Gov. Rick Scott boasts about creating new jobs, but the numbers tell a far different story
12/06/2013 12:16 PM
12/19/2013 12:58 PM
Editor's note: An enhanced version of this story is available. Read it here.
Gov. Rick Scott has staked his political future on his ability to bring jobs to Florida, but the first comprehensive review of his efforts shows few successes and hundreds of unfulfilled promises.
The Miami Herald and Tampa Bay Times reviewed public information for 342 job-creation deals that involve various tax breaks since Scott took office in 2011. Among the findings:• Of the jobs Scott can influence most, only a fraction now exist. Scott has pledged $266 million in tax breaks and other incentives in return for 45,258 new jobs. But 96 percent of the jobs have yet to materialize, according to state data.
• The total number of new jobs Scott ultimately might deliver doesn’t offset the jobs lost at companies with more than 100 workers in the same time period. Between January 2011 and November 2013, large Florida employers reported 49,163 layoffs, according to federal data.
• Nearly 14 percent of Scott’s deals — 46 in all — have collapsed for various reasons, the state says, and more projects are dormant.
• Florida offers tax breaks in most cases only when a company creates the jobs it promised, and $45 million sits idle waiting to be claimed by companies that have not yet reached hiring goals.
• The jobs outlook isn’t better in Broward and Miami-Dade counties, where Scott inked deals to create 5,456 jobs in exchange for $25.2 million tax incentives and breaks. Jobs created to date: 61.
Scott campaigned in 2010 on a promise to create 700,000 jobs and has crisscrossed the state ever since, welcoming employers and proclaiming, “It’s Working.”
But the hard numbers show that the jobs Scott can most directly deliver to the state are the slowest to arrive.
“These things take time,” Scott told the Herald and Times. “It’s years.”
Counting Florida’s jobs
In the big picture, Florida’s economy is improving.
Since Scott took office, the state’s unemployment rate has dropped from 11.1 percent to 6.7 percent, and the state has added 440,000 private-sector jobs, according to federal data.
But both numbers come with questions and caveats.
The drop in unemployment is partially due to people who stopped looking for work, notes the Legislature’s economist, Amy Baker.
And the jobs gains in part mirror a national trend. So are Florida’s added jobs thanks to Scott? Or President Barack Obama? Both? Neither?
“(Scott) has worked around the clock to create jobs in Florida and has succeeded admirably,” said J.M. “Mac” Stipanovich, a lobbyist and political strategist, who served as chief of staff for Republican Gov. Bob Martinez. “But no governor in any state can move the needle on the world economy meter, for good or bad.”
Scott proudly displays a chart highlighting the drop in unemployment on an easel outside his office in the state Capitol. State emails feature a “What’s Working Today” logo with a construction crane hoisting a map of Florida.
“When you’re talking about politicians, they’re going to use the number that’s most appealing to them,” said Mark Price, a labor economist at the liberal-leaning Keystone Research Center in Harrisburg, Pa., which tracks employment trends.
Herald and Times analysis
To understand Scott’s influence on Florida’s jobs picture, the Herald and Times examined the deals that the governor could most affect: projects where the state offers economic incentives such as cash grants and tax refunds.
Reporters spent more than six months examining publicly available information on 342 jobs deals crafted since Scott took office. The Herald and Times also requested information from the state Department of Economic Opportunity, an agency Scott created in 2011 to oversee incentive programs.
In many cases, reporters visited or contacted businesses individually to document their progress.
The Herald and Times created a first-of-its-kind database, available online at MiamiHerald.com, to catalog the findings.
Dozens of the deals made by Scott remain confidential, and job figures varied depending on the source. In those cases, the Herald and Times used Scott’s press announcements or news reports to fill in gaps.
When the photo-op ends
Scott faithfully shows up for photo-ops and ribbon cuttings to highlight the promise of new jobs.
But where he goes, the jobs don’t always follow.
Two years after Scott agreed to spend $250,000 renovating a Kissimmee warehouse for Colt’s Manufacturing Company, the building sits empty.
Eighteen months after Florida offered $700,000 in incentives for Global Voter Solutions to hire 127 people for a civic website, the project remains stalled. Owner Chuck Kirkpatrick declared personal bankruptcy in 2010 and said he can’t find investors.
Nearly a year after Scott hailed news of 350 jobs at a sawmill in struggling Suwannee County, construction is just beginning. Red tape slowed the transfer of land to the company, Klausner Holdings USA.
Redpine Healthcare Technologies planned to shift 410 jobs from Spokane, Wash., to Panama City, and got $400,000 and a congratulatory note on Scott’s letterhead in 2011.
