Delaware Dialogue: Data, Anecdotes and the Benefit of “Cheerleaders”
We kicked off our first Delaware Dialogue with a robust discussion about whether many Delaware business and political leaders are paying enough attention to data that says Delaware’s economy is struggling in favor of pushing out a positive message. That discussion veered into a number of different areas, including the importance of focusing on public education, Right to Work, building up underserved neighborhoods, sustainability and streamlining the permitting process throughout the state. This discussion, which was often spirited, has been edited for length and clarity and we welcome comments to our moderator, editor Peter Osborne, or in the comments below.
Let’s start with the consistent message coming out of the Caesar Rodney Institute: “Contrary to the rhetoric coming out of Dover, Delaware’s economy is doing poorly, and the political establishment has little stomach for meaningful change.” John, can you talk a little bit about what’s driving that view?
John Stapleford: Okay. I just put together data from 2008 to 2018, so the last 10 years starting with the end of the recession.
Output: Delaware grew 9%, the United States 19%.
Employment: wage and salary employment,
Delaware grew 3.5%. The United States grew 6.1%.
Personal income: United States grew 40%, Delaware grew 31%.
Per capita percent of income: Delaware grew 20%,
the United States 30%.
Average annual wage: Delaware 20%, the US 26%.
And the Delaware average annual wage went from above
the nation to below the nation over that time period.
Economic Freedom: the Frazier Institute has an
Economic Freedom Index by state. In 2001, we were
number one among all the states. Now we’re 38th.
Household income: inflation adjusted median household
income from 2000 to 2018, we’ve gone from a
$70,300 down to $60,200.
So as adjusted for inflation, we had the largest drop in inflation adjusted median household income of all the states. To put that in a translation terms, what it means is that households, the median household, has lost 14%-15% of the purchasing power. Then finally, we’re eighth in the nation in state and local government spending per person.
Bryan Short: Do you have a sense of where we rank (in these categories) regionally? Clearly there’s a difference between a low natural resource state, maybe agriculture versus Alaska with oil or Texas?
Stapleford: We’re in the bottom one fifth of all the states.
Dave Stevenson: First of all, let me tell you, you’re right. The states that have had oil, gas, mining, even ethanol are in the top 10 states, top 11 states. Pennsylvania is 11th for growth. So that had a major impact. But even if you take out those 10 states, Delaware is still at the bottom quintile. And we’re doing worse than most of the surrounding states, Virginia, Maryland, New Jersey.
They’re all doing better, and with the same problems Delaware has.
The people selling Delaware to outside companies point to a strong university with the University of Delaware, a state that is supportive of local businesses and startups with manageable risks and businesses and innovations that are interdisciplinary and well positioned for technology change. That’s clearly a very different view.
Stapleford: Let me throw one thing in that took me a long time to learn. You have to realize many people are in the position of being cheerleaders and they can’t talk about reality. You have to be an evangelist regardless of the reality.
Alan Levin: Well, there’s no doubt you have to believe in the product you’re selling. Clearly people believe in the SBDC.
Stapleford: I started the Small Business Development Center. And I can tell you the reality is the SDBC actually creates only a handful of jobs a year at a very high expense.
Levin: Delaware needs to decide what it’s going to be. It can’t be everything to everyone. It has to decide where we’re going to accentuate ourselves, where we’re going to be specialists and where we’re not. To John’s point, the numbers have fallen, but when you look at 2008 and 2009 when we were going into the recession, we lost three major employers with high paying jobs at GM, Chrysler and the refinery. And although the refinery came back, there was a two-year lull where it was closed down after being mothballed, if you will. But GM and Chrysler hurt us. There were 5,000, 6,000 jobs that went to support that.
Stapleford: And why do you think GM and Chrysler closed down?
Levin: Because they changed their philosophy and they wanted to put their manufacturing in the center of the country, and they would cut their shipping costs.
Stapleford: It had nothing to do with union wage rates?
Stapleford: And union work rules. Nothing to do with that?
Stapleford: Very interesting, that’s a perspective.
Levin: They decided that they wanted to be in the center of the nation because it would cut their shipping from the East Coast to the West Coast and vice versa. But at the same time, look, there were concessions that the unions made to keep those jobs, not here in Delaware but everywhere else.
Stapleford: When Chrysler and GM shifted their production, did they shift down towards the south where they have right to work laws?
Levin: They shifted it really to the center. But they had right to work laws in most of the states as well, Iowa, Missouri, Ohio.
I was a cheerleader for Delaware. John and I batted heads a lot over the six and a half years I was there. We did some good things. We did some things that may not have borne fruit. But at the end of the day, if you’re not trying, you’re not going to make anything happen. So that’s what we tried to do. People always say to me oh, Fisker. And I said, well I’m not afraid of the F word. As far as I’m concerned. If I had to do it all over again, I would do it again. The truth is, the reason Fisker wasn’t successful was because the Obama administration left us at the altar. They did not honor their commitment after Solyndra. Editor’s note: Solyndra was a solar company that went bankrupt after receiving support from President Obama. That situation put the Obama administration on the defensive in terms of supporting so-called environmentally friendly initiatives and companies.
