Labor Shortages and Catastrophic Risks Cast Clouds on Florida’s Business Outlook

A month into the new year, the fact that the Sanibel Causeway has been repaired and is again open to the public is a positive sign of Southwest Florida’s continuing recovery from Hurricane Ian’s devastation and the effects of the pandemic before that.

But the fact that visitors are still discouraged as the community rebuilds is a concern. And it speaks to the good news/bad news environment facing the region’s employers as 2023 progresses.

On one hand, as the Florida Chamber Foundation touted in its annual forecast, population growth, wealth migration, more jobs and economic growth point to a sunny year. Indeed, the Chamber projects the addition of 250,000 jobs this year, with population growth pegged at almost 1,000 people a day. Net annual income migration of $23.7 billion is also expected.

But it’s not all sunshine ahead. Florida can’t escape the impact of inflation on costs, which compounds ongoing supply chain worries. And it’s more at risk than any other state of increasingly costly catastrophic events like Ian. It all has a ripple effect across the economy. Further, for all the jobs being added, the question is whether population growth can keep up with demand: the Chamber estimates that just 62 residents will be looking to fill every 100 open positions.

Here’s what Southwest Florida’s business community should expect for 2023.

Acute shortage of workers holds business back
Healthcare’s dearth has reached epidemic proportions; the nursing shortage alone reached 1.1 million positions at the end of 2022. Restaurants are down 750,000 jobs, and hotels 400,000, from 2019 levels, with shortages reported by 87% of lodging operators. And construction has 25% more jobs than it has people to fill them – especially problematic in Florida’s booming construction economy.

It makes recruitment and retention a high priority, and benefits are key to success. As important as it is to offer valued benefits to employees, it’s still vital to keep costs in line.

That means starting with enriched benefits that focus on wellness, along with better leave policies, more flexibility in schedules, and ultimately, packages that are personalized to individual circumstances. Getting there takes strategic use of data analytics and other tools to identify what really matters to people, given where they are at in life and at work.

But the economic climate means that employers seeking to leverage their health and wellness benefits to protect their workforce are going to have to get creative in how they’re financed. Fully insured medical plan renewals have been coming in at record highs, while the affordability percentage under the Affordable Care Act (ACA) is at its lowest in the history of the legislation, dropping down to 9.12% from 9.61% in 2022. These challenges coupled with the costs from hurricane damages, it’s putting profitability in a vise.

Technology’s a big fix, but big risk, too
Tech investment is high on every industry’s list, especially important as a solution to productivity issues and labor shortfalls. But the squeeze on profit margins when borrowing is more costly which means many companies can’t afford tech investment. More than a third of construction firms, for example, say the investment is out of reach. But can any industry today afford not to invest?

At the same time, tech solutions pose downsides in terms of heightened exposure to cybercrime, like ransomware and phishing, and especially through web applications. Hospitality, for example, is the third most targeted industry by cyber criminals. A Forrester survey found that 75% of construction industry respondents had been exposed in the previous 12 months at an annual cost of about $6 trillion.

Stringent risk management strategies are essential, but difficult as cyber criminals grow increasingly sophisticated. Insurers insist that safety protocols and comprehensive safety measures, such as multi-factor authentication and training, be in place.

Of course, cyber insurance is no longer optional; most major hotel and restaurant organizations, for example, require their franchisees secure it. That may be easier said than done. Capacity is tight as cyber risk grows, plus rates are likely to advance more than 40% from 2022.

The Mother Nature factor
Even more worrisome than the impact of cybercrime is a risk that is impossible to predict and control. Hurricane Ian devastated southwest Florida last year, pushing insured losses past $50 billion.

The impact goes beyond the state’s economy, as it marked the tipping point for insurers on losses. It has pushed premiums through the roof on builders risk and residential and commercial property insurance.

This environment is especially problematic for Florida, as the entire state is a catastrophic risk zone. It also has been in a massive construction boom. Rebuilding on top of that, especially for residential construction to keep up with population growth, will add to the pressure. Inability to secure sufficient builders risk to satisfy lenders is likely to cause projects to be delayed or cancelled, which will impact economic investment.

The more resiliency organizations can muster during uncertain times, the better they will be positioned for long-term success. A tailored strategy is key for protecting the bottom line and supporting the workforce. It also will take a rigorous program of risk management, with an eye to insurance costs and alternatives, to best meet needs across the board.

About the author
Kerri Sisson is Area Vice President, Leading Edge Benefit Advisors, LLC, a HUB International Company. She joined Leading Edge Benefit Advisors in Fort Myers in 2004 and most recently served as managing partner. Leading Edge was acquired by Hub Florida in November 2020.

Kerri earned her B.A. in Mass Communications from the University of South Florida in 2003. She became a licensed insurance broker in 2004, and completed her Series 6 license with FINRA in 2006. In 2017 she received her Accredited Investment Fiduciary (AIF®) designation.

Over the years Kerri has served in many leadership roles for a number of trade organizations and associations. She is currently serving on the Small Group Advisory Council for United Healthcare as well as the State Insurance Council for the Florida Restaurant and Lodging Association. She has also served as the Chairperson for Women in Business with the Greater Fort Myers Chamber of Commerce and was the Education Chair for the Charlotte County Society for Human Resources.