But the jobs never arrived, the money is gone, the company owner declared bankruptcy, and the state accused Redpine founder Shad Wheeler of fraud.
For hundreds of other projects, the state website that tracks jobs data, Floridajobs.org, shows the same number of jobs created during Scott’s tenure: 0.
Yet Scott’s chief jobs recruiter, Enterprise Florida president Gray Swoope, insists the jobs are coming. Some companies have up to a decade to create the jobs they promised and Scott officials say that projects are on schedule.
“It’s hard, because it is not a solid transaction that you announce today and there are going to be the jobs tomorrow,” Swoope said. “It’s a fluid process.”
Scott also takes the long view.
“They’ve got to figure out their business plan — the companies do,” Scott said. “Long term, the growth is going to be because we created an environment where businesses can do better.”
Hertz: A success story
Week after week, Scott trumpets new job announcements.
Amazon is promising 3,000 jobs in Tampa Bay by 2016. Navy Federal Credit Union plans 1,500 jobs in Pensacola by the same year. Northrop Grumman says it will hire 1,400 people in Melbourne and St. Augustine, and Verizon will employ 750 in suburban Orlando. But none of it is concrete.
The single deal that Scott considers his most prized acquisition is with Hertz, a Fortune 300 company.
The rental car giant agreed in May to transfer about 700 employees from its Park Ridge, N.J., headquarters to a new location near Fort Myers and stands to receive incentives totaling $19 million. One of Hertz’s perks is a reduction of its electric bill by $125,000 over four years.
The company says it will invest $69 million in the area and that its Florida workers will earn an average wage of $102,000 a year. Many details of the Hertz deal remain confidential, yet the company broke ground on its new building last month.
Hertz began searching for a new corporate home after it bought Dollar Thrifty, a rental car company based in Tulsa, Okla., a merger that produced a clash of cultures.
“We were never going to get the New Jersey-based people to move to Oklahoma and the Oklahoma people were not going to move to New Jersey because of the cost of living,” said Hertz vice president Rich Broome, who’s headed south with other Hertz executives. “Florida quickly became at the top of the pack.”
Hertz liked Florida’s image as a tourism center and its low cost of living. Scott said he did not know Hertz CEO Mark Frissora beforehand, but they looked like old friends at ceremonies celebrating the company’s move.
Another company, Mindtree, which designs websites for airlines, hotels and other large companies, was looking to be near a university with a strong engineering school.
It chose Gainesville over Greenville, S.C., and Birmingham, Ala., and promises 400 jobs paying an average of $80,000. The company has five years to create the jobs to qualify for a $1.2 million tax break.
Mindtree general manager Joelle Smith says 100 employees already are on board, though the state has not verified the numbers. “We’re right on target,” Smith said.
Mindtree executive Scott Staples cited encouragement from both the University of Florida and city of Gainesville economic development officials. He said three phone conversations and two meetings with Scott helped seal the deal.
“What I really like about Gov. Scott is that he was a businessman,” Staples said. “He completely understands what it takes to be successful.”
‘Proud of every job’
Scott seeks all kinds of jobs, from six-figure salaries at Hertz to low-wage jobs that pay barely above the poverty level. He has offered tax breaks and incentives for a Sam’s Club discount store in St. Petersburg, a Miami-Dade Walmart and a call center for Sitel Operating Corp. in Ocala.
Sitel does customer relations work for major retailers and told the state it would hire 250 people by now. It operates three shifts around the clock and says it has hired 620 people, more than promised.
“We’re seeing some very nice growth,” Sitel manager John Miller said.
Sitel employee Daniel Buncie coaches coworkers on how to deal with customers and monitors their “AHTs” — jargon for average handle time, or how long it takes to deal with a customer.
Buncie, 28, supports his wife and daughter on a salary of less than $10 an hour, and he’s happy to have it. Hired in August, he hopes to become a salaried supervisor soon.
“This is an up-and-coming business,” said Buncie, who lost his $36,000 job as a Marion County teacher two years ago and spent months looking for work.
“It took me about seven months,” he said. “I came here for the opportunity to move up, and I got promoted pretty quickly.”
For Sitel to earn a brownfield redevelopment tax credit of $1 million from the state, the Tennessee company must continue to have at least 500 people on its payroll in 2015 and pay each of them at least $19,860 a year, or about $9.50 an hour. The poverty level in the United States is $23,550 a year for a family of four.
“A call center job — that’s a job that pays,” Scott said. “I’m proud of every job.”
