Friday, October 19, 2018
Business

Q&A with Jesse Panuccio, Gov. Rick Scott's point person for creating jobs

Jesse Panuccio bristles good-naturedly when anyone tells him he looks like a high-schooler. But he's got an adult-sized job as head of the Florida Department of Economic Opportunity.

Under the backdrop of a heated gubernatorial race, he's Gov. Rick Scott's point person to carry out a much-trumpeted promise to create jobs and put unemployed Floridians back to work.

Panuccio, who turns 34 on Nov. 1, brings some youthful exuberance to one of the toughest jobs in Tallahassee. He prefers to drive to meetings around the state instead of flying. And he speaks with passion, whether it's defending the record of his boss or recalling fond memories of his undergrad years at Duke University, where he participated in the "tenting" rite-of-passage, camping out for days to secure basketball tickets.

The Tampa Bay Times recently caught up with Panuccio during a stopover in Tampa to talk about the one-year anniversary of the troubled launch of the CONNECT site to collect unemployment benefits, controversial government incentives to create jobs, the state's mix of low-paying versus high paying jobs, and other economic flash points. Here are some excerpts:

How well is Florida doing in creating jobs? Are you meeting your goals?

I think things are still looking good… We're up approximately 12,800 jobs for the month. Somebody asked me (whether) it seems like things are slowing. I don't think they are. Take all the jobs added out of last year and divide by 12 and do the same this year, we're pretty close. We've added between 15,000 and 17,000 a month. Over the last two years you've seen steady job growth.

Tampa Bay can point to a slowdown. We used to be the No. 1 job creator among Florida metros. Now we're fifth. Shouldn't we be disheartened?

I want to analyze that. I wonder if it's that you've slowed down or others have sped up. Part of it is that Miami was slower there for a while and in the last six months, really came back to life. I will tell you there are some (positive) indicators… (Tampa Bay) has the highest job demand in the state for a metro area. And you have the highest job demand in STEM as well (science, technology, engineering and math jobs). If you take job demand as I often do as a leading indicator it looks pretty good for Tampa Bay. If I were thinking of investing in the state, this is still a hot area.

How much stock can you put in job postings as an indicator? I've talked to numerous job seekers who say that people advertise and advertise just to stock up their list of candidates. They're not necessarily hiring.

Look, there's always going to be anecdotal stories like that… But I look at a dashboard of indicators. (Job demand) is one of my big four or five. During the recession we lost 40 percent of our job demand in the state. So if people were just advertising for the sake of advertising, they would have done it then, too.

Many of the new jobs, certainly early on in the recovery, were lower-paying in retail, tourism and health care. The recent construction boomlet of higher-paying jobs and professional services seems to have tapered off a bit.

Yeah, a little bit. But for the last several months we've been the nation's leader in construction jobs. So they're still there… Over the year, trade, transportation and utilities (which includes retail jobs) is No. 1. But construction and professional and business services is next.

You're right: Professional and business services has been bouncing around month to month. And that's critical because if you're looking at the average wage you're talking about almost $53,000.

I was tired of hearing it's all low wage jobs being created. So I said, 'Let's look at that.' (Almost) 80 percent of the jobs (created since December 2010) are paying above $39,000.

What initiatives do you have to promote higher-quality, higher-pay jobs?

In terms of quality, we obviously think all job growth is good. One thing I stress is you have to have a lot of entry points into the economy. There are people who are getting into the economy for the first time… You need entry level jobs for those folks.

But for the workers who have been in the workforce for a while and need higher-wage, higher-skill jobs, our targeted job creation efforts focus on those industries. We don't provide incentives for any job. We pick target industries. Things like aviation and aerospace, STEM jobs, biotech — six broad-speaking target industries… Manufacturing is another one. The manufacturing tax cut, of course, was a major initiative two years ago.

Isn't there a problem with the incentives program when a fraction of the promised jobs have turned into reality?

It's a conceptual point. A business doesn't announce its plans and grow instantaneously. Our contracts very explicitly say if Acme Corp. is coming or expanding, they have a ramp-up time. So we do a job creation schedule and if they promise 500 jobs, it will probably be something like 100 jobs a year for five years. And our payment schedule is based on that. The number I gave — and (the media) pushed back a little — is that 85 percent of the jobs due have been created. Look, you want businesses planning for long-term growth. You don't want them growing just today.

Still, isn't this akin to a developer announcing plans for a 100-story office tower that doesn't happen? You get the publicity boost from a jobs announcement whether or not it actually happens.

Well, we track it. In terms of transparency, we put it all on the website… We have to verify it with auditors so… it's a calendar year late. It's like taxes. I don't know what my current year taxes are until I file next April. But we track it so you can see it. And we really have worked on the due diligence and structure of the contracts. Almost always, and there are exceptions, almost always we try to do pay-for performance only, which means… we try to have what we call skin in the game. We want to see either capital investment in the ground or jobs hired before we make our payment.

What do you think about politicians in general taking credit or blame for economic cycles? How much of Florida's job creation is tied to policies of the Scott administration? Since the U.S. unemployment rate is even lower than Florida's, does that mean they have better policies nationally?

Of course, we're part of a larger economic cycle and part of the nation so what happens with national policy is going to affect us. But I sometimes say if there is any silver lining to the recession, we now have 50 different states pursuing 50 different economic policies within the box they're allowed to operate in.

