Florida is gradually adding jobs again as its unemployment rate dropped another notch to 8.6 percent in May.
In fact, the state's jobs report released Friday was generally positive for most workers. Unless you work in state government.
Overall, Florida's workforce added a net 5,300 jobs between April and May, rebounding from a down April and raising the number of jobs created over the year to 53,800. Tourism, along with trade and professional/business services led the way. Information jobs rose for the first time in nearly five years. Even the long-pummeled construction industry and manufacturing were up a combined 4,200 jobs from April.
State government, meanwhile, shed 4,500 jobs in just one month, the single biggest drop among all categories of jobs that are tracked. Compared with a year ago, state government is down 10,500 jobs — down 13,100 jobs if you add in federal and local government workers. Only construction was worse: down 22,300 jobs from a year ago despite the recent improvement.
"To me it makes perfect sense we're seeing this (cutback) in state and local governments," Wells Fargo senior economist Mark Vitner said. "It's just the blunt reality of the math."
First came corporations cutting back, Vitner said. Then, to a lesser degree, households adjusted their budgets. Now, governments are trying to make do with less tax revenue and the end of the federal stimulus prop-up.
The great government contraction is partly by design. Florida Gov. Rick Scott won the election in 2010 on campaign promises to slash government bureaucracy and spending as a means to free up private sector growth.
The contraction is also partly a numbers game. Even though job numbers are seasonally adjusted, government losses tend to rise in the spring months when universities and public schools lay off employees. This year, some university spring sessions ended earlier than last year, slightly skewing results.
Nationally, the issue of government job cuts has taken center stage in the presidential race. President Obama has called for federal funding to stem the tide of public-sector job losses, while presumptive Republican presidential nominee Mitt Romney has criticized Obama for wanting "to add more to government."
In a New York Times column this week, economist Paul Krugman suggests that "an unprecedented fall in public employment" translates to having 1.4 million fewer public sector jobs than there would be if government had grown at the same pace as it did under President George W. Bush.
"If we had those extra jobs, the unemployment rate would be much lower than it is — something like 7.3 percent instead of 8.2 percent," Krugman said.
Republican leaders, however, say turning government into a more lean and streamlined operation makes government live within its means and paves the way for the private sector to add jobs.
Rebecca Rust, chief economist with the Florida Department of Economic Opportunity, sees two ways to look at the effect of government cuts.
Short-term, government layoffs can stifle the economy. "You have to wait for those (dislocated) workers to find work in the private sector and that takes some time," she said.
Long-term, however, Rust said it's more desirable to have fewer public employees and focus on growing jobs that are not funded by taxpayers.
With its unemployment rate dropping a full 2 percentage points over the past year, Florida continues to narrow the gap with the rest of the country. In May, the U.S. unemployment rate inched up from 8.1 percent to 8.2 percent.
The Tampa Bay area added 2,500 jobs in May as its jobless rate stayed unchanged at 8.6 percent. Since May, 2011, the region has added 17,300 jobs, tops among all Florida metros.
Rust found several milestones to celebrate in May. Among them: The number of unemployed Floridians fell below 800,000 for the first time in three years and unemployment is now at the lowest level since December 2008.
Still, Florida has a long way to go to reach what's considered a healthy jobless rate below 6 percent. Many economists fret that unemployment could rise again both in Florida and the nation because of the growing number of job seekers who have temporarily postponed their jobs search.
One example: The number of Floridians age 16 and up grew by 217,000 over the past year, but the state's labor force only grew by 31,000. A part of that difference is made up of retirees and young people who aren't looking for a job. But such a big spread indicates that a sizable group of people are on the sidelines but will start looking for work again when the economy improves.
"Florida's labor market still stands on wobbly legs," University of Central Florida economist Sean Snaith said.
Snaith cited ongoing concerns over domestic economic policy and the Eurozone crisis. Combined, those factors are keeping the recovery "bogged down in a swamp of uncertainty," he said.
Jeff Harrington can be reached at [email protected] or (727) 893-8242.