(The Center Square) — A report by a taxpayer watchdog group says that cooling down the state’s red-hot labor market will help ease inflation.
The Florida TaxWatch report titled Florida’s Labor Resilience: Navigating the National Cool-Down and Local Market Dynamics, builds on a previous report released in May that discussed labor market data indicating a cooldown and highlights the economic impact of these market conditions.
“Labor market conditions significantly impact the lives of Floridians, especially since a strong — or hot — labor market drives inflation. A hot labor market is one that favors jobseekers, but to bring down inflation and achieve balance, the labor market needs to cool down,” Florida TaxWatch President and CEO Dominic M. Calabro said in a news release.
Calabro added that despite the labor market in Florida remaining “hot,” it is still following a national cooldown trend, just slower than the rest of the country.
“With Florida’s economic track record of being highly adaptive and receptive to economic changes, we expect this trend to continue. As developments in the labor market progress, Florida TaxWatch will follow the ‘cooldown’ and monitor what Floridians can expect so they can plan for success in their jobs, careers, and businesses,” Calabro said.
According to a recent survey from the U.S. Bureau of Labor Statistics on job openings and labor turnover — job openings are on the rise nationwide, rising by 9.6 million in August — which was up by 8.8 million in July. However, this took a slight dip compared to August 2022, when 10.2 million jobs were added.
Since 2020, the growth rate of job openings has increased from 4.3% to 6.9% by 2021. This dropped to 5.8% by August 2023. Florida TaxWatch says that the slow rate of decline is due to many employees leaving their jobs for various reasons.
This created a shortage in the labor market and caused wage inflation. According to Florida TaxWatch, because the Federal Reserve continues to increase interest rates, businesses will likely move to reduce spending, which will in turn reduce job openings and eventually decrease wage inflation.
Currently, there are two vacant jobs for every unemployed person in Florida. If this trend continues, wage inflation will continue to rise, increasing business costs, and ultimately pushing up the cost of services in the Sunshine State.