The Great Inequality in Florida

Every state has its quirks, of course, but Florida seems to be in the news more often than most. Human-interest stories like a woman arrested for leading a motorized suitcase chase through an airport, a man bitten by an alligator he mistook for a dog, another man who carjacked a street sweeper (all real stories from Florida in just June 2022); political stories like Governor Ron DeSantis being tapped by many to be Donald Trump’s replacement as the head of the Republican party; policy stories like the state’s widely publicized “Don’t Say Gay” bill and banning math textbooks that officials claimed taught Critical Race Theory (CRT). For one reason or another, Florida is always in the news.

But Florida is not just unique because of its strange, often barely believable, stories. It is also a land of contradictions. It has the fourth-largest economy in the country (with a gross state product of $1.2 trillion in 2021) and, if it were its own country, it would have the 16th largest economy in the world, ahead of Indonesia and just behind Mexico. Yet in 2022, it has the 28th highest median household income ($80,286) and 28th highest per capita income ($31,619). In fact, the state’s median household income is 13% below the national average.

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As of May 2022, Florida had an unemployment rate of 3%, significantly below the national average of 3.6% at the time. Yet, 12.7% of its population lived below the poverty line in 2020, making it 32nd in the country.

So what has gone wrong for Florida? Why is the fourth-largest economy in the country ranked so low in these common measures of wealth? And, perhaps more importantly, what effect does this have on the state’s security and stability?

Florida is known for being a pro-business state. Chief Executive magazine has ranked it the #2 Best State for Business for the past ten years; CNBC ranked it the #4 State for Access to Capital in 2019; and the Tax Foundation ranked it #4 on its 2021 State Business Tax Climate Index.

But contrary to what many claim (or would like to believe), being good for business does not make a state good for its workers or citizens. Since Chief Executive first published its list of the “Best & Worst States for Business Survey of CEOs” in 2001, Texas has held the top spot. Just below it for the past ten years has been Florida—and it has certainly earned this runner-up position.

Florida is one of ten states with a top corporate tax rate at or below 5% (Florida’s is 4.5%), and it offers a variety of tax incentives to businesses choosing to relocate there. For instance, the Capital Investment Tax Credit (CITC) offers an annual corporate income tax credit, for up to 20 years, for projects that create a minimum of 100 jobs and invest at least $25 million in eligible capital costs. Companies can also avail themselves of the other 13 “Investment in Florida” tax credits, like the Research and Development Tax Credit, or any of the additional 28 tax credits, refunds, and other incentives Florida has created to attract businesses.

Naturally, the lower a state’s corporate tax rate, the more attractive it will be to companies considering relocating—and this is exactly what has happened in Florida. Last year, Pfizer announced plans to open a global capacity hub in Tampa; in May 2021, KPMG doubled its investment in its Orlando operations and announced 350 additional jobs; and in September 2021, Terran Orbital announced a $300 million investment and 2,100 new jobs at its Commercial Spacecraft and Constellation Facility in Merritt Island. Currently, 20 Fortune 500 companies are headquartered in the state, which places it at #8 in the nation and rising.

While it’s true that these businesses provide jobs for Florida’s workers—based on the fact that the state’s unemployment rate is 3% (17th in the nation)—its median household income is still 13% below the national average. Thus, on average, it workers must be toiling for lower wages than their fellows in higher-ranked states. And the fact that companies can pay workers less is likely a key selling point for moving business to Florida—particularly for companies looking to reshore all or part of their operations from countries where labor is cheaper in order to, among other things, avoid the current supply chain chaos.

Another factor that has attracted companies to Florida is the fact that it is a “right-to-work” state, the name of which is a masterful bit of euphemism.

While the conservative National Right to Work Legal Defense Foundation claims that the Right-to-Work principle is beneficial for workers and “affirms the right of every American to work for a living without being compelled to belong to a union,” naturally unions—and many academic studies—disagree.

According to the AFL-CIO—the largest federation of unions in the country—“‘Right to work’ is the name for a policy designed to take away rights from working people. Backers of right to work laws claim that these laws protect workers against being forced to join a union. The reality is that federal law already makes it illegal to force someone to join a union. The real purpose of right to work laws is to tilt the balance toward big corporations and further rig the system at the expense of working families. These laws make it harder for working people to form unions and collectively bargain for better wages, benefits, and working conditions.”

