The Reubin O’D Askew Institute on Politics and Society has partnered with the Bureau of Economic and Business Research to develop a series of Florida Focus papers that highlight how various regions in Florida are positioning themselves to move forward after the Great Recession. This paper – the second in the series – is a background essay written for participants in a meeting titled “Orlando: Choosing Our Future after the Great Recession,” that was co‐sponsored by the Askew Institute and the City of Orlando on May 18, 2011.
Florida and Orlando: Choosing the Future after the Recession
Dr. Lynne Holt and David Colburn
Overview: Florida and Orlando’s diverse populations present unique challenges, as well as opportunities, in a post-“Great Recession” era. Investments in key growth sectors and supporting infrastructure are essential to the region’s economic future, and the economic expansion resulting from such investments will strengthen the foundation of both the region and the state as they emerge from the recession.
Introduction: From 1970 to 2010, the populations of both Florida and Orlando expanded dramatically and became more diverse. Joining the wave of retirees and workers seeking better job prospects were immigrants from throughout Latin America. Over 2 out of 5 Florida residents are classified as having a race other than “white, non-Hispanic.” In Orlando, the ratio is even higher than that of the state, with almost 3 in 5 residents classified as such. Florida’s African American population expanded in the 1990s and 2000s, bolstered by the migration and immigration of African Americans, Jamaicans and Haitians. In contrast, Orlando’s remained fairly stable. Constituting 17% of the population, Florida’s seniors have exercised extraordinary political influence that extends well beyond their proportion of the population. They tend to vote more than other age cohorts. Orlando’s senior population is smaller and younger relative to the state average. In the past, forging consensus among such a diverse population was not particularly daunting because economic growth provided widespread opportunity. However, when the economy began to decline, the lack of understanding Floridians had for their state and one another became an enormous obstacle in responding to the Great Recession.
By spring 2008, Florida’s economy had begun to seize up. Still, Floridians, who only knew growth, believed the downturn would not last long or be very deep. By 2009, that optimism had been dispelled and the migration of the retirement population slowed to a crawl. Florida found itself buried in a mountain of debt, and jobs fell to a 10-year low for many of the state’s major cities. The number of Florida’s leisure and recreation-related jobs fell in 2008 and 2009 as a result of the national decline in disposable income, but increased in 2010. Orlando has a greater reliance on tourism employment than the state as a whole. The number of tourists visiting Orlando decreased about 4.7% from 2008 to 2009. Yet, despite the dip, tourism in Orlando remained one of the more stable sources of revenue for the city and state during the recession. Although Florida’s and Orlando’s long-term economic prospects bode well, four lingering threats to recovery remain: high unemployment, a languishing housing market, a projected downturn in government employment, and creating jobs of the future.
Unemployment: Florida’s March 2011 unemployment rate (11.1%) was much higher than the 8.8% rate for the nation. The rate in Orlando (10.4%) was lower than in the state as a whole and has continued to decline, but is unlikely to return to the 4% rate of 2005 and 2006.
Housing Market: Another major drag on the state’s economic growth is the high percentage of foreclosures and unsold housing stock. Florida has the dubious distinction of leading all states with a foreclosure rate of 13.7% and with 23.5% of loans in either foreclosure or delinquency at the end of February 2011. Foreclosures likewise dampened Orlando’s economic growth. All indicators suggest that the housing crisis will persist for several years.
Government Jobs: In 2010, the share of government employment…was 15.5% in the state and 11.6% in the Orlando metro area. Federal and state budget cuts are likely to increase unemployment in this sector in the near term and drive down their spending as a consequence.
Jobs of the Future: Wells Fargo Securities recently identified several growth sectors that would have a high share of employment in the future: finance and insurance, professional and technical services, accommodation and food service, and health care and social assistance. Florida was reported to have a greater regional advantage than most other states and over 42% of Orlando’s total employment is in a combination of these sectors. The category used by the Bureau of Labor Statistics, “professional and business services,” represented over 16% of Orlando’s total employment in 2010, and is expected to have annual growth of almost 6% from 2011-2015. Professional and business service jobs will be critical for the research, services, and technologies that are expected to stem from Orlando’s biotechnology and life science companies. According to the Metro Orlando Economic Development Commission, there are more than 150 such companies in the Orlando metro area with 9,248 employees and an estimated 2.6 billion in earnings.
