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Region's hot job growth doubted
If Tampa-St. Petersburg has been wrongly credited, it would inflate its economic outlook.
By JAMES THORNER, Times Staff Writer
Published February 5, 2008
For about a decade, the Tampa Bay area has enjoyed bragging rights as one of the top jobs engines in the nation.
Since January 2000, the state has reported the Tampa-St. Petersburg-Clearwater metropolitan statistical area has gained 185,000 new jobs.
Turns out those numbers may be overblown. Tens of thousands of those jobs - perhaps more than a quarter of the 185,000 - exist, but many are based elsewhere in the state and, in turn, are inflating this area's economic outlook. The region's job growth numbers have been a prime business recruitment tool and a source of confidence to home builders who launched a construction spree starting about 2000.
"There's been a lot of overestimating of employment going on," University of Florida economist David Denslow said.
When it comes to the economy, the region lives and breathes by its job estimates. Employment figures helped validate the recent runup in home sales and prices.
As late as last year, Tampa-St. Petersburg's higher-than-average job growth earned the area honors as Forbes magazine's seventh hottest jobs market in the United States.
But the accuracy of the numbers has been called into question. That's because the Tampa Bay area is unusual in being home base for dozens of professional employer organizations. PEOs are employee leasing firms to which companies outsource services like payroll and health benefits.
PEOs hire a client company's employees, becoming the employer of record, and then lease them back under contract to the original employer. They're popular with small companies without human resources departments, from community banks, accounting firms and medical offices to hotels, retailers and fast food franchises.
About 28 percent of the job growth in the Tampa Bay area since 2000 - that's officially 52,000 jobs - has been through these PEOs and related companies such as temporary staffing firms. Trouble is, economists assume many of those jobs were wrongly credited to the Tampa Bay area.
Florida labor statisticians can't easily distinguish between PEO jobs that serve local companies and those that serve companies in the rest of the state.
If the local PEOs don't provide a breakdown of where its employees work - and they're not required by law to do so - the Florida Agency for Workforce Innovation usually places them in the Tampa Bay area's column by default. Conversely, the same statistical fluke would under-count job gains in other Florida counties.
"This problem is more prevalent in Florida than in any other state," Denslow said.
PEOs form a growing chunk of the state's economy, acknowledged Rebecca Rust, in charge of keeping the state agency's labor statistics. A large firm like FrankCrum in Clearwater leases 75,000 employees to companies across the United States.
Controls are in place to prevent jobs created in, say, Atlanta, from being credited to the Tampa Bay area, Rust said. But it's impossible in many cases to sort the jobs within the state and among Florida counties.
"With the limitations of our counting method, how confident can we be that we're accurately counting PEO jobs? There's really no way to tell," Rust said.
The potential for overcounting is illustrated by such firms as St. Petersburg's DecisionHR. The company leases 6,700 employees in Florida, but only 1,200 work in the Tampa Bay area. Modern Business Associates, also in St. Petersburg, supplies about half of its 30,000 employees outside the region.
Builders say it takes about 1.8 new jobs to justify building a house. By that calculation, a miscount of 20,000 jobs could throw construction off by 11,000 homes.
"They may use that jobs number as an indicator of the health of a market," said Marvin Rose, a Tarpon Springs consultant who works with big builders.
Rust said her department has long been aware of the problem and has pleaded for more money to mend its methods. Economists like Denslow suspected the job count was out of sorts when Rust's surveys found more jobs than justified by the U.S. census.
"We've tried off and on, over and over again, to do something about it," Rust said. "To correct the problem you need a law change. And that's not an easy issue."
James Thorner can be reached at email@example.com or 813 226-3313. Read his real estate blog, (Un)Real Estate, at blogs.tampabay.com/realestate.
Room for error
How employee leasing firms can throw a wrench into job counting:
1. The U.S. Bureau of Labor Statistics conducts a monthly survey of about 14,000 Florida employers, including hundreds of employee leasing firms, many clustered in the Tampa Bay area.
2. The numbers are sent for processing and publication to the Florida Agency for Workforce Innovation.
3. The law doesn't require that the leasing companies provide a county-by-county breakdown of where the jobs were created. So only a minority provide that information.
4. With too little data to go on, the state places the jobs in the Tampa-St. Petersburg-Clearwater column, most likely inflating employment numbers for the region.
Local employers, distant employees
About 28 percent of the recent job growth in Pinellas, Hillsborough and Pasco counties has been in "employment services," which includes mostly employee leasing firms whose workers are not all employed in the Tampa Bay area. Here are the three-county job totals, with a breakdown of employee services jobs: