2010 Florida Jobs Summit Rosen Shingle Creek Hotel Orlando, Florida January 15, 2010 Tony Villamil St. Thomas University of Florida The Washington Economics Group (WEG) Jobs and the Florida Economy: An Economist’s Perspective

Economic Principles Cyclical vs. fundamental change Employment is a lagging indicator of economic activity; labor demand is derived demand Florida is a regional economy, highly sensitive to US, global and financial conditions Policy credibility and certainty are essential for job creation: “do no harm” Scarce human and financial capital for job creation flows to regions, states and countries that offer the highest returns, adjusted for risk (including regulatory, tax policy risks)

Cyclical vs. fundamental change

Employment is a lagging indicator of economic activity; labor demand is derived demand

Florida is a regional economy, highly sensitive to US, global and financial conditions

Policy credibility and certainty are essential for job creation: “do no harm”

Scarce human and financial capital for job creation flows to regions, states and countries that offer the highest returns, adjusted for risk (including regulatory, tax policy risks)

Economic Principles The greater the degree of policy intervention by government in the marketplace, the greater the risk of adverse consequences Florida is a global player; policies should reflect a global orientation to job creation Florida is competing in a knowledge-based 21 st Century economy: talent creation is the key to longer term employment growth

The greater the degree of policy intervention by government in the marketplace, the greater the risk of adverse consequences

Florida is a global player; policies should reflect a global orientation to job creation

Florida is competing in a knowledge-based 21 st Century economy: talent creation is the key to longer term employment growth

Florida Into the Perfect Economic Storm 2008-2009 Sharp Decline in Household Net Worth Global Financial Crisis Synchronized Global Economic Recession From employment growth leader to a leader in employment decline Cyclical decline and not fundamentals, is the main factor of high unemployment

From employment growth leader to a leader in employment decline

Cyclical decline and not fundamentals, is the main factor of high unemployment

Cyclical Factors are Improving: Unemployment Rates will Eventually Decline in Florida Economic Driver Outlook 2010 US Economy Moderate growth expected in 2010, but at slower pace than prior recoveries Global Economy Top trade and investment partners performance improving, which will fuel demand for Florida’s goods and services Financial Markets Stability returning, credit availability is improving, but remains tight for small businesses and for commercial real estate

US Economy

Global Economy

Financial Markets

What Can Florida Government Do to Accelerate Job Creation under an Improving Cyclical Picture? Short Term (2010-2011 ) Suspend, for as long as possible, the significant increase in the Unemployment Compensation Tax: A tax on labor demand Take advantage of growing global economies by funding again the successful Florida International Business Expansion Initiative Pass HB93 and SB1178 “Cost Benefit Analysis of Legislation:” Education, economic development and tax policy initiatives require dynamic analysis for optimum policy decisions continued

Short Term (2010-2011 )

Suspend, for as long as possible, the significant increase in the Unemployment Compensation Tax: A tax on labor demand

Take advantage of growing global economies by funding again the successful Florida International Business Expansion Initiative

Pass HB93 and SB1178 “Cost Benefit Analysis of Legislation:” Education, economic development and tax policy initiatives require dynamic analysis for optimum policy decisions

What Can Florida Government Do to Accelerate Job Creation under an Improving Cyclical Picture? Aggressively promote the pro-growth business climate of Florida to US and Global Markets Help defeat “growth and jobs destroyer” Constitutional Amendment 4 Tax relief for consumers and small businesses – to the extent possible Sell State assets to the extent possible, holding education investment “harmless” continued

Aggressively promote the pro-growth business climate of Florida to US and Global Markets

Help defeat “growth and jobs destroyer” Constitutional Amendment 4

Tax relief for consumers and small businesses – to the extent possible

Sell State assets to the extent possible, holding education investment “harmless”

What Can Florida Government Do to Accelerate Job Creation under an Improving Cyclical Picture? “3 Yards & Cloud of Dust!” Longer Term Economic Diversification for High Skill, High Wage Jobs Steadily implement the 2010-2015 Strategic Plan for Economic Development, with emphasis on talent creation and innovation initiatives Develop new (non-tax) sources of revenues to invest in human capital and infrastructure development  Mineral wealth  Innovative financing

Longer Term

Economic Diversification for High Skill, High Wage Jobs

Steadily implement the 2010-2015 Strategic Plan for Economic Development, with emphasis on talent creation and innovation initiatives

Develop new (non-tax) sources of revenues to invest in human capital and infrastructure development

 Mineral wealth  Innovative financing

Best Way to Create Jobs: Unemployment Rate only 5% for College Graduates U.S. December 2009 Age 25 and Older, US Census.

Talent Pays!: Employment-Population Ratio 73% for College Graduates U.S. December 2009 Age 25 and Older, US Census