Wednesday, June 20, 2018
Business

As Florida income inequality grows, state economy is threatened

This is not a formula for success for Floridians.

While all 50 states experienced widening income inequality in recent decades, the growing disparity in Florida is especially troubling.

From 1979 to 2011 in the Sunshine State, the top 1 percent enjoyed a hefty 116 percent gain in average income to $1.14 million. Over the same 32-year period, the rest of Florida — the "bottom 99 percent" — saw their average income drop 8 percent to $35,393.

Nationally, the average income of the top 1 percent rose 129 percent. The 99 percent bumped up 2.3 percent; that's a puny gain, but it is still better than Florida's decline.

The very rich getting richer? No surprise there given years of national buzz on the topic. But the rest of Florida actually losing income over the same period?

Big problem.

This is not another richest-versus-poorest complaint. But let's ask this question:

If the relatively small numbers of Floridians with incomes in the top 1 percent capture most of the income gains year after year while the average income of the remaining 99 percent of Florida falls, where is this state going?

Most Floridians' wages have stagnated, or have lost jobs that were replaced with lesser-paying work. Florida is adding jobs, but what kind are they?

The highest income tier in Florida typically includes wealthy retirees, high-level executives, successful business owners, well-compensated doctors and specialists, and those with large inheritances. The stock market, which has more than doubled in value since the large dip of 2009, also plays a large part in the widening income gap.

It hardly takes a brainiac — or even an economist, teacher or retailer — to realize this is a pattern that cannot continue without nasty consequences.

Don't assume the improving economy since the recent recession is easing this longer-term inequality. The gap is still increasing.

"After incomes at all levels declined as a result of the Great Recession, lopsided income growth has re-emerged since the recovery began in 2009," says a report issued this past week.

The report, The Increasingly Unequal States of America, is the product of the Economic Analysis and Research Network, a partnership between the Economic Policy Institute, a left-leaning Washington, D.C., think tank, and state advocacy groups. The study used national data from the Internal Revenue Service and estimates for each state. The analysis was done by Ph.D. economists Estelle Sommeiller of the Institute for Research in Economic and Social Sciences in France and Mark Price of the Keystone Research Center in Pennsylvania.

The report found Florida is one of 26 states in which all income growth from 2009 to 2011 went to the top 1 percent. While the average income of the top 1 percent in Florida rose 9.2 percent in that period, the remaining 99 percent saw its average income fall 2.4 percent.

Just to break into the 1 percent bracket in Florida requires an annual income of $336,935. To enter the more elite 0.1 percent in Florida requires an income of $8,659,187.

Bottom line? In the Florida economy, the report says, the top 1 percent average of $1.14 million income is 32.2 times greater than that of the other 99 percent. Only Fortune 500-rich New York and Connecticut, home to many Wall Streeters and other highly paid workers, reported a larger disparity in income ratio.

Nationally, the top 1 percent income is 24.4 times that of the nation's remaining 99 percent.

The day after this report was issued, the Brookings Institution released a separate study ranking income inequality among the 50 largest cities. Atlanta had the greatest inequality, while two Florida cities — Miami and Jacksonville — ranked No. 3 and No. 37. No other Florida cities were large enough in population to be ranked.

Both of these reports follow President Barack Obama's December speech on economic mobility, in which he called income inequality and the lack of upward mobility "the defining challenge of our time."

So where does this leave the United States and Florida?

Leaders vowing to support better-paying jobs sound good. Delivering on those jobs and preparing the local workforce to prosper in jobs that require sharper skills are far tougher goals to meet. Especially in a vast sun-and-fun state of 19 million people.

Florida needs a better economic formula for success.

Robert Trigaux can be reached at [email protected]

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