Critics fault Scott for his enthusiasm for low-wage, service-sector jobs. But he brags about them. In Jacksonville, he trumpeted the 7-Eleven convenience store chain’s plans to hire up to 800 workers at Florida stores.
“Who didn’t grow up wanting a Slurpee?” Scott said. “Thank goodness for 7-Eleven.”
No governor in the history of Florida has focused on jobs and the economy as much as Scott has. Scott built the nation’s largest for-profit hospital chain before narrowly winning the race for governor in 2010. He promised to turn the economy around, create an additional 700,000 jobs over seven years and spent $73 million of his fortune on TV ads that told recession-weary voters, “Let’s get to work.”
Before taking office, Scott invited a group of economic development experts to a meeting at his transition headquarters at a Fort Lauderdale Hilton. As Scott recalled it, they told him that when it came to chasing after jobs, “Florida didn’t try.”
Del Boyette, an Arkansas site selection consultant who does business in Florida, was at that meeting.
“In the economic development arena, Florida is doing a lot of things differently than it did three or four years ago,” Boyette said. “People want to know that the governor is committed. And he is.”
Soon after his victory, Scott embarked on a week-long jobs tour across the state. He toured a cruise ship in Miami, huddled with Lake City business owners and visited a jobs incubator at the University of South Florida.
Scott’s list of talking points from that week, provided to the Miami Herald and Times by his office, included: “Garner reputation as the ‘jobs governor.’ ”
He has been at it ever since.
Scott places cold calls to out-of-state CEOs, visits the floor of the New York Stock Exchange to brag about Florida on cable news shows and tries to poach jobs from states led by Democratic governors — a tactic that angered those states and has not landed a single employer.
No groundbreaking is too insignificant for Scott to show up.
In Clearwater last month, he clutched an oversized pair of scissors and cut the ribbon at PODS Enterprises, a rapidly growing storage business that will employ 40 people at its new headquarters. Terms of the agreement remain confidential.
“It’s a big deal,” PODS CEO John Koch said of Scott’s visit.
In Lake Mary, Scott stood before a Verizon logo as he trumpeted the latest drop in the unemployment rate, and in New York for a Bloomberg TV interview, he stood in front of a big Hertz sign.
With Florida engaged in stiff competition with other states for jobs, Enterprise Florida’s Swoope said Scott’s background as a business executive and his enthusiasm for the subject are tremendous assets. Yet in an interview, Swoope did not point to one deal the state landed because of Scott or his connections.
“People like to be wanted,” Swoope said. “What’s the best way to get our foot in the door? Use the CEO governor. It doesn’t matter to him whether it’s a large company or a small company.”
Many companies getting incentives are very small, and Scott’s staff makes sure he takes some of the credit for every new employer, whether he had anything to do with it or not.
An example is DTW Marketing Research Group, which helps pharmaceutical companies market their products, and whose owners grew tired of New Jersey’s high taxes and icy winters. They’re moving to Amelia Island on the state’s northeastern tip, where the owners had a vacation home.
While on vacation, company president Pam Statile and her husband stopped at the county economic development office, whose director, Steve Rieck, moved quickly to help.
The Statiles never met Scott, even though he touted DTW’s relocation plans in a June press release.
“We just fell in love with Amelia Island,” Pam Statile said. “This is a beautiful working community and so much slower paced than the Northeast.”
The company’s new 8,000-square-foot building is almost ready, and Statile said 13 employees will move south, including her husband and son, a recent college graduate.
She expects to hire a total of 40 people by the end of next year at average salaries of $55,000 a year, including some part-time college students earning $8.50 an hour.
A $280,000 sales tax refund for DTW covers employees’ moving costs, Statile said. The incentive was a factor, but so were Florida’s lack of a state personal income tax and the proximity to the ocean.
“You can’t say it was any one thing,” Statile said. “But the incentive was very important to us as a small business.”
Pay for performance
To businesses, Florida is a popular jobs destination because it has a pro-growth culture as a right-to-work state with pleasant weather, a low cost of living and a declining crime rate — all factors Scott consistently hammers home.
Like most states, Florida also offers tax refunds and other sweeteners in agreements that give employers seven to 10 years to reach hiring goals that qualify them for incentive packages.
Scott’s job-creation experts emphasize that incentive deals are done on a pay-for-performance basis and require companies to produce in the state before getting anything in return.
For example, Bi-Lo Holdings, corporate parent of the Winn-Dixie grocery chain, stands to get $3.6 million in incentives to keep its headquarters in Jacksonville and create 100 new jobs over 11 years.
That’s a $36,000 bonus for every job created, the highest cost per job of any incentive deal during Scott’s term, according to the Herald and Times analysis.
