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July 8, 2012

Unemployment shrinks, but so do paychecks

IPI expert referenced: Merrill Matthews | In The News | Media Hit
  Tampa Bay Times

By Brittany Davis

Floridians are earning less and taking more low-wage jobs than they were a year ago, with pay rates dropping more than almost anywhere in the country.

Workers saw their pretax paychecks shrink to an average of $847 per week, down $24 or 2.8 percent compared with 2011, according to a U.S. Department of Labor report released Thursday.

Florida trails only Minnesota, Nevada and Connecticut in wage decline, according to the Labor Department.

What that means for Florida's economy depends on whom you ask.

Several think tank and federal government reports say a drop in wages can undermine economic recovery. But many economists also believe the decline can help fuel improvement by encouraging businesses to hire.

"The decline in wages will lead to more people working and help to pull the country out of the recession," said Larry Kenny, a University of Florida economics professor.

Florida's unemployment rate also decreased by 1.4 percent during that time, on par with the national average, according to the Labor Department.

Gov. Rick Scott frequently touts state data (collected more recently than the federal data) that put Florida's unemployment at 8.6 percent, a 2.5 percent decline within the past several months. But a report from the Legislature's research offices suggests the actual decrease is only about 0.3 percentage points once researchers factor in people who dropped out of the job market.

Scott spokesman Lane Wright said the governor welcomes all jobs.

"Gov. Scott has put a lot of focus on the high-tech sector, but he is not limiting Florida's growth to just that," Wright said. "We're not going to reject jobs just because they don't pay as high of a wage as they might in other sectors."

Why have Florida's wages dropped more than in other states?

Several factors may contribute, said Merrill Matthews, a resident scholar at the Institute for Policy Innovation.

Among them, Florida has made it more difficult for people to apply and retain unemployment benefits, which can shove more low-wage earners into the workforce and lower wages, Matthews said.

"Once those unemployment benefits are about to end people become more willing to compromise and are willing to accept less," he said.


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