And when you really get down to it, if we had gotten the money that they were promised, they would have manufactured a car. I’m not saying they would have been successful. I have no idea. Bryan was on the Council on Development and Finance at that time when we approved it. And when you have a 3.2 million square foot facility that is really only good for heavy manufacturing (autos and farm equipment or whatever), that’s what you would put it to work for. And it didn’t happen, but I don’t regret doing it.
What do you think Delaware’s message should be?
Levin: It’s the same message we’ve always had: That we are responsive, that we provide easy access to decision makers, that we’re located in the center of the United States between Washington and New York where you’ve got the economic and the governmental services. And we can get things done. But I just read in DBT that there’s going to be a study on how to speed approvals up. I know how to speed things up. You take the guy or the woman that has run the department and they put the edict down that you’re going to approve this, you’re going to make it happen. And if they don’t, you get rid of the people that are impeding it.
We don’t need another study. We have studied this damn problem to death. And for a state our size, you look at Incyte. In six months, we got their second building. And that can happen. I mean, Bryan’s members made it happen. New Castle County made it happen. DelDot made it happen. It can be done. We did it at Amazon in Middletown. And truthfully, and I don’t mean to monopolize this, but I will tell you, if you want to know how to get things done, go down to Middletown, talk to Mayor (Ken) Branner. He doesn’t say no to anything. He gets it done. And that’s why he’s successful.
Stevenson: Let me share a couple of things with you. It’s not just putting the right person in place. Jennifer Cohan, when she took over DMV, night and day difference. She changed the culture there. Now she’s running DelDot and she’s got so much push-back she’s not changing the culture at DelDot. It takes a long time to do that. You’ve got a lot of bureaucrats who have been there forever and one person can’t make as much difference as you might think, depending on the size of the organization. It starts at the top. I have a close friend who was trying to start a manufacturing job on Delmarva for the poultry industry. He decided this factory would be located on the peninsula. He went down to Virginia, he went to Maryland and he went to Delaware. When he got to Virginia, every decision maker that would have to sign off on a permit was sitting in the room the first visit and telling him we will walk you through this process. We will pave the way for you to get this done. Went to Maryland, had not as good as situation, but there were still quite a few of the decision makers were available on short notice. Came to Delaware, nothing. Nobody cared. It was only 100 jobs. We’re not talking an Incyte or somebody or DuPont that’s going to bring 1,000 jobs.
Levin: That’s big time for us, 100 jobs.
Stevenson: But 100 jobs are still significant in manufacturing and manufacturing has almost disappeared in Delaware. My personal opinion is Delaware is primed for expansion, for economic expansion. And we’re tying our own hands.
Right to Work in Delaware?
Stevenson: I want to make it very clear that CRI is not anti-union. We talk about right to work as a necessity because manufacturers and others who want to find a business location go to consultants who are saying if you don’t have right to work, we’re not even bringing these guys to your state. Two years after Indiana adopted right to work, they added 120,000 jobs in one year. 70,000 of those were union jobs. Union jobs in Delaware are almost nonexistent. We’re down to a few percentage of our workers in the private sector unions. I want to see unions do very well. But if you don’t have blue collar jobs, you don’t have union jobs. Right to work is not going to solve everything, but it checks that box so that people at least come to Delaware to talk to us.
Levin: We had a company in Dover, Uzin Utz, which is a German company. We ultimately were able to bring them here. But the first question they asked was are you a right to work state? We said well, no we’re not. And they started to get up. I said “whoa, whoa, whoa, whoa, wait. You don’t have to worry about that. You’re looking to go into Dover. Kent County is really not a union stronghold.” “Well, no. Our attorneys and our advisors had said if you’re not right to work, do not go there.” We were able to convince them to stay at the table and to make a deal. But to be quite frank with you, we heard that all the time. We had a company from Turkey that wanted to go to Seaford. They wanted to go on the Nanticoke, and as soon as they heard it they were gone. They were gone. And it would’ve been a perfect fit.
Again, I don’t think it’s the panacea, but truthfully it is one thing you cross off and it’s done. And truthfully, we all have to earn our stripes every day. The unions have to earn their stripes every day. They do good things and they do things that are not so good. But at the end of the day, their members are going to decide that, not the other way around. And that’s kind of the way I look at it.
Short: Delaware had a pretty darn good portfolio in 2008. Manufacturing, drugs, chemicals, finance, insurance. That’s a pretty good investment portfolio. Unfortunately, we got the legs cut out from underneath us, even with that diversity. I think we took a hit that was maybe more significant than other places. And it’s taken us longer, as has been pointed out, to climb back up. But the fact that we’re, I think we’re the fastest wage growth, and we can talk about what those wages are, but the fastest wage growth in the region is a positive in some of these more negative perspectives.
