Evidence can be cited to show that Delaware is making solid progress in both economic and social terms. See, e.g., “We’re making progress on issues that Delawareans care about,” Governor John Carney, News Journal, 7/21/19.
But for every positive sign, other indicators support a different conclusion. Delaware’s unemployment rate was 3.3% in July 2019, for example, which is said to be the lowest in 30 years and placed Delaware in a tie with Alabama for 16th lowest in the state-by-state statistics. (The national rate was 3.7%.) Bureau of Labor Statistics, July 2019.
This didn’t address the equally important issue, however, of whether Delaware workers are experiencing enough income growth to keep up with the cost of living. And the answer to that question is probably “no.” Delaware economy isn’t doing well; Here’s how to fix that, Dr. John Stapleford (Caesar Rodney Institute), News Journal, 5/30/19.
Over the past 12 years Delaware per capita personal income has gone from 10% above the U.S. [average] to 4% below. Inflation-adjusted median household