growth, while others see less. The wage growth rates quoted above are not adjusted for inflation. Inflation since the recession ended in 2009 has been a cumulative 10 percent. If we took out that inflation so as to only look at the increase in purchasing power of workers, the wage growth rate would be lower. For Florida and for Pensacola, inflation-adjusted wage growth since the end of the recession is low or actually slightly negative. Of course, different households face different inflation rates. The price of renting is rising at a faster rate than the price of owner-occupied housing. Some families use more fuel and energy; others use less. Some use more health care services; others use less, and so on. Over the last several decades, earnings to owners of capital assets have grown faster than earnings of workers. But when wage growth is weak, it is harder for consumer spending to blossom and sustain the robust business growth that will allow entrepreneurs to thrive. Growth in spending, albeit modest, will support job creation and overall economic growth for several more years before recession pressures grow once again. Dr. Rick Harper serves as senior research fellow with the Studer Community Institute, a Pensacola, Florida-based organization that seeks citizen-powered solutions to challenges the community faces. He also directs the University of West Florida’s Office of Economic Development and Engagement in Pensacola.

Back to Blogs

Wage growth remains sluggish in Northwest Florida

Recent Posts