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Victor Claar_16x10.6

Since the pandemic-induced recession ended in April 2020—at least according to the National Bureau of Economic Research, the official arbiter of the business cycle—it seems everyone is trying to sort out what’s happening in the labor market. 

We’ve all read and heard national and local news stories like this: Firms can’t find enough workers, while unemployment rates are especially low. Yet employment overall is strong. 

If the jobs situation is unclear, the overall economic outlook for the remainder of 2022 and 2023 looks uncertain, too—not only where employment is concerned, but also inflation. Despite job growth in 2022, the national economy has slowed overall, and persistent inflation is creating crises for working families. 

Yet, signs suggest that no matter what happens to the national economy in the next few months, Southwest Florida appears better prepared for uncertain times than just about anywhere else.

To understand why, it’s helpful to first look at some U.S. jobs numbers, and then examine how they compare to Florida in general and Southwest Florida in particular. 

Most readers are familiar with the monthly job market numbers supplied by the Bureau of Labor Statistics. For starters, consider the national labor force participation rate reported by households. In February 2020, just before the pandemic, the nation’s labor force participation rate was 63.4%. This means that among eligible adults, nearly two-thirds were either working or looking for jobs. Of course, the pandemic created a catastrophic drop: In April 2020, that rate had fallen to 60.2%, but by the end of the first quarter of 2022, that number had recovered to a mere 62.2%. 

Now let’s compare those numbers to the same numbers for Florida at the same three times. In February 2020, the participation rate in the Sunshine State was 59.1%, then fell to 53.8% two months later, and by March 2022 had risen to 58.8%. So even though Florida started lower overall, we’re much closer to our pre-pandemic levels than the nation is. 

So how is the region doing? To understand the particular dynamics of our area, it’s helpful to look at what has happened to the levels of some specific numbers rather than aggregated measures such as participation rates. As we know, our population has been surging. How well have available workers been connected to available jobs?

In the Cape Coral-Fort Myers metropolitan statistical area (MSA), the labor force in February 2020 was about 355,000. But by March 2022, it was up to roughly 367,000. Yet the unemployment rate in the same period from the beginning to the end changed little overall—2.6% in February 2020 and 2.5% in March 2022—though it was a whopping 14.1% in April 2020. This means that the local job market absorbed lots of those new labor market entrants. That’s good news about the availability of jobs and hiring rates. And the Naples-Immokalee-Marco Island MSA experienced a similar pattern over the same time frame: a bigger labor force and similar unemployment rates both pre- and post-pandemic. 

So the good news is that the local labor market appears robust; likely more so than the nation overall. 

But it’s not just the jobs picture that’s encouraging. Other signs point to the robustness of the Sunshine State. For example, while GDP for the country fell by 3.4% in 2020, for Florida, it fell just 2.8%. And in Southwest Florida, I’m encouraged by recent residential housing permit numbers: Though prices remain high and inventory low, permits issued in the coastal counties rose 28% from May 2021 to May 2022. And regional tourist tax revenues increased by 21% from April 2021 to April 2022.

In uncertain times, it’s good to be in the best shape possible. And Southwest Florida is in an enviable position.

Victor V. Claar is an associate professor of economics in the Lutgert College of Business at Florida Gulf Coast University. He serves on the James Madison Institute’s Research Advisory Council and the Freedom & Virtue Institute board.  

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