Although Orange County has a higher percentage of prime working age residents (age 24-54) than the state as a whole, it will need to provide incentives to better align these workers with the skills of these emerging jobs. A good first step would be to identify barriers to relocation and job creation, and identify ways to ameliorate these barriers.
Long-Term Challenges for Prosperity: Both the state and Orlando will need a sizeable, skilled, and educated workforce to meet the high skilled employment demands arising from a changing and expanding global economy. In addition, the community will need to enhance stability while also reducing poverty and crime and expand transportation options to support business efficiency, job growth, and the city’s competitive initiatives.
Making the Case for an Educated and Skilled Workforce: Those without a college education were more likely to lose employment early in the recession. They also have had much greater difficulty finding re-employment. While there will always be a demand for low skilled labor in Orlando, no city will be able to compete globally on the basis of its lowest wage jobs. Florida and Orlando can and will draw some expertise in the sciences, engineering, and other more specialized professions from other states, but the nationwide housing meltdown has hampered mobility. As a consequence, a major source of skilled and educated workers will need to come from within the state. To facilitate the recruitment of skilled workers and the effort to “grow its own,” Orlando must develop a coordinated plan to ensure its success.
Improving Education: The vast majority of skilled positions in Orlando are dependent on graduates of Florida’s post-secondary education system. But university graduation rates are currently insufficient to meet the needs of a robust, high skilled economy. Florida’s K-12 system is also a major source of concern for employers. Too many students do not graduate from high school, and, among those who do, too many are not qualified for many entry-level jobs in the service sector, let alone in more skill-intensive industries. One might argue that money does not necessarily buy a better education, but steadily declining public school funding is not likely to either.
Reducing Poverty and Crime: Cities do not want to be included in indices that rate them the most dangerous in the country. One index ranked the Orlando metro region third among the 11 most dangerous cities in the nation in 2009.While the city of Orlando’s crime rate is lower than that of the region, rankings such as these are not good advertising. Crime, as well as the perception of crime, threatens Central Florida’s tourism industry and the region’s ability to attract new employers. The city responded a few years ago by implementing a community-wide program to address the immediate causes for the spike in crime. This anti-crime program and other community development measures successfully contributed to the most dramatic reductions in crime in Orlando history.
Urban Sprawl, Traffic Congestion and the Damage to Business Synergy: Traffic congestion brings with it costs that are manifested in time and money lost through delays and additional fuel expenses, by one estimate costing Orlando $962 million in 2009. One way to reduce traffic congestion is through expanded public transportation which can connect neighborhoods and enable Orlando’s residents to access medical providers, work, tourist facilities, and shopping malls. Despite challenges with local traffic for economic and business development, Orlando’s International and regional airports have made Orlando a transportation hub for air travel and commerce. There is every sign that this area of travel and trade will continue to expand significantly in the coming decades.
Conclusion: A lack of sustained investment in educating skilled workers and researchers hurts all cities in the state. When asked recently by a state legislator why the Boeing company ignored Florida in choosing to build its planes in another state with higher taxes, higher wages, more union presence, more regulations, and lower unemployment, the Boeing representative responded: well educated workers. While Orlando and Florida have identified high-skilled and high-compensating fields as critical for their future development, the city and state are still very dependent on a workforce that is not sufficiently trained and educated to meet future demand. Collaborative efforts between businesses and government are nonetheless critical for meeting workforce demands. Such efforts also apply to intergovernmental collaborations. Over the last decade, the City of Orlando and Central Florida’s cities and counties have been able to leverage the benefits of enhanced partnership to begin developing a collaborative, regional approach to these challenges. It is clear that maintaining this strategic effort to diversify the region’s economy and grow the jobs of tomorrow while focusing on safety, education, and expanded mass transit will be essential if Orlando is to emerge from the “Great Recession” as the world class city so many of its residents desire.