The government has been playing an oversized role in Florida's struggle to harness its double-digit unemployment rate — for better and worse.
A year ago, the federal stimulus and creation of thousands of temporary U.S. Census jobs helped prop up a state with 1 million jobless. Today, government-related job cuts and budget cutbacks are arguably the biggest obstacle to a faster, broader recovery.
Florida employers have been slowly adding jobs this year, including 28,000 over the past month, pushing the jobless rate down for a fifth straight month to reach a near two-year low of 10.6 percent in May, the state reported Friday. The Tampa-St. Petersburg-Clearwater area added 4,700 jobs this month as its unemployment rate ticked down a 10th of a percent to 10.5 percent.
Among the most encouraging developments, the state's labor force grew slightly by 3,000 jobs at the same time unemployment fell — an indication that the lower rate this time was driven by job creation and not people who stopped looking for work.
The overall picture would have been much brighter, however, if not for a drop in federal, state and local government jobs.
Year over year, the government is down 41,500 jobs statewide, many of them long-gone census jobs. That's three times more than the second-biggest job loser statewide: construction.
It was the first time government led as a job loser, noted Rebecca Rust, chief economist with the Florida Agency for Workforce Innovation, which oversees doling out unemployment statistics and distributing unemployment insurance.
Part of the crunch is directly tied to the $800 billion federal stimulus plan, a third of which flowed directly to the states. Part is tied to the housing crisis. And part to a growing austerity movement within government circles.
Rust predicted government cutbacks to broaden in months ahead as the dry-up of stimulus funds and tax shortfalls force localities to cut back on services and schools to cut positions in an effort to balance their budgets.
"So there will be additional job losses," she said, "but I don't have an account of what they will be."
Last month, Gov. Rick Scott signed a budget that eliminates almost 4,500 state jobs.
Florida's austerity push isn't isolated. Nationally, state and local governments have been shedding jobs at a rate of 25,000 to 30,000 per month "when normally we'd be adding 20,000 to 25,000 a month," said Scott Brown, chief economist with Raymond James Financial in St. Petersburg.
"You're talking about a 50,000-job swing from where we'd normally be. … That's a pretty significant drag on the economy," Brown said.
After participating with other economists at a recent summit with the president's Council of Economic Advisers, Brown left Washington convinced there's no political will for either additional stimulus or intervention by the Federal Reserve. Rather, he said, the widely adopted mantra is "cut, cut, cut."
"A lot of this is political. A lot of people just don't like government," he added. "But in the short term (government layoffs) are not a good thing for the economy. These people have mortgages. They have families. They buy food and gasoline. … They take vacations in Florida."
The government also plays a key role in one of the biggest immediate threats to Florida's recovery: a decision initiated by the Bush administration and carried out by the Obama administration to phase out the space shuttle program.
As a result, the Palm Bay-Melbourne-Titusville region, nicknamed Florida's Space Coast, was easily the biggest job loser among metro areas this month, down 6,800 jobs since May, 2010. The region's unemployment rate hasn't simultaneously rocketed higher than its current 10.8 percent, but economists said that may be because generous severance packages connected to the space layoffs provided a temporary cushion for those laid off.
Another 2,300 space-related job cuts are expected in July, the vast majority coming directly from United Space Alliance, the contractor that operates the shuttle program for NASA.
The Space Coast's woes are in sharp contrast to much of the rest of the state.
Orlando, fueled by continued growth in tourism, continued to be the best-performing metro area, adding 6,600 jobs over the year. In a related vein, the industry gaining the most jobs over the year was leisure and hospitality, up by 45,100 jobs or nearly 5 percent. Other industries on the upswing include private education and health services (up 24,500 jobs); trade, transportation and utilities (up 10,500 jobs); and professional and business services (up 6,600 jobs).
Florida remains one of the hardest hit states when it comes to unemployment. About 980,000 people are still looking for a job, a figure that would be much higher if it included those who have stopped looking for work and others who work part-time but would like to be fully employed. The national unemployment rate for May was 9.1 percent.
Eighteen states and the District of Columbia continued to have unemployment rates of 9 percent or higher; Florida is one of just seven states with a persistent rate of 10 percent or more.
In addition to the drop in government jobs and construction (which is down 14,300 jobs over the year), Florida's other lagging industries include information (down 4,700 jobs); financial activities (down 1,300 jobs); and manufacturing (down 900 jobs).
The state's jobless rate peaked in December at 12 percent. Despite the recent improvement, it isn't expected to reach a healthy level closer to 6 percent until at least 2018.
Jeff Harrington can be reached at (727) 893-8242 or email@example.com.