FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 1

Tougher Choices

Jim Dewey

3rd Annual Florida College Access and Success SummitTampa, Florida

October 16, 2014

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 2

Data from the U.S. Bureau of Economic Analysis

1980s Apparent Potential Fading

• By mid 1980s– Income per capita ≈ US– K-12 $/student near US– Universities rising– Future with high-skill

jobs seemed in reach

• Falling income per capita in the 1990s and 2000s– fluctuation around parity

or– decline masked by the

housing bubble?

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

75

80

85

90

95

100

105

1

2

3

4

5

6

7

Income per capita Population Share

Per

Cap

ita

Inco

me

(US

= 1

00)

Pop

ula

tion

Sh

are

(% o

f U

S)

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 3

Data from the U.S. Bureau of Economic Analysis

Relative productivity falling

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

82

84

86

88

90

92

94

96 Relative Gross State Product per Worker (US=100)

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 4

Tougher Choices (2014)downward trend extremely hard to change

• Low skill starting point plus feedback effects– Skilled jobs go to cities with lots of skilled jobs

• Labor market polarization• Baby boom retirees• No room to invest at current tax rates• No support to raise tax rates• Report at collinsinstitute.fsu.edu

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 5

Labor Market Polarization

Man

agers

Profes

siona

ls

Techn

ician

sSale

s

Office

& A

dmin

Produ

ction

, Craf

t, and

Rep

air

Operat

ors,

Fabric

ators,

Lab

orers

Protec

tive S

ervice

s

Food P

rep &

Clea

ning

Person

al Care

& S

ervice

s0%

10%

20%

30%

40%

50%

60%

Employment Change, FL 2000-2010• Routine Jobs

– Mid-skill– Replaced by automation

and info tech

• Non Routine Jobs– Cognitive: High-skill – Manual: Low-skill

• Wage gains concentrated in advanced degrees, certain STEM fields

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 6

Accounting for Florida’s Low Job Skill

Retiree

College

Tourism

Other

-2 -1.8 -1.6 -1.4 -1.2 -1 -0.8 -0.6 -0.4 -0.2 0

Contribution to Florida Job SkillMSA average, pre recession data

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 7

Growing Retiree Influence

• Age 65+ in 2010– FL 17%– US 13%

• Age 65+ in FL in 2030– 1 in 3 Adults– 2 in 5 voters

• Crowd out other export industries• Change the nature of cities

– Less supportive of investment?– Shift taxes to business

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 8

Lagging Human Capital Investment

Revenue data from State Higher Education Executive Officers (SHEEO).Deflated using the GDP deflator from the US Bureau of Economic Analysis.State appropriation recovered some in FYs 2014, 2015, but comparative data is not yet available for those years.

State Appropriation plus Net Tuition per FTEby Fiscal Year (FY 2013 Dollars)

  2010 2011 2012 2013

Florida 8,768 8,447 7,867 7,416

US 11,331 11,419 11,226 11,523

FL/US 77% 74% 70% 64%

FL Rank 49 50 50 50

• Prior to the recession, state funding average, tuition low

• During recession, state fuinding fell sharply

• 50% increase in BOTH to catch US in FY 2013

• Real K-12 teacher salaries falling, 84% of US average in FY 2014.

FLORIDAPOLY Jim Dewey–Tougher Choices 04/19/2023 08:28 PM 9

Summary

• Relative to US: income per capita ↓, output per worker ↓, high-skill job share ↓ , low-skill job share ↑

• Trend hard to change due to five mutually reinforcing factors– Low starting point plus feedback effects– Labor market polarization– Baby boom retirees– No room to invest at current tax rates– No support to raise tax rates

• Florida will likely be the subtropical corner of a safe, rich country, highly specialized in retirees and tourists

• There are worse things to be, but we could have been better• Maybe we still can be better, but it will cost a lot more