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Delaware’s future pinned to a skilled labor force, consultant says

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DOVER – In the last decade, Delaware has increased its number of jobs by about 12%, but its growth in average wages and gross domestic product sit among the worst in the nation in the same period. Improving those rankings over the next decade relies heavily on how to prepare a workforce for next-generation jobs that employers will want, according a consultant contracted by the Delaware State Chamber of Commerce.

Ted Abernathy, managing partner of Economic Leadership LLC, a North Carolina-based consulting firm that works with more than a dozen state chambers, presented his findings at the Delaware State Chamber’s annual conference webinar July 21.

Ted Abernathy

Abernathy said that one of the more significant findings was that Delaware has actually had a 13% job loss in tech-related roles between 2015 and 2019, while the national average rose about 8%. It currently doesn’t look to change dramatically either, as Delaware is projected to remain in the bottom 10 states in terms of tech-related employment growth over the next five years.

“One of the surprises for a lot of elected officials when we talk about technology is that every state is not growing its tech work,” he said. “Technology is concentrating in some places, and those places are heavy into technical training, tax and regulatory systems that support the technology industry.”

“There’s no reason for Delaware not to be a leader in technology, but it currently is not,” he added.

Delaware officials have been cognizant of the fact that it needs to grow its tech workforce, with the Delaware Business Roundtable, a coalition of state CEOs; the state’s economic development agency, Delaware Prosperity Partnership; and a new Information Technology Industry Council launched in Delaware tackling the issue.

When asked what factors impact tech employers’ decision-making, Abernathy said that it’s often a mix of taxes and talent. States should assess how entrepreneurs and founders are taxed, including their stock holdings, as well as whether machinery and equipment are taxed, and if so at what rate. Other companies look to where training on technology is offered for free or at low-cost, indicating that the right workforce would be close at hand.

After the COVID-19 pandemic subsides, states should expect a continued acceleration of change, which will lead to further industry disruptions, as well as “talent wars,” Abernathy said.

“Companies could not find enough workers with the right qualitative skills. We were at record-low unemployment before this started, so [when the pandemic is over] there will be more people in the pool, but the odds are that they will not have gotten new skills during the pandemic,” he said. “Nurses, truck drivers, and mechanics will still be hard to find.”

Abernathy noted that in his firm’s annual survey of corporate site selectors found that highway accessibility remains the most important factor – a plus for most of Delaware with close proximity to Interstate 95 or Route 1 – but the second, third and fourth priority are all related to the labor force: availability of skilled labor, labor cost, and quality of life.

“When a company is looking for investment today, their biggest concern is can they get the talent they need? And I think Delaware is a state where your workforce looks good on paper because you’ve got a lot of talent. But can you attract talent in big numbers?” he said.

A key to that question will be the retraining of older workers who may not be as adept at adapting to technological advancements, Abernathy said.

“Something people don’t like to hear is that older workers get less productive, and it’s because they’re not learning the new tricks,” he said. “So, retraining mid-career workers is a huge key as we move forward, and I think that that puts the onus on systems on how to fund and invest in our community colleges and our technical schools.”

The technology sector isn’t the only one that could benefit from further educational opportunities, as the construction sector has seen growth in Delaware over the past decade as well, Abernathy said. Opportunities remain for public school systems and community colleges to increase the number of trades offered to students.

Delaware’s largest employment sector may also be one of the most at-risk for future job losses, Abernathy said. Financial services, with 45% of Delaware’s gross domestic product tied to the industry last year, may be susceptible to increasing computer automation. State elected and business leaders should prepare for that eventuality, he noted.

“I think that you are in a unique position in finance because it’s so important to your state. But as well as being the unique place, you need to be the leader. You need to be the person going to that next level,” Abernathy said. “If you’re going to begin have automation, OK, embrace it. Get both the positives and negatives from it because automation typically creates more jobs than it loses.”

“You should have the most innovative legislation in the country on finance, as you have in the past,” he added, referring to the 1981 Financial Center Development Act that made Delaware a capitol of credit card operations.

With states now discussing how to best position themselves for post-pandemic gains, Abernathy recommended that Delaware begin planning too, focusing on talent, business climate and infrastructure. He noted that a public-private approach will get better results than one side working by itself.

“If you can align around a plan to strengthen both the skills of your workforce and their productivity, but also the opportunity in industries that are going to be growing in the future and going to bring more wealth and higher-paying jobs and stability, then that’s the key for you going forward,” he said.

By Jacob Owens

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