Jacksonville: Choosing a Future
In September 2010, public television broadcast a program titled “Florida: Choosing the Future.” This program was produced with support from the Fred Friendly Seminars, the Florida Humanities Council, WEDU-Tampa, and the Reubin O’D. Askew Institute on Politics and Society at the University of Florida. Its purpose was to promote a broad-based discussion among Florida’s community leaders on the nature of Florida’s public policies as related to government, business development, education, the environment, and citizen participation. The program’s underlying premise was that Floridians need to be engaged in choosing a future for the state. In much the same vein, Jacksonville’s residents should position themselves to choose a future for Jacksonville/Duval County.
Jacksonville: Choosing a Future
Dr. Lynne Holt
Overview: In September 2010, public television broadcast a program titled “Florida: Choosing the Future.”The program’s underlying premise was that Floridians need to be engaged in choosing a future for the state. In much the same vein, Jacksonville’s residents should position themselves to choose a future for Jacksonville/Duval County. [Duval County and the State of Florida face many challenges as they emerge from the Great Recession. As a first step in this planning process, Duval County residents will need to ask the hard questions before they tackle the various economic and social challenges: What steps can be taken to place the County on a firmer economic and business footing? Should poverty reduction be a goal or is that more a byproduct of strategies to improve education and to reinvigorate the economy? Will Jacksonville’s post-recession policy choices move its residents closer to bringing everyone on board? This paper seeks to outline the challenges facing the County and address these questions.
Challenges for Economic Recovery: Very few states escaped the adverse impacts of the Great Recession, and Florida declined economically more than most. In particular, Florida’s foreclosure problem has contributed significantly to the state’s anemic recovery. Foreclosed housing in Florida as a percentage of total housing inventory exceeds the percentage of every other state. Although Florida does not lead the nation in mortgage payment delinquencies, the combination of delinquencies and foreclosed housing were the highest in the nation as of November 2010.
Foreclosure rates in Duval County, though significant, were only 59% of the state average. Duval County was spared some of the worst effects of the housing meltdown because the escalation of housing prices leading to the recession was not as great as in other Florida metro regions. New housing construction is also significantly down from the 2005 peak. Duval County was slower than the state as a whole to experience negative growth in housing starts as measured by housing units that were permitted. A sluggish demand for new housing also resulted from a significant slowing in the state’s population growth. Population growth in 2008-2009 and 2009-2010 was the lowest since the 1940s. For 2009, the population was estimated to have grown by only 0.1% in Florida, much the same as in Duval County.
Sluggish net migration is responsible for the much lower estimated population growth during 2010 and 2011. During several months in 2008 and 2009, Florida actually experienced negative net migration. Population growth is shaped by many forces beyond a county’s or even the state’s control, such as business’ access to national and international credit markets which can drive hiring and expansion. Baby boomers may decide not to move to Florida for retirement if they cannot sell their homes elsewhere and shrinking retirement portfolios may dampen relocation plans. However, local governments, such as Duval County, often can and do deploy various economic development strategies that may affect decisions on the part of businesses to relocate, remain, expand their operations, or leave a community or state. These strategies may also affect decisions of families and retirees to move to and remain in Florida and of tourists to visit Florida.
Deploying Development Strategies – A Balancing Act:
Duval County’s leaders are faced with a balancing act in implementing economic development strategies, because resources are finite and stakeholder interests obviously differ. Businesses considering expansion will be interested in different public services than, for example, families who are weighing the pros and cons of moving to Jacksonville or tourists who are considering a holiday on one of Jacksonville’s beaches.
All these parties, despite disparate interests, share the need for goods and services. For businesses, the need may include workforce training facilities and a skilled labor pool; for families, decent, affordable and safe housing, and good and dependable wages, roads, and public schools; for tourists, plentiful cultural and recreational amenities. This shared demand for goods and services, however defined, drives employment growth.
The question facing both Duval County and the state is how that growth should be guided. For both, the objective is clear: the economy must become more diverse, less dependent on real estate and construction, and with a greater emphasis on higher paying jobs. Export activity is considered an economic development strategy linked to employment growth and higher wages. To that end, both Duval County and the state see the importance of exporting. Both advocate a targeted industry/cluster approach to propelling employment growth forward and informing the most efficient use of government resources.
Two Strategies – Diversify the Economy and Increasing Income and Average Wages: Diversifying the economy is essential if the state and localities are to be cushioned against future downturns and better positioned for global opportunities. The Great Recession has showed us that an over-reliance on sectors such as construction, real estate, and services can significantly affect the state’s long-term prosperity. Several metrics are used to gauge prosperity and they all have different implications. Average annual wages provide some broad insight into the types of occupations that are more or less lucrative. For example, in 2009, average annual wages in Duval County for several high-paying occupations such as the information sector and education and health services tended to exceed those for such occupations statewide. However, the information sector represented only 2% and education and health services roughly 14% of all average annual employment in both Duval County and the state as a whole.
