(Bloomberg) – Governor Ron DeSantis presided over an eye-catching period of growth for Florida’s $1.1 trillion economy. He’s betting the push can help him get into the White House, even if more Sunshine State workers are left behind.
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Hiring has boomed and real estate values have soared in Florida during the pandemic, and an influx of billionaires, including Citadel founder Ken Griffin in Miami and tech investor Cathie Wood in St. Petersburg, Wall Street Glitz added. . The state has long attracted workers and retirees seeking to escape high taxes and cold winters elsewhere, and DeSantis’ relaxed approach to Covid-19 and pugilist brand of cultural conservatism have drawn a new crowd.
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“His appeal to me was that he kept the state open. It was a big problem. My kids not having to wear a mask was a problem,” said Steven Hertzberg, a tech entrepreneur who moved to the Ponte Vedra Beach area near Jacksonville from northern California last year.
Recent economic gains have not been widely shared. As a new class of well-paid professionals have flocked to the state, following their southern financial bosses, many of the lowest-paid workers are struggling to stay afloat amid the rising tide of wealth . Paychecks are failing to keep up with a torrid rise in rents, and the housing boom has put homeownership out of reach for many.
With 44-year-old Republican DeSantis at the helm, Florida’s economy grew about 11% from 2019 to 2022, about double the growth of California, Texas or New York in during the same period. Florida alone would rank 18th among global economies, just behind the Netherlands and ahead of countries like Indonesia, Saudi Arabia and Turkey, according to World Bank data.
Florida helped lead the charge out of the brief but deep slump that pushed the U.S. economy into recession in the spring of 2020. But the unique conditions that made the state’s growth explosion possible – including a epochal shift to work from home and a massive federal government response to the economic pain created by the pandemic – seem unlikely to be repeated or easily replicated with other policy changes.
DeSantis benefited from billions of dollars in federal pandemic relief and infrastructure funds, which allowed him to inflate the state budget to $117 billion for the fiscal year beginning July 1, or a 31% increase from when he took office in 2019. Much of that spending came in the form of tax breaks, even though Florida’s tax advantages over other states are longstanding. It has no state income tax and has long provided property owners with favorable property tax rates.
Former President Donald Trump, DeSantis’ arch nemesis in the GOP nomination race, has hinted at how his administration’s policies have helped bolster the governor’s fortunes. Trump’s CARES Act pandemic relief legislation gave Florida $8.4 billion.
“Florida was doing VERY well before Ron DeSanctus came along,” Trump said in a February post on the Truth Social platform, in one of several jabs he and his campaign have unleashed on DeSantis’ record. “SUN AND OCEAN, very alluring!!!”
The lowest paid workers have seen smaller income gains even as house prices and rents soar. According to Zillow’s Observed Rent Index, between 2019 and 2023, seven of the 10 largest rent increases have taken place in Florida – with Cape Coral, North Port and Miami leading the way, all seeing more than 50% increases in rents. rents. The national average rent increase was about 31%.
The majority of jobs in Florida are in hospitality, healthcare and retail, according to Ned Murray, a professor at Florida International University who specializes in economics and housing. Although these jobs are plentiful, they do not offer a high degree of economic security. Florida had the 37th-lowest median wage in the United States at $19.26 per hour in May 2022, according to data from the United States Bureau of Labor Statistics.
“If you’re a worker, it’s hard to have a quality of life right now,” Murray said. “There’s a lot of job growth and low unemployment, but most jobs are in the low-wage service sector.”
Yet for the first time since 1957, Florida has the fastest growing population in the United States, according to the Census Bureau, and it’s not just the very rich who are packing their bags and heading south. . Ocala, a largely middle-class Central Florida city of 64,000 and the self-proclaimed horse capital of the world, saw the strongest growth in one-way U-Haul trucks in the nation last year.
“In Florida, we proved it could be done — we chose facts over fear, education over indoctrination, law and order over riots and mayhem,” DeSantis said. in a glitch-filled, hour-long online chat where he officially announced his intention to seek the 2024 GOP presidential nomination. “Our results in Florida have been unmatched, and we can and must deliver big results for America.”
A governor’s actions can have a powerful effect on a state’s economy, especially in the aftermath of a disaster. When Hurricane Ian cut off Captiva Island, a seaside retreat off Fort Myers, from the mainland, DeSantis pushed to repair a damaged causeway in 15 days. For local businesses, this provided an essential lifeline during the recovery from the storm.
“We thought it was going to take months,” said Andreas Bieri, owner of Mucky Duck, a popular beachfront restaurant and bar. Shortly after, Bieri voted to reward DeSantis with a second term, helping to largest margin of victory in a Florida gubernatorial election in 40 years.
But other more lasting changes DeSantis has made could threaten many of the same businesses he helped after the storm. A new law that penalizes people who house or employ undocumented immigrants could force Bieri to close Mucky Duck because he fears he won’t be able to host the restaurant. The bill requires employers to verify the immigration status of workers and will suspend companies that are not compliant.
“I’m not sure what he’s been up to lately, I’m a Republican but in my opinion he’s too extreme,” Bieri said of Desantis. “I might have to close, and if I have to close, c’est la vie.”
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Like Bieri, some prominent businesspeople have struggled to reconcile their support for DeSantis’ pandemic position with his positions on cultural issues such as abortion, transgender rights and education. Thomas Peterffy, the founder of Interactive Brokers, said he refuses to support DeSantis on social issues, and Steve Schwarzman, the co-founder of Blackstone Inc., refrains from donating to the Desantis campaign after the have met recently.
The immigration law could be particularly worrisome for businesses that are the foundation of Florida’s economy and depend on a steady supply of people willing to work for modest wages in hotels, restaurants and construction.
At the same time, falling wages have made it difficult for many Floridians to keep up with rising costs. Miami and Tampa recorded the largest year-over-year increases in consumer prices of any major U.S. metro area, according to the latest data from the Bureau of Labor Statistics, about double the level of San Francisco and New York. In Miami, the median household must pay 50.2% of their annual income to own a home at the median price, up from 33.7% two years ago.
Some people who flocked to the state in search of a higher standard of living had to back down. Yvette Mendez, 62, moved to Miami in 2008 from the Bronx. She and her husband at the time were fed up with the high rents and the cold. But a month ago, she found herself in New York, living with her daughter in Brooklyn.
Mendez was evicted from her home in suburban South Miami after falling behind on rent, which initially cost $1,500 a month in 2021 but soared to $1,800 just six months after moving in. She scoured the county for a new place, but couldn’t find anything in her price range, and Mendez said she couldn’t afford the three months’ rent that many landlords charge at home. advance.
“I wanted to live in a tropical place, the Sunshine State, as they say. Now it’s my home, I absolutely want to go back,” she said, hoping the rents would come down. “The governor, the officials, it’s like they want to see everyone on the street.”
Billionaire and Republican kingmaker Peter Thiel says Florida’s on-the-ground economic woes are finally catching up with DeSantis, leaving him with little to focus on outside of the cultural stances that have helped him grow. rise to national prominence.
“What do you do with these skyrocketing rents, these skyrocketing housing costs? It’s a super hard problem to solve,” Thiel said on the Honestly With Bari Weiss podcast in early May. “I understand why DeSantis doesn’t talk about it, but surely it’s a bigger issue.”
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