State officials say the figure is so high because Bi-Lo also agreed to retain 891 existing jobs at an average salary of $81,000 and make $81 million in capital investments.
The state and Bi-Lo struck the deal on June 1, 2012, but 18 months later, the state confirms zero Bi-Lo jobs.
Scott officials say companies could be creating jobs that the state doesn’t know about yet.
Department of Economic Opportunity director Jesse Panuccio said employers have up to a year to report new workers and that the state needs additional time to verify that the jobs exist.
“Sometimes our reporting may be behind what’s actually happening in the economy,” he said. Sitel, for example, says it has hired 620 people, but the state cannot confirm those numbers.
Panuccio did provide a list of 24 companies that he said created 1,253 jobs that have yet to be verified. The Herald and Times included the 1,253 jobs as part of its analysis.
When incentives matter
In Central Florida, a massive 11-acre lot has sat empty and decaying for years. But where others saw blight, the owners of Evolution Auto Sales saw opportunity.
The state stepped in with a $100,000 brownfield redevelopment tax credit in January to improve the site, and Seminole County contributed landscaping and site work.
Evolution promises to hire 40 people over the next two years — salesmen, mechanics, accountants — with an average salary of $40,000. The company is starting small, with a sales center in a small building. The state lists no jobs created yet.
The Golf Channel, launched in 1995, has always been headquartered in Orlando. But when it considered expanding elsewhere, Scott pounced.
Florida agreed to $550,000 in state incentives to add 75 jobs.
“The incentives were an important part of the decision,” said Jay Madara, the Golf Channel’s chief financial officer.
The company says it has exceeded its promise, which prompted a visit from Scott in July. The Golf Channel claims 98 jobs created to date.
In Miami, Spanish-language network giant Univision secured about $11 million in tax credits and cash from Florida and Miami-Dade County for its Fusion network headquarters, which shares space with the Spanish-language Univision network’s news division. To secure the incentives, Univision and Fusion committed to investing an additional $247 million in the venture.
Soundproofed to keep out the roar of jets from Miami International Airport, the complex has a two-story newsroom with open ceilings. Spanning 150,000 square feet, it may be the largest in television news, Fusion executives said.
Univision has not disclosed a construction expense for the “Newsport,” but in a recent conference call with analysts, the company said the tax credits alone wiped out the cost of building it. Univision pledged to eventually create about 350 jobs with the new facility (Fusion currently employs about 200), and will receive cash subsidies once the added payroll slots are confirmed.
In Marianna in the Florida Panhandle, city commissioners waived competitive bidding rules to fix a leaky roof and make other improvements to a dilapidated former washing machine factory that will house an Atlanta home furnishings company.
“The place was a wreck,” said Mike Beard, chief operating officer of Home Source International.
Home Source, a maker of furniture, lighting and textile products, plans to employ 303 people at an average wage of $14 an hour in a region desperate for jobs.
Scott approved $1.4 million in immediate incentives in May 2012 that paid for improvements to the building, but the jobs are slow in coming: the company says 23 so far.
“Employment is just now ramping up,” said Bill Stanton, executive director of the Jackson County Development Council, who was instrumental in uniting the city, state and company.
‘Create an environment’
Scott sometimes is so eager to tout the promise of new jobs that he’ll announce a deal before it’s consummated.
In Melbourne in October, he announced that Embraer, a Brazilian manufacturer of jets, would create 600 jobs on the Space Coast, a region with an abundance of engineers following the dismantling of the space shuttle program.
Details of the incentive package are still secret. But the state confirmed that it will build a hangar to house Embraer jets if the Legislature approves.
The Legislature requires a six-month confidentiality period for incentive deals, a decision criticized by Good Jobs First, a national economic development watchdog group.
“Florida has some critical shortcomings in its transparency practices,” the group said. “In some cases, state development officials do not even disclose the names of the company to the locality they are negotiating with for local money. This practice of secrecy has serious implications for democratic processes and accountability.”
Meanwhile, as the incentive-related jobs trickle in, Scott continues his zealous quest. Riding to a recent jobs event in Tampa in the back seat of his state SUV, he was all business.
On the phone, Scott congratulated a CEO for a positive mention in Forbes magazine and talked to Florida Chamber of Commerce CEO Mark Wilson.
Scott said he has kept his focus on the economy.
“My job is to do what I got elected to do: Create an environment where the private sector prospers,” he said.
Moments later Scott’s phone buzzed again. Texas Gov. Rick Perry was on the line. The topic: jobs.
Herald/Times staff writer Tia Mitchell and Miami Herald reporter Doug Hanks contributed to this report.
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