Business

Top 1 percent reap benefits of economic recovery, study says

Construction workers on the job at the renovation of Sun Life Stadium in Miami Gardens.
Construction workers on the job at the renovation of Sun Life Stadium in Miami Gardens. El Nuevo Herald

Although Florida’s economy is healing after a deep national recession, the benefits of the recovery are flowing overwhelmingly to the state’s top 1 percent of income-earners, a new study says.

The pre-tax income of Florida’s wealthiest citizens — people who made at least $378,342 in 2012 — grew by an average of nearly 40 percent between 2009 and 2012, according to a report released Monday by the left-leaning Economic Policy Institute.

At the same time, those in the bottom 99 percent saw their pre-tax income fall by more than seven percent.

That’s a national trend, one the U.S. hasn’t seen to this extent in the past, said Mark Price, a labor economist who was one of the study’s authors. The study is based on tax data collected every year by the Internal Revenue Service.

“In previous recoveries, the majority of income growth was accounted for by the bottom 99 percent,” Price said.

But several factors are leading to lopsided growth nationwide, Price said, including a minimum wage that hasn’t kept pace with inflation, a decline in the membership and influence of labor unions, and a prolonged recession and painfully slow recovery following the financial crisis.

Florida’s minimum wage does rise with inflation. In 2015, it ticked up twelve cents to $8.05 per hour, higher than the federal minimum wage of $7.25 per hour.

The national economy began turning around in 2010 as Gov. Rick Scott made job creation a cornerstone of his administration. The governor announced Friday that Florida has added 728,500 private-sector jobs over the last four years.

“We look forward to seeing even more businesses grow and create jobs for families across the state,” Scott said.

But not all jobs are created equal.

Workers laid off during the recession have found new jobs but they are often settling for lower wages or worse hours, said Kit Rafferty, executive director of South Florida Voices for Working Families, an advocacy group.

“It’s a daily struggle for these folks,” Rafferty said.

The uneven recovery is reflected in the wealth gap between rich and poor, she said.

In Florida, members of the top 1 percent now make an average of 43.3 times more than everyone else, the fourth greatest disparity in the nation.

The state’s top earners raked in nearly $1.5 million in 2012, compared to an average of $34,387 for the bottom 99 percent.

Only Connecticut, New York and Nevada had a greater gap between rich and poor.

The recovery has been especially top-heavy in Florida because of the state’s reliance on construction and tourism to drive its economy, said Alayne Unterberger, associate director of the Research Institute on Social and Economic Policy at Florida International University, which contributed to the study.

“Those were the industries that were hit the hardest during the recession and were the slowest to come back,” Unterberger said.

Unterberger also said that Florida’s tax system favors the wealthy. The state has a sales tax but not one on income.

“If you have a flat tax on sales, that means that a person who’s making $30,000 is paying the same exact amount of money for what they buy as someone who’s making $400,000,” Unterberger said. “It hurts working people and low-income people much worse than the top one percent.”

And in Miami growing inequality is bad for business, said Lauren “Lolo” Reskin, owner of Sweat Records, a vinyl record store and coffee-shop in Little Haiti.

Reskin said rising housing prices have pushed local artists and her store’s customers out of their apartments and studio spaces in search of cheaper neighborhoods. She’s starting to worry about whether her own store can afford to stay in the Little Haiti location it has called home since Hurricane Wilma destroyed the original shop in 2005.

“We’re going to lose a lot of these people here in Miami if we don’t have affordable spaces for them to live and work,” Reskin said.

  Comments