Viewpoint: Local projections show marginal increase in jobs prospects

John Stapleford
Guest Columnist

Over the last decade, including the “Great” Recession, total employment in Delaware has increased at half the rate of total employment throughout the nation, with a lukewarm 0.3 percent compound annual growth rate for Delaware compared to 0.6 percent throughout the U.S.

During the recovery, the year-over-year Delaware employment growth rate bounced back to a healthy 2.5 percent. Since May 2016, however, the state’s job growth rate has fallen steadily back to the weak annual rate of 0.3 percent. The latest November data records a year-over-year Delaware job growth rate of a mere 0.1 percent.

There were substantial differences in employment performance among Delaware’s counties over the 10-year period. At one extreme, the growth rate in total New Castle County employment was zero. Kent County was 0.4 percent per annum, and Sussex County led with an annual job growth rate of 1.1 percent

Looking ahead, the Delaware Department of Labor projects an 0.8 percent increase in total employment over the coming year, and DEFAC expects 1.1 percent. Over the longer term, the DDOL expects annual employment growth rates of 0.7 percent for New Castle County, 0.8 percent for Kent, and 1.1 percent
for Sussex.

These projections would have Delaware employment continuing to rise at one-half the rate of the nation, a depressing prospect.

Why it’s happening

Delaware’s economy, especially New Castle County, has absorbed some serious body blows.

First was the 1998 passage of the restrictive “no growth” New Castle County Unified Development Code that basically drove economic development to incorporated areas, such as the Amazon warehouse in Middletown.

Then during the 2001-02 recession the DuPont Co. quietly eliminated at least 10,000 management positions from various sites throughout the county.

In the background there was the steady attrition of automobile manufacturing that culminated
in the closing of the GM and Chrysler plants.

While credit card industry jobs were being added, commercial banks in the county cut over 7,000 jobs, mainly through automation and consolidation.

Finally, last year the Dow-DuPont merger eliminated at least 7,000 high-paying research and development jobs throughout the county.

Meanwhile, since the public school desegregation decision in the late 1970s, there has been the steady out-migration of professional workers with school-age children from the New Castle County to areas such as Chester County. From 1980 the net loss of wages from persons working in the county and living elsewhere has soared from $200 million to over $3 billion.

In the background, following the recession, the state raised every business tax and the top personal income tax rate, alienated firms incorporated in Delaware through an aggressive abandoned property tax collection program, and raised electric rates by giving $500 million to Bloom Energy for essentially nothing in return.

The implications for business

Going forward, the Delaware Department of Labor’s modest employment growth projections for the state appear quite reasonable.

Despite lots of flurry and reports, the Delaware public school system remains mediocre, with children from lower income households being most disadvantaged.

Coming off a $400 million deficit, the state government is in no position to provide a spending “jump start” to the state economy. Moreover, changes in accounting procedures require the state government in 2018 to show officially on the books its $8 billion unfunded health care liability to active and retired state employees.
In such an economy, Delaware businesses that wish to continue to grow must either steal customers from rivals or move into out-of-state growth markets.

Dr. John E. Stapleford is president of ECON First, which provides web-based marketing strategies based upon economic analysis and web presence research.