As the unemployment rate continues to drop in South Florida, experts recommend taking a second look at the numbers.
“The unemployment rate has been really a misleading indicator of what’s happening in the labor market,” said Sean Snaith, a University of Central Florida economist.
In Miami-Dade, unemployment slid to 5.7 percent in March, down by .2 percent from 5.9 percent in February and 6.3 percent in March 2015. But along with shrinking unemployment was a slightly smaller labor force, dropping by .3 percent. This was the second consecutive month in which the number of job seekers decreased in tandem with unemployment.
“People leaving the labor force is not the way we want the unemployment rate to fall,” said Snaith. “We went through this . . . during the recovery, but this was mainly because people were losing hope of finding work.” This time, the culprit is economic turmoil abroad, he said.
“Miami-Dade is feeling the pressure of what’s been happening with the global economy. What’s happening in South America is having a tangible impact,” he said.
In Broward County, the unemployment rate in March stayed at the same level as the previous month: 4.4 percent. Statewide, the seasonally adjusted jobless figure dropped from 5 percent in February to 4.9 percent in March.
But the employment rate tells only part of the story. A better indicator of economic prosperity, said Snaith, would be wage growth. And that has been paltry in recent years.
According to the U.S. Census Bureau, median household incomes in Broward County have decreased by .3 percent since 2009, while in Palm Beach, wages have fallen 1.2 percent. Median incomes grew only in Miami-Dade, to $43,099 in 2014, the most recent year available, from $37,226 in 2009, a 15.7 percent increase.
Wage growth is crucial to the job market because “when you’re making money, you’re spending more money, and more demand equals more jobs,” said Josh Navarro, a global investment specialist with J.P. Morgan Private Bank in Miami.
“It’s a virtuous cycle,” he said.
Beyond economics, however, is psychology. The two, Snaith says, are inextricably intertwined.
“[People in Miami are] seeing stories about condos not selling, and I’m sure this is causing people anxiety because it wasn’t that long ago that . . . there were so many empty condo towers that people couldn’t even imagine they would ever sell. It’s an economic form of PTSD,” that creates economic standstill. Statistics, such as the unemployment rate, only hint at reality, Snaith said.
“I watched the steel industry [collapse due to globalization in the 1970s] and I saw firsthand the human element of economic cycles,” he added. “I’ve never forgotten that behind an unemployment number are families and children.”