There are states like Florida and Texas that coming out of the recession had budget shortfalls and said look, you can raise taxes and raise debt or you can tighten the belt and lower taxes and try to spur economic growth that way. I think if you compare a dashboard of indicators… you'll see Florida stacking up well. We led downward in the recession. We're leading the nation coming out of recovery.

We're still lagging some ways. We're lagging the improvement in the unemployment rate. Wages are lagging.

But the growth in our labor force has been much stronger. Up to 60 percent of the growth in the labor force nationally occurred here in Florida. So yes the unemployment rate can be harder to come down as people keep coming back in (to the labor force). But since March 2012 we've had the highest job growth rate.

Take New York. About the same population as us… We've had (through August) 140,000 more private sector jobs over the last three and a half years than New York which has arguably one of the greatest cities in the world.

Then again California, a liberal bastion, is creating twice as many private sector jobs as Florida every month.

That may be in total number of jobs, but they have a GDP that's triple ours. They're a much bigger state. In terms of the growth rates I think we stack up well.

Your original question was, Can you take credit? My view is there are policies that you can put in place to spur business growth. It has to be the private sector that ultimately grows a lasting recovery. But you create the risk or an opportunity environment. And I think what Governor Scott has done with the Legislature of lower taxes, less regulation and targeted economic development has worked to really grow confidence about the climate in this state.

A year ago you launched CONNECT (the new unemployment website for filing clams) with a lot of problems. You say it's fixed. Yet, now we're ranked last in the nation in terms of providing timely relief for the jobless. What happened?

That stat comes from a report that has a known defect in the system. It's been identified for some time and we'll be putting a fix in sometime in the next few weeks. So that stat is not accurate and every report we've submitted to the federal government has a giant footnote on it that says there is a defect with this particular report.

What's the specific defect?

It's something in the system. The specifics I'd have to get to you. But that report is not generating accurately for the federal government . That number will be higher when the true data goes in and we'll give the federal government the correct data.

But here's the thing. We watch very closely the performance of the system. Leading indicators of performance are really twofold. We look at the call center… and what's our adjudication look like… If there's a dispute over a claim it goes to adjudication.

What can happen in any state is the bigger your adjudication queue, the longer it may take. Coming from the old system, we had an adjudication queue of 48,000 claims that were being held for payment pending adjudication. We now today have an active queue of 2,800.

With the call center, we are now and have been for some time answering 100 percent of unique calls. Now some people are repeat callers so we don't answer every single call in every day. But we track unique numbers (first-time callers). All of them get picked up. Then we track what are the complaints or problems or comments or questions about.

Why are you sticking with project contractor Deloitte Consulting when they're linked to slow processing of claims in several states, not just Florida?

Well, yes the launch had its problems. In the end, they were able to fix a lot of those problems. They were penalized under the contract and beyond. But we recouped for the state quite a bit of money under the contract… After we got past that initial first couple of months, things have been going well. They have performed under the contract and done what we've asked them to do. It is performing now to a level that we need and where it's not, we have fixes going in.

As you know, this long preceded this administration. This thing has been planned since 2008. We have a warranty period and anything we find, we want to get fixed under the warranty.

Now we are in a process where we're transitioning to an in-house process and that's exactly how this is supposed to work. So this will not be a relationship that goes on forever. Our own in-house IT team is learning the code.

If you lost your job tomorrow and filed for unemployment, would you want to live in Florida, a state where weekly benefits paid are among the lowest, there are added burdens to proving your eligibility and there have been documented delays in payouts? It doesn't seem to be a great state to be unemployed in.

It depends on the goal. The goal of unemployment is to get re-employed, and I think this is a great state to seek re-employment in… There are lots of jobs available; we have a very good workforce system which is one of the best in the country at helping people find work. So I would say, yes if I were looking for a job, this is a state I would want to be in.

Years ago, going back to the Jeb Bush administration, we had initiatives to promote biotech and green jobs and other next-generation industries. Were we in such a crisis mode getting out of the recession that we took our eye off the ball?

I don't think we took our eye off the ball. In the early 2000s, the economy in Florida was growing. And then this global, massive economic recession of course took the wind out of the sails in a lot of initiatives. And, yes, the last few years have definitely been about jump-starting the economy. But all those things are still there. And I think as you continue to see job growth and the unemployment rate come down, I think you'll see those things continue to pick up.

What other initiatives are under way?

As we lost all this manufacturing and are now trying to bring it all back, people are learning that, 'Hey, what we used to call the trades are not sweeping dirty factory floors any more.' These are what they call advanced manufacturing jobs. You have to learn CAD; you have to learn 3D printing.

In the last few weeks, I've probably visited three or four different high school or state college academies — what used to be called vocational schools. I met someone who had a class that I think they were calling advanced manufacturing. And he said they changed it to advanced robotics and the next year enrollment soared. It's a branding thing. Of course, they're working on building robots but it's the type of robots used in manufacturing.

Those are the jobs that pay solid middle-class salaries that we need to be getting people into. There are the beginnings of efforts like that all around the state.

Contact Jeff Harrington at (813) 226-3434 or [email protected] Follow @JeffMHarrington.

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