Based on the studies that have so far been conducted, the data seems to be on the side of unions. For instance, one study released in early 2021 by the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign lays out how, on a number of metrics, states with right-to-work laws come up short. According to the study, there are 11% fewer workers with bachelor’s degrees in right-to-work states, there are 31% fewer registered apprentices, economic productivity per worker is 17% lower, and the on-the-job fatality rate is 50% higher. In addition, according to the analysis, right-to-work states have 3% lower hourly wages on average, 5% less health insurance coverage, and 8% less retirement security.

All of these negative economic indicators for workers seem to be having a direct impact on the well-being of Floridians. In a study by WalletHub of the happiest states in America, Florida did not come off well. WalletHub compared all 50 states across three key dimensions—Emotional & Physical Well-Being, Work Environment, and Community & Environment—using 31 relevant metrics. In doing so, Florida was ranked the 34th happiest state—despite the fact that it is home to Disneyland, “The Happiest Place on Earth.” While it did okay in “emotional & physical well-being,” placing 21st, its “work environment” and “community & environment” rankings were dreadful (42nd and 49th place, respectively). In fact, the only state ranked worse than Florida in “community & environment” was its fellow right-to-work state and #1 best state for business 21 years in a row: Texas.

In order for a society to be secure and stable, the citizenry needs to be, by and large, happy—or at least satisfied and content with their lives. In Florida, this is clearly not the case for many. Florida is the most politically divided and prejudiced state in the nation (according to a 2019 study by PredictWise in collaboration with The Atlantic), meaning people are less likely to be tolerant and accepting there than any place else in the U.S. It’s 32nd on Oxfam America’s 2021 list of “The Best and Worst States to Work in America,” yet it is the 2nd best state for business—a discrepancy which probably goes pretty far in explaining why it’s ranked 42nd in work environment by WalletHub.

And yet, rather than trying to remedy this, the state’s conservative leadership has chosen time and time again to double down, introducing and passing unpopular and harmful legislation because it aligns with and enforces their own morals or will keep them in power. Of course, there are the much discussed banning of the teaching of CRT in classrooms and the “don’t say gay” bill, but Florida Republicans have not limited themselves to imposing their social conservativism just on schools.

Governor DeSantis recently signed into law the subtly titled “Stop WOKE Act,” which restricts not only schools but also private corporations from conducting teaching or trainings that could cause people to “feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race, color, sex, or national origin”—effectively banning diversity and inclusion training. He also made a name for himself nationwide as a leading opponent of vaccines and masks—Florida had the 18th highest COVID death rate per 100,000 people and the third highest total number of deaths of any state. And, he has taken retaliatory actions against both Disney and the Tampa Bay Rays for coming out in favor of equal rights and gun control laws, respectively.

At the same time, as Al Jazeera writes, “after Florida voters chose to restore voting rights to felons—a sign that the state’s population was becoming more liberal—Republicans worried that the re-enfranchisement would benefit Democrats. They therefore passed a new set of regulations that defied the spirit of the law by denying the vote to hundreds of thousands of people who still owed fines or fees related to their convictions.”

While Florida may be a case study in how to attract businesses to a state, it is hardly the ne plus ultra in any other respect. Yes, its corporate taxes are low, but so is the happiness of its citizens. Yes, there is a large workforce, but the members of that workforce are in the bottom half of states in terms of educational achievement—Florida is 36th in percentage of the population that has graduated high school, 29th in percentage with a bachelor’s degree or higher, and 29th in percentage with an advanced degree. And yes, it has a low unemployment rate, but it is the 32nd best state in which to work and 42nd in work environment.

Improving the lives of Floridians, or the citizens of any state, is bound to be a lengthy process. And as long as Florida is more concerned with attracting businesses than improving the well-being of its workers and citizen, little about any of this is likely to change. However, there is a silver lining to this cloud: we currently find ourselves in a very tight labor market.

Unemployment has remained consistently low—at or below 4% since December of last year—yet according to the U.S. Bureau of Labor Statistics, there were still 11.3 million open jobs in the country at the end of May and fewer than 6 million unemployed workers to fill them. This discrepancy indicates that the tight labor market is likely to continue for some time, barring a severe recession. Perhaps Floridians will be able to parlay the bargaining power offered them by the labor situation into higher wages and more benefits, finally taking a bigger piece of corporate profit for themselves.