Stapleford: The data for Delaware is our wages are growing slower than the US and it’s because of the…
Short: I think it’s unfair to compare a northeastern state to the US. When I was in the legislature, I looked at who my immediate competitors were. And yes, we’re competing in the nation and we compete in the world, but we’re regionally competitive. So I think it’s more useful in terms of where our competitions are to at least provide some of the framework around our immediate competitors. John pointed out in one of his articles that there are 43 different business studies that rank states and Delaware is two to 48 depending on which study you look at. You can be all over the place depending on what measurements are used.
Stapleford: According to Dave’s research, we’re 25%-26% above the nation in industrial electric rates and it’s caused the loss of half the energy intensive manufacturing.
Melanie Smith: I think that some of the comments that you’ve made, frankly, are part of what’s contributing to the problem, not only in Delaware but nationally around our ability to work together and get things done. I found myself physically getting uncomfortable as you were saying things like others were cheerleaders for various organizations. I found that hard to accept because it seemed as if it was belittling the work that these folks were doing.
Stapleford: You’re right. But it’s not belittling the work (of our economic development teams). They refuse to accept the data. All we do is put out data and they refuse to respond to it.
Smith: All I’m trying to suggest though is that the research that the Caesar Rodney Institute churns out masquerades as economics and statistics and facts and data when in reality you’re cheerleading the folks that are funding you. So I guess from that perspective we all are taking the information and data that is coming to us and we’re spinning it in a way that makes sense to our world-view. You have the advantage of being funded in an organization that allows you to study something and come out with statistics.
Stapleford: Melanie, right now I have a month and a half of payroll. We’re funded by 650 donors all over the board. We have no deep pockets. Pete Ross was our mentor. Pete Ross who was the budget director said publish data. Don’t be pejorative and don’t assign blame. Maybe present positive solutions if you have them.
The biggest success we have had in Delaware was the Financial Center Development Act where government got out of the way. Government deregulated. We didn’t have committees.
Smith: With respect to statistics, you really can turn it in any way that you want. You used one figure that said our median household has dropped. Well, could that be because we have few of the uber rich here? You lose a couple of uber rich and your median income’s going to drop. Is it because the lowest rung is not getting as many benefits? So we have more of the uber low, but maybe those folks in the middle, maybe they’ve gone up, maybe they’ve stayed the same. We don’t know.
I believe part of our problem is that we’ve gotten so divisive in our methods and our processes that regardless of what you believe, we seem to have this inability anymore to really work together to get things done. There are news organizations in Delaware that call it the Delaware Way as if it’s a bad thing, as if it’s a negative thing that people actually work together. I believe that’s what Vice President Biden was trying to convey when he made the comment that he did, is that he’s able to work together and that’s what this country needs. That’s what this state needs.
Now that will actually segue me, if all would indulge me one more minute, into what I believe is a solution that can be win, win for everybody. That’s the reason that I have taken this huge risk to go out and found my own company around sustainability. Sustainability really is this win-win opportunity.
Stevenson: Would you please define what you mean by sustainable?
Smith: Sure. It’s your impact on three different things: the environment, people, and the economy, the local community, if you will. The environment’s self-explanatory. People is along the lines of your employees. Making sure that there’s diversity in the board room, making sure that people are being paid a livable wage, making sure that your supply chain is not using child labor, human trafficked labor. Then the local economy governance piece of it is making sure that the community you’re operating in is better off for your having been there.
Ninety percent of the Fortune 500 companies have committed to sustainability, and they know that it’s because it’s what the world wants. It’s what our millennials want, it’s what employees want. So to attract and retrain top talent, you have to become sustainable. It’s what investors want, because studies are showing that you earn a greater rate of return for companies and funds that are sustainable than those that aren’t. And your customers are demanding it. Whether it’s business to business, like Walmart telling anyone that wants to sell in their company, show us what you’re doing around sustainability before you can get onto our shelves. Or whether it’s the consumer like myself, who has two little children, who wants to buy from Whole Foods because I know that what I’m going to be putting in my children’s bodies is going to be safe for them.
Logan, you represent what’s often described as an underserved or at-risk population in the Riverside area. As you listen to this discussion, how does that align with what you’re seeing in your neighborhoods?
Logan Herring: I am going to make the same disclaimer that Bryan made. I am not an economist and I deal on a much more granular level in the Riverside neighborhood, a neighborhood that is probably the most expensive neighborhood in the state. In the city of Wilmington, 70% of our children in the Riverside neighborhood live in poverty. When you think in terms of the lack of economic output in the Riverside neighborhood and the folks in it, it’s all really a byproduct of structural and systemic racism that has put folks that look like me in this neighborhood, and kept them there.
These discussions really strike a nerve within me because I grew up in West Center City, a neighborhood and an area that is really starting to get a lot of attention now, just because it’s so close to downtown. And you think about the expense of childhood poverty in America itself, which is about $500 billion a year. That’s healthcare expenditures, lack of economic output, the cost of crime. Having to beg, borrow, and plead for resources to come into the Riverside neighborhood now around a project that makes all the sense in the world when you look at social determinates of health, and the cost of this neighborhood to the rest of the city and the state. I don’t understand why I have to beat my chest and beat a drum to try to get resources to come into a neighborhood around opportunity zone funding.
