Mark R. Howard
By the Numbers
I was caught short by a recent article in the Washington Post that reported on the impact of citrus greening on Florida’s citrus industry. Though not exactly news, the story did a good job chronicling the extent of the disease and its threat; it ignored longer-term factors that have changed the industry just as profoundly over the years — freezes, canker, development — and missed a lot of interesting recent news, including big-acreage purchases of citrus land by interests intent on replanting and some citrus farmers moving into the business of storing water.
But never mind — the only real jarring part of the piece was a reference, unsourced, to citrus as “the state’s second-largest industry behind tourism.”
First, let’s talk about tourism. There’s actually no category labeled tourism among the federal government’s North American Industry Classification System, which the U.S. Department of Commerce uses to track employment and dollars generated by major economic sectors.
The closest surrogate category for tourism in the NAICS system — Accommodation and Food Services — is problematic because it both overcounts and undercounts tourism’s impact. It counts dollars that I spend if I take a business trip to Jacksonville, for example, or eat at a restaurant here in St. Petersburg. Is that spending really tourism? And it doesn’t include all manner of economic activity that falls into other NAICS categories, from tourists’ purchases of gas (Transportation), groceries, clothing and other goods (Retail) to money they spend on hospital visits (Health Care) and timeshares (Real Estate).
Taken as is, Accommodation and Food Services, according to 2018 figures, ranks 10th in Florida among the major NAICS categories in terms of direct dollars generated — about $46.7 billion, 4.5% of Florida’s total economic output. Significant.
But even if you add in generous slices of the Transportation, Retail and Real Estate categories that can be linked to tourism, that cobbled-together tourism category wouldn’t be the No. 1 industry in Florida. Triple the dollars generated by Accommodation and Food Services, and tourism still wouldn’t be No. 1. The slam-dunk leading economic category in Florida is — no surprise, really — Real Estate. Alone, real estate sales, rentals and leasing account for around $173 billion — more than 16% of the state’s economy. And that doesn’t include the dollars from the related category of Construction — another $55 billion.
As for the statement that citrus is the state’s No. 2 industry, well that’s just wrong. Really wrong. According to the NAICS 2018 statistics, all agricultural activity — including forestry, ornamentals, fishing, hunting, vegetables and citrus — generated around $5.5 billion. Arbitrarily triple that number by counting some ag-related dollars from the Construction, Manufacturing and Retail categories, and $16.5 billion in economic impact still leaves Agriculture accounting for less than 2% of Florida’s trillion-dollar economy. Some additional context: Florida hasn’t been thought of traditionally as a manufacturing state, but even if you subtract a chunk of ag-related dollars from the Manufacturing category, that sector would still be about four or five times larger than agriculture.
This is not to slight ag’s importance, either historically or currently. Agriculture accounts for more than 20% of the state’s land mass and is a key player in issues ranging from development to water use and conservation. It is, however, important for us — and the rest of the country — to accurately understand what makes Florida tick.
So what are the biggest sectors in Florida’s economy, according to the NAICS numbers? In terms of dollars generated, the top five are Real Estate; Government; Health Care; Professional, Scientific and Technical Services; and Retail Trade. In terms of employment, the top five are Health Care; Retail Trade; Government; Accommodation and Food Services; and Administrative Services (office and clerical personnel).
The two most dynamic sectors in recent years, by far, have been Health Care, and Professional, Scientific and Technical Services. And therein lies what may be the biggest story about Florida’s economy — its growing diversity.
Florida Gulf Coast University, for several years now, has maintained what it calls a Diversification Index that ranks the states on how employment is distributed — more diversified economies have fewer jobs concentrated in just a few sectors, which is desirable in today’s world.
Florida’s economy had been growing more diverse in the years before the Great Recession but slipped during the downturn. In 2010, for example, Florida’s economy ranked 30th. As of late 2019, however, the state’s economy ranked among the top 20 most diverse in the U.S. (You can access FGCU’s data at fgcu.edu/cob/reri/idp/rankings#States. The Florida Chamber of Commerce Foundation’s Scorecard, thefloridascorecard.org, is also a great place to get data on the both the statewide and county levels.)
The increasing diversification of Florida’s economy is a positive development, reflecting an economy that’s more sophisticated and healthier. Old assumptions die hard, but Florida hasn’t grown just by adding more roller coasters and growing more fruit. That’s a long way from today’s reality: Florida hasn’t just grown, it’s grown a lot more complex.
— Mark Howard, Executive Editor
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