Until recently government has been another source of relatively stable employment. This has been particularly true in Duval County with its substantial military base-related employment. While government employment grew steadily in the years leading up to the recession, total government employment dipped slightly from 2008 to 2009 in Florida and Jacksonville. Employment at all levels of government is projected to decline in Jacksonville due to revenue shortfalls and deficit reduction measures at the federal and state levels. State and local government jobs will continue to decline until at least 2012. Federal government jobs will fare worse with projected reductions each year through 2014. On the other hand, Jacksonville is well positioned to expand its employment in healthcare and professional services, both sectors with relatively high paying jobs.
A second and related metric is per capita personal income. The U.S. Bureau of Economic Analysis tracks personal income by metropolitan statistical area (MSA). The Jacksonville MSA includes five counties: Duval, Nassau, St. Johns, Clay, and Baker. If a comparison is made to the average per capita income of all U.S. metro areas, Jacksonville’s numbers look worse than the overall U.S. average over time. Even immediately prior to and during the recession (2007-2008), Jacksonville’s per capita income lagged that of the average U.S. metro area.
The Brookings Institution ranked 150 metropolitan areas throughout the world in terms of their per capita income growth and employment growth prior to the recession (1993-2007), during the recession (2008-2009), and during recovery (2009-2010). Of the 150 metro areas under review, 50 are in the United States, including Jacksonville, which lost significant ground during the recession in terms of both income and employment but managed to regain quite a bit of ground relative to other global metro areas during recovery. The “mixed” recovery picture of Jacksonville, as well as of other large Florida metro areas, was typical of U.S. metros in general because changes in metro employment and income are strongly correlated to national trends. The same housing meltdown and drop in consumer demand that affected the U.S. also affected many large U.S. metro areas, including Jacksonville. The unemployment rate in Jacksonville was 11% in 2009. Much the same as unemployment in the state and other big Florida cities, Jacksonville’s unemployment is expected to taper off gradually in 2011 but still hover over 10% until 2013.
The Brookings Institution also analyzed the 100 largest U.S. metro areas in terms of their recovery from the recent recession, and …Jacksonville was classified among the 20 weakest in its recovery from the recession. Of the eight metro areas in Florida included in the study, only Orlando was not among the 20 poorest performers.
Despite the sluggish economy of the recent past and present, there is some good news for Jacksonville on the horizon. The city is forecast to experience the highest projected average per capita growth among the four largest Florida metros during the period, 2010-2014. In addition, Jacksonville is projected to see higher average wage growth than the Tampa and Orlando MSAs during that period.
The Case for Export Expansion: One approach to expediting the recovery from the Great Recession would appear to be through expanded export activity. While exporting may be desirable in terms of average wages, research findings suggest that long-term wage growth and productivity of exporting firms appear not to be superior to that of non-exporting firms. However, employment growth, initial wage growth, and probability of survival are higher for exporters than non-exporters. So it is important to understand the benefits of exporting but not to overstate them.
Florida’s strategic plan, “Roadmap to Florida’s Future,” acknowledges the importance of export activity for job expansion and high-paying jobs. Information technology is another sector ripe for exports, according to the state’s strategic plan, as the state is ranked third in the U.S. for IT exports.
Jacksonville’s export activities also contribute to job creation. According to a recent Brookings Institution report, Jacksonville produces an estimated $3.7 billion annually in total exports, ranking it 68th of 100 exporting metros examined. However, Jacksonville’s export sales of both goods and services as a share of the total economy lag behind those of other large metro areas. The Gross Metropolitan Product (GMP) measures the market value of all final goods and services produced or provided within a metropolitan area in a given period of time. Like export promotion strategies, targeted industry clusters can benefit both Jacksonville and the state.
Conclusion: Duval County’s strategic efforts are inextricably affected by regional, state and federal policies and by the health of the state and national economies. While Duval County was slower to experience the impacts of the downturn than the state as a whole, it, like other predominantly metropolitan counties in the state, was eventually hit hard by the recession and is still combating unemployment and housing woes. Strategies involving both exports and investments in targeted industries may accelerate the County’s recovery, as well as that of the larger metro region, if research findings amassed by the Brookings Institution on metro areas turn out to be correct. Like other large metro areas in Florida, Jacksonville/Duval County will continue to face the daunting task of exploiting its comparative strengths while attempting to bring everyone on board to plan, share in, and enhance its future. Critical to that effort will be an educated and skilled workforce, which is fundamental for success in a global economy. In addition to the County’s strategic planning efforts to improve education and upgrade workforce skills, among other objectives, regional planning and engagement of the sort undertaken by Cornerstone and Jacksonville Community Council, Inc. will be instrumental in growing and attracting businesses to, and expanding intermodal transportation in Northeast Florida.
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