It’s legislation that’s supposed to support neighborhoods like this and spur social impact funding, why I can’t get an extension? And I understand the regulations and rules, but extension for downtown development districts so we can have more resources coming into the neighborhood. These are the things that I try to focus on. We have been successful, there are people that have stepped up. The State of Delaware, I mentioned earlier before we started recording, in the last two budgets we received $1 million. We would like more, but of course we have to start somewhere. Christiana Care granted us $1 million; CSC is coming to the table and we’re having conversations with them.
So there are folks that get it, especially in leadership positions. But when you look at what’s happening in especially downtown and areas like that around the Buccini developments and I love Rob. Rob is on my board, but it just seems like we’re backwards in a sense when everyone is not seeing the same prosperity that is happening in certain areas. I myself, am an anomaly. When I look around this table, I mean I’m different and Melanie’s different obviously. I’m not naïve enough to think or not know that there are a lot of things that happened in my life that allowed me to get to where I am. Growing up in a single mother household in West Center City, being able to go to Wilmington Montessori because my grandfather (Rev. Otis Herring )was a big, philanthropic leader and had some funds to help me do that.
Then I went to public school, St. Mark’s, and then I ended up at Sanford with Alan’s son. Just having that network available to me, and then just a little bit of luck. Someone like myself, if I were to make one mistake, or I’ve made many mistakes, but if I were to actually get caught in those mistakes. I wouldn’t be able to bounce back. So I’m dealing with a neighborhood where people can’t afford to make those mistakes, are in survival mode, how can I just pay my bills? How can I feed my family?
When I hear these conversations, it’s just so high level to me. Because when I walk up into Kingswood and a mother of five pulls up to me and said, “When are you going to be tearing these houses down, because I want to get out of this neighborhood,” this conversation resonates differently with me.
Stapleford: Again, a story. I grew up with a single mother in the Lower Merion School District, which is one of the tops in the nation. What do you think about the public schools, and how they’re servicing your community, your constituents?
Herring: Like most people, I think the schools could be doing a lot better. But the problem and what Charlie McDowell, who really started this work in the Riverside neighborhood is asking: what do the homes look like that those students are going back into? What do the communities look like? It really doesn’t matter what goes on in the school when they have to come back to those same unstable houses, the same unsafe neighborhoods. The fact that they might only get their meal in school, and then expecting them to be able to concentrate once they go in the school or listen to a teacher that doesn’t look like them. That doesn’t have that cultural competency.
There’s so many barriers outside of the school, that the school really isn’t going to make that much of a difference. The leadership at East Side Charter in our neighborhood saw that no matter what we do in the school, you’re really not going to affect the lives of these students or their families unless you go into the neighborhood and change the housing. Change the access to capital, change the employment, being able to have a livable wage job, access to a grocery store. I mean, we have corner stores and a Popeye’s in the Riverside neighborhood, and we have three Dollar Stores that are predatory. Until we change the framework of the community, and make it a healthier neighborhood, a safer neighborhood, a neighborhood with less trauma, it really doesn’t matter what we do in the school
Stapleford: Thirty percent of the students in Delaware public schools are black, and 40% of the students in Delaware charter schools are black. And the startups of charter schools in the last five years have been mostly African American. What do you think?
Herring: A white high school dropout makes more money than a black, college graduate. No matter what we do in the schools, if we’re not changing the community, we’re not changing the access to resources and networks in these communities, the entire state is going to suffer. Even with our warehouse project, when giving resources to teens, that’s our next workforce. It’s funny to hear these conversations about education, but it’s really a black-white thing. And it’s really about a lack of resources to low-income communities. Most importantly, to black and Latino communities, particularly in the city of Wilmington.
Short: Logan, what about? This idea of changing the conversation from everybody goes to college to preparing everybody for post-secondary careers. We need to get a little bit more in alignment, because there’s a lot of folks working in that space.
Herring: We talk a lot about income, but what we don’t talk about is generational wealth. Alan, you are able, if you want, to send your kid to college and pay for that. A lot of this is done through generational wealth, being able to build wealth through real estate. My great-aunt passed, and she left me a house on the east side. And at that time, the house was worth $40,000. I then sold the house two years ago for $26,000. So it depreciated, and the only reason why I sold it is because I wanted to put a down payment on a house so I could build generational wealth for my family. When you look at going to college, if you don’t have a scholarship, particularly if you come from a low-income neighborhood that doesn’t have generational wealth, let’s do a cost benefit analysis and see where you’re going to be 10 years after going to college, or 10 years in a trade.
My wife and I have $150,000 in student debt. When I look back on it, I would say, “Well, I’d rather take a year or two to figure out what’s best for me, so I don’t put myself in further debt.” We do very well as far as income is concerned, but when you look at the wealth that we have, there’s nothing there. So yes, I am a big proponent of picking up a trade. You don’t necessarily have to go to college. And if you do, like my nephew did, you better be on a scholarship. Because I can’t afford to put you through college. Or I can’t refinance a house, because there’s no equity there.
