Employers in the Sunshine State have always had the "Florida discount" on their side-the pay cut workers are willing to take in exchange for sun and sand. But a good climate and beautiful beaches won't buy a house, and neither will many salaries in the Sarasota-Bradenton area anymore.

Workers who don't already own a home are faced with long commutes or moving out of the area altogether. Employers, already squeezed by a tight local labor market, can't recruit new workers to the area and are losing existing employees.

Beaches, weather and Southwest Florida's growing cultural amenities are still enticements, "but you just can't tell people, 'Sell your house up North and buy twice the house down here,'" says University of Florida economist Dr. David Denslow.

Over the past 10 years, Florida's house prices have leapt ahead of those in other Southern states-Florida's labor market competition-with a 72-percent increase (adjusted for inflation). Compare that with a 35-percent rise in Georgia, 21 percent in North Carolina and 17 percent in Alabama. At the same time, adds Denslow, wages in Florida have consistently averaged 20 percent lower than the nation's average.

"Partly that's because the occupations are different here," he says. "But about 5 percentage points of that difference are because our cost of living has been about average and our amenities are high, so people are willing to take lower pay to work here because of the sunshine, coast, ocean, Gulf and average cost of living. That's no longer going to be true, because there's just no question that the cost of living in Florida exceeds that of the nation now."

SQUEEZING WORKERS OUT

There are countless tales in Sarasota and Manatee counties of losing workers to more affordable areas, and recruits bailing out on prospective jobs once they see the housing market.

Bijou Café last summer lost its sous chef, who headed back to North Carolina, where he stood a better chance of buying a home, says general manager Susan Phillips. He was working two jobs at competitive wages, and his wife was employed full time in healthcare; yet when their apartment was converted to condominiums, they could afford neither the condo nor anything else in the area. "Definitely a loss for us," says Phillips, who adds that most local food-service employees work two or more jobs now.

"People are moving to North Port and farther away in order to find a place," says Tony Souza, executive director of the Downtown Partnership of Sarasota. "Many of the apartments are turning into condominiums. It depletes the rental market, and there's a huge rental market here."

The pressure cuts across industries and income brackets. Web site developer GravityFree has lost programmers, and the law firm Abel Band has lost associates to markets with higher wages and lower housing costs. Employers from high-end hotels to manufacturing firms, broadcasting companies, builders, hospitals and schools all are struggling not just to hire new workers, but to hold on to existing employees.

Southwest Florida's labor market is tighter than the rest of the state or the nation. As of July, Sarasota County's unemployment rate was 3.2 percent, compared to the state's 3.8 percent and the nation's rate of 5 percent, both seasonally adjusted, according to the Florida Agency for Workforce Innovation.

In the Sarasota-Bradenton metropolitan statistical area, the median sales price in July for an existing single-family home (among realtor-assisted transactions) was $333,900, an increase of 32 percent from July 2004. Statewide, the median home price in July was $252,300, representing an increase of 33 percent from July 2004, according to the Florida Association of Realtors.

Meanwhile, wages in Sarasota-Bradenton are lagging behind both the state and nation. The U.S. Department of Labor cites the average annual salary here at $31,100 as of May 2004. That's up from $28,240 in 2001, but falls behind the 2004 figures for the state, $33,320, and the nation, $37,020.

In the first half of 2005, the average small business in Florida increased in number of employees by 13.5 percent, yet the average earnings dwindled by 3.8 percent, adjusted for inflation, according to SurePayroll, a national payroll firm that serves 15,000 small businesses and produces hiring and pay indices. According to its information, hiring has increased, but average salaries dropped from $34,315 in January to $32,320 in July.

OUT-PRICED BY OUTSIDERSSo, why aren't employers upping wages?

"In many cases they are raising salaries, but they just can't keep up with prices of houses," says Souza of the Downtown Partnership. "I think wages here were low for a long time, but so was housing, and housing has increased by leaps and bounds more than what employers could possibly come up with."