Rob Martinelli: Rodal reports each year on the results of public education and highlights outlier schools that have bucked the trend. Public schools with a high percentage of low-income populations that not only closed the achievement gap, and these are some of the best schools in the state. One is in Dover – Booker T. Washington Elementary School, which is 70% low-income. They got a Race to the Top grant for three years. They got $250,000, and with that they brought in a retired principal from Maryland who created high expectations and he changed the culture of the school. He was able to pay the teachers with the grant, and he extended the school day. At the end of the day, the teachers look at the kids’ assignments. And if Johnny didn’t get the reading assignment and Billy didn’t get the math assignment, they would have those kids in small group tutors that afternoon, for an hour and a half, learning the assignment that day. In five years, that school went from having a 38-point achievement gap to now being one of the best schools in the state.
Why aren’t we applying what we’re learning and giving some of these schools in the city the extra resources they need? Extending the day, doing the small group tutoring. They had social workers. He was able to pay for social workers because of the trauma that these kids have to deal with. They had social workers in these schools. So I want to make that point, that I think sometimes we study a lot. We should just be applying the things we’ve learned. Sometimes we just don’t apply what we learn and put it into action. We have a model that works. Not that every model is going to have to be exactly the same, but…
Stapleford: What we’re advocating is returning the finances and the curriculum to the teachers, and the principal in the local school and the feedback we’re getting is, that principals can’t do that. Because principals now look to the district or Dover for making their decisions. I kind of disagree with that. They should say, “Here’s some money, you and the teachers work out the curriculum. You figure out how to spend the money. If you need social workers, or whatever.”
Smith: The success of the school certainly can be dependent on the quality of the leader of the school. Governor Markell was very focused on that. And he used some of the Race to the Top money to create leadership academies, where you’re bringing in the best leaders in the school.
Stapleford: Delaware Economic and Financial Advisory Council says the next three years we’re going to have flat state revenues. And the reason they say that is because-
Short: If they’re flat where they were this year, I’ll take it.
Stapleford: This is no 4% or 5% jump, no extra million dollars to throw to Logan. This is three years of DEFAC projecting flat revenues. And the main reason is flat economy.
Herring: It’s funny you say “no extra million dollars.” I think that’s the problem. This should be a priority project that is going to set the example. We just received the highest score for the 9% low-income housing tax credits for our project, which will allow us to build the first 74 units. A neighborhood has been promised a redevelopment for about 30 years and it’s never happened. Next year we’ll actually start construction. You’re talking about a neighborhood that can literally serve as an example, working with a credible, national organization that has done this all around the country. I hate hearing “an extra million here, an extra million here.” Like we’re a sidebar.
The root cause is the community. To Rob’s point, when you look at the schools, we need to talking about equitable resources. I’m not talking about East Side Charter gets the same as North Star Elementary. I’m talking about whatever is needed to go into East Side Charter, whatever is needed to go into Kingswood, whatever is needed to go into the community and housing around Reach Riverside. To make it equitable, to allow for those communities to thrive, the state is going to benefit tenfold.
Martinelli: Let’s just say Delaware ranked among the top 10 best schools in the United States, how would that impact economic development in the state? When you’re talking to a business and you say to them, “We’ve got the best public schools in the country,” wouldn’t that make it easier to attract these businesses to Delaware? Wouldn’t they want to live and work here as opposed to living in Chester County working here?
Herring: I’m going to make this personal again. At Kingswood Community Center we have our early learning center. My kid goes to Wilmington Montessori School, because I can afford to send him there. He should be going to Kingswood, but we’re just not there yet. So to your point, if you have the means like most people do to send that kid to a private school, they send them to a private school. Or they move to Chester County, something like that so their kid can have access to better schools. But I would love for all the schools in Delaware to be great public schools, same with early learning centers and all of that, so I can send my kid somewhere where it’s actually cheaper for me.
Levin: Look, I grew up, I was a product of the public schools. Don’t laugh John. I graduated from Concord High School in 1972 before busing went into effect. Busing came in, in ’77 and we know where we went from there. I will tell you that our schools were some of the best in the nation when I went to school. I mean we had a zillion districts. We have 19 now, and quite frankly, when I go into the schools on the Principal for a Day thing, they will tell you they are papered to death by the school district administration. They took the handcuffs off the principal at Booker T. Washington and allowed him to do his thing. We should be doing the same thing in these schools. These principals understand their kids, they understand the neighborhoods that they’re in, and they can deal with it. The administrators don’t have a clue what’s going on. I mean plain and simple. I’m not trying to demean them, but it’s a fact. They just are not there. They don’t see what happens. And I think it’s a shame.
Herring: One quick thing. Now the competitive schools are the vo-tech schools. And there are no neighborhood schools. Howard Vo-Tech had only 11 graduating seniors that came from the inner city of Wilmington. Howard used to be a historically black school that produced great leadership from that school.
Stapleford: The disparity is, if both parents are college educated, you can go to the Delaware public schools and get a good education. For 20 years, the national assessment of education progress in No Child Left Behind tests says that over 80% of the black eighth graders are functionally illiterate in reading and math. For 20 years it’s been this case. It’s almost criminal-
Short: We spend a lot of time talking about education. We’ve all experienced it, everybody has an opinion on it, and it is critical in terms of how employers make decisions about where to move. Because they’re moving a whole workforce with them. Or they’re looking for the quality of the workforce that they have in place. Certainly, infrastructure is a big part of that equation. Fortunately, we have the largest bond bill in the state’s history and we’ll both have transportation infrastructure in place as well, and this happened under your service administration, expansion of telecommunications in our state.
Levin: Delaware Contractors Association is part of the Ready in Six initiative. And we recently had a conversation with contractors, and as we talked about the speed of permitting, certainly the personalities and individuals came up. Everyone across the state pretty much plays by the same rules, but things get done in a different fashion. One of the things that I didn’t expect to take from that conversation was the role of the lack of technology within the state system. This particularly relates to permitting. Whether it’s at the state level, DelDOT, or Delaware Natural Resources & Environmental Control, or New Castle County. We don’t have a place where our contractors or developers can put in and follow it through the system. Even though that doesn’t change the individual that’s maybe acting or slowly acting on a permit, there’s a pressure that takes place because it’s more transparent.
Martinelli: I like the whole sustainability movement. But I think we have to be careful that it’s not the government picking the winners and the losers. I think you mentioned Whole Foods, and Whole Foods is now owned by Amazon. The state gave Amazon money to build that distribution center in Middletown because it was going to create all these jobs. But what we’re not measuring, is how many local bricks and mortar stores are put out of business by Amazon because of what they’re doing? But I don’t think government should be deciding that they’re going to give them money. Why aren’t they giving money to these small retailers, bookstores? Other retailers have to compete against Amazon now. But why are we giving money to a huge, billion-dollar conglomerate that’s putting these companies out of business?
Levin: It’s real simple, Rob. When we came into office and the unemployment went up to 8.9% in the state, we had one job, and that was to create employment in the state. So we went out and found companies that wanted to grow and wanted to come to Delaware. The only way you can do that, is to incentivize them to come. I don’t like the idea, I think we should be able to compete on the basis of great people, great schools, great location, great amenities. But unfortunately, that’s not the way the game is played now. Everybody is being paid off, and their boards are saying, “Okay, what’d you get from Delaware? Because you got this offer from Pennsylvania, and this from Ohio. Why are you going to Delaware?”
Martinelli: Every state across the country almost, is giving this company money to come in. They’re lowering prices at Whole Foods now. Why do you think they’re doing that?
Levin: To buy market share.
What are the one or two things that Delaware could do today to promote, accelerate, preserve economic growth?
Levin: I think that starting with the governor and the leaderships within the counties and the cities, they could develop a timeframe for approvals. You have to be able to guarantee you will be in the ground in six months if you’ve got your act together, if you have all the questions asked and answered
New Castle County did that with Incyte. They wanted to be in the ground in six months. They were in the ground in six months and that facility was built 12 months later. The new facility, not the original Wanamaker’s facility. . Number two, I think the state really needs to decide where it wants to be, what it really wants. We are a huge producer of agriculture in Sussex County and Kent County, to a lesser extent. We need to accentuate that. We’re a great tourism section in our state, in our economy. We’re a great finance area as well.
Before I left office, we funded Zip Code, which is the group now that teaches coding. Those individuals are coming out. All they know how to do, most of them, is how to work one of these (pulls out phone) when they go in there. They come out after 16 weeks and are guaranteed employment at $70,000+ a year. They have graduated, I think, 10 classes to date. We funded that with $150,000 of seed money to get it off the ground. They are just fantastic, and they’re going to build a second facility.
These are the type of opportunities where we can take individuals, from Kingswood and things like that, who clearly don’t have a college degree. You don’t have to have a college degree to do coding. You just have to have a logical mind, which I do not have. But the point is if you have that, you can learn how to code.
These are things the state needs to find its niche, truly it’s niche, and work on that. We can’t be everything to everyone. We’re not going to be, but I want to get to the point where the state, where people are knocking on our door saying, “I want to come to Delaware because we see things are happening here.” That’s not really happening.
Stapleford: Public education reform and returning control with finances and the curriculum to the local school because, as Alan said, the principal and the teachers there know the community and they can create a culture that’s appropriate for that community and for success. Reduce the amount of money going into administration. The money going into a classroom has steadily fallen over the last 15 to 20 years. We’ve gone from about 21 students per administrator to 14 per administrator. That’s got to stop. That would be No. 1 for me.
We’ve also got to stop thinking we’re in a seller’s market. We are not in a seller’s market in Delaware, we’re in a buyer’s market. We’ve got to accept that and address some of the things that are going on. You can argue back and forth on the minimum wage. You can argue back and forth on the unified development code in New Castle County, impact fees. These things send out a message to the business community and they say, “Oh, you think that you can tell us how to behave and what to do?”
Short: We do have a reputation, and I think it’s well-earned and well-deserved of responsiveness across the state at our highest level to employers of significance, in particular, that want to move to the state or someone that may want to expand or, unfortunately, if they’re considering leaving, whether it was in the Markell administration or Carney or when I worked for Tom Carper, those guys were responsive to that. But when we get into the system is where it becomes about the permitting timeframe. I do think that that is critical of the message. We won’t have employers coming here if we can’t do the construction work that they need done in a timeframe that works for them. Particularly, there’s a real element and this impacted my business growth, of uncertainty. It’s not just, “Hey, it’s going to take a long time.” You don’t know how long it’s going to take. You don’t know how deep deep is when you get into it. That is really off-putting to any business.
There are a lot of good conversations going on right now about finding people to actually do the work. I personally believe that a lot of our energy needs to be directed at parents and not at kids. I believe it’s parents of, say, seventh and eighth graders. I know that doesn’t solve our problem next year or, the next two years, but we’re having those conversations with high school students now. We need to get to those younger kids and create that pipeline.
Herring: That was a great segue, because today we have a workforce development committee meeting where we’re bringing everyone together. We’re bringing all of those individuals together, because our project alone in Riverside is going to create 100 to 150 jobs just off the first phase of housing. I’m actually a varsity coach of soccer and basketball at my alma mater, Sanford. As a coach and former athlete, if you’ve been an athlete, you know, you’re only as strong as your weakest link. Having neighborhoods like Riverside and East Side and South Bridge that are apparently the weakest link in the city, in the state. If we focus more attention, more resources in those neighborhoods, making them safer, make the family stronger, you’re going to have better schools, because you’re going to have students that aren’t coming with all of the baggage. You’re going to have parents that can be there if the kids are having issues or to support and understand and value education, because they have a good job where they live in a safe community and they can walk to a grocer to get healthy food.
If we make sure that we don’t forget about our “weak links” then we need to make sure that these neighborhoods actually contribute and they’re not a drain on the economy, they’re a boost to the economy. We have to stop forgetting about these neighborhoods or these “weaker links,” because I think these are the key to prosperity throughout the city and state.
Smith: Sustainability. The government can do two things. One is become sustainable itself. That will free up tons of cash that the state is otherwise spending on energy and other things. If we become sustainable, there’ll be additional revenues there to do more work on all the other things we’re talking about here; workforce development, education, et cetera. The second is to support sustainability inside of Delaware. What that means is you’ve got companies, you’ve got local governments, you’ve got large organizations, like hospitals and universities. If the government can support, or even just get out of the way, for these organizations to become sustainable, it’ll do a couple of different things. For the for-profit companies, it’s going to help them become more profitable. If the government, for example, were to have a technical assistance program to help companies become sustainable then, according to all the studies, they’re going to become more profitable. The more profitable they are, they expand, they hire more people, they pay taxes, et cetera.
It’s kind of a chicken and an egg for the state in terms of the companies that are looking for talented young people. In order to draw the talented young people, how do we bring them to Delaware? One of the ways can be if we have a sustainable state, if we have a sustainable city of Wilmington or Dover or these areas, we could really pitch ourselves as a sustainable place for young people to come work and live. That, I think, would start to create some of that buzz that you’re talking about. Once you’ve got that talent here, then that helps your startups, they want to stay here all of a sudden instead of going out of state and et cetera.
STEVENSON: First of all: Ditto. Ditto. Ditto. These may not have been the top issues, because you hit the top issue. But there’s the second tier. First of all, getting permits done quicker. I absolutely agree with that. I have low confidence it’s going to happen. The backup for that is to do exactly what Middletown did, what Sussex County did, what Dover did is to put in a pre-made industrial park that has already gotten most of the permits and has the utilities in place. And Sussex County down at the Delaware Coastal Airport. The problem is that most of those are filling up and the next wave is not in place. There are some great brownfield sites and coastal zone that has been freed up. It’d be perfect for some of this. In Sussex there’s plenty of open land. We need that kind of thing going on in Seaford. We need it going on in Bridgeville, Laurel, on the western side of the county, where if you’ve got those parts, people are coming, because it eliminates that problem. There needs to be, probably, some government funding to make that happen and the counties by themselves probably don’t have that money.
Stevenson: Last year was the first time we had a lower ratio of students to administrators and students to teachers. If we go to the kind of plans we’ve been talking about where the principal takes over, you need less of the administration and the money becomes available to do a lot of the things that you want to get done.
One of the biggest problems in Delaware is a very low workforce participation rate. We have about 62% of our population working. Minnesota, which was one of the fastest growing states last year is 70%. How do we get that labor participation rate up? One of the ways we do that is criminal justice reform. You go down to Southbridge, 70% of the male population has been in prison. It’s extremely difficult to get a job after you’ve been in prison. I had a construction business, one of the businesses I started in Sussex County. I worked with the guys coming out of SCC, where we helped them get to their parole officer and we understood that they had these issues and, in fact, two of our production superintendents were out of SCC instead of the university.
I have a feeling I won’t sell you on this, but I’ll say it anyway. Progressive policies by design rely more on government policy and government oversight. We at CRI believe we need more free market solutions.
Smith: Trust me when I say the progressives do not consider me one of them.
Stevenson: We have to stop digging the hole. We need less regulation. We don’t need more minimum wage work stuff. We don’t need an expansion of renewable portfolio standard. We don’t need a carbon tax on gasoline, which is coming up next year. Just stop digging the hole and start thinking more about free market solutions.
How would you describe the political climate for doing all these things? We’ve lost a large number of legislators, two of whom are in this room, who operated in the middle. Across the nation, there’s a lot of talk that people are entrenching in positions on the margins and that they’re basically taking on a mob mentality toward the middle.
Herring: Regardless of the administrations, whether it’s city, local, government, or any other entities in power that makes decisions around investments around the state, we have to be willing to understand that the investment we make now might not yield a return during the lifetime of the current administration. But it doesn’t mean you can’t leave a legacy on this state, similar to what Pete du Pont did. We have to be willing to do what’s best for this state, even if it’s not in our own particular individual interests, because the impact will be great, but it might take some time.
Short: Even during my tenure in the legislature, I wish that more legislators were focused on jobs. I’m laser focused on jobs. These problems that we’re talking about, so many of them are solved with a healthy economy, with people having jobs. The challenges that Logan is describing is something that jobs play a huge part in. In solving resources for our schools, jobs play a huge part in that. Legislators have their spectrum of what they’re interested in. I just would encourage any legislative body to know that the foundation of that is jobs.
Levin: Until legislators and the administrators and the like realize that their most important thing is to serve the people as opposed to getting re-elected, until that happens, things are not going to change.
Stevenson: I think Leg Hall has become less collegial than it used to be. I have very low confidence we’re about to change anything. I’m a big fan of split government. When Pete du Pont did what he did, he had a Democratic (majority). Pete was able to get things done, because people were working together with a similar vision of what needed to happen. Until one house or the other or the governor becomes of a different party, I don’t see that we’re going to have any changes.
Smith: Just back to your point about the progressives and the sustainability, I have to clarify the beauty of sustainability is that it is free market. It’s not that the government is telling businesses they have to pay a livable wage, but companies on their own are recognizing that when they pay their employees a livable wage, then those employers are more engaged, which makes them more productive, which earns the company more money. It’s a very free market-based concept.
You all talk to a lot of people. What are you finding that they care most about, particularly as it relates to business and economic growth and the general economy?
Stevenson: The comment I hear the most often is, “My children are going to leave Delaware, because they can’t find a job here.”
Levin: I agree partially with David, because that is a concern and used to be a big concern in Sussex and Kent County. But I think the other concern is whether we are providing our kids with the best education possible. They may be, but it’s the next generation that they worry the most about.
Herring: Prosperity for all, regardless of the zip code you’re born in. Just prosperity for all.
Short: The quality of the job opportunities and concern about technology.
Stapleford: I’d really say the culture of accusation. There seems to be, both in the media and in the elected area, people who think they know better how you should run your life and that they can put a judgment on your values. They want to impose their values on your values. To me, it pales in the face of the performance of the public schools, for example. That drift into assisted suicide, or whatever it might be, away from what seem to be more central issues.
We obviously have a predominantly business-centric readership for the Delaware Business Times in a variety of industries, probably more geared toward leadership roles and people who are aspiring to leadership roles than maybe the rank and file, if you will. What can our readers do to support economic growth in the state of Delaware?
Editor’s Note: There was general agreement among the participants that getting involved was the No. 1 idea.
Short: There are opportunities out there for whatever your expertise is. You can get involved. But I would also point out, and hopefully it won’t be too upsetting to John, to be a cheerleader for our state. There are great things happening in this state. The conversation needs to start with, “Where do we need to be better?” That’s where we’ve been talking today. I do think that the Prosperity Partnership has a good message. Hearing about the school in Dover is a good message. The fact that we did accomplish getting permits processed for large employers within six months is a good message. It’s important for us to face the challenges, work on solving those problems, but not to forget that there’s a lot of good stuff going on here.
Stapleford: It sounds like you’re already started down that road with DBT. We’ve been arguing that for years; you can use the unemployment data. We’ve done it, when I was at the university, use the unemployment data files to break out the gazelles in your existing business base and then just come alongside those gazelles and say, “What’s hindering you? What’s holding you back?” And so forth. Recognizing that most of the job growth comes from existing businesses, not from new moving in.
Stevenson: I would say for business leaders, put aside your fears, get involved. I can’t tell you how many times I’ve been told, “I don’t like what DelDot is doing,” or “I don’t like what DNREC is doing, but I need to go to them for a permit in six months and I’m not going to say anything.” You’ve got to start speaking up and saying things. Otherwise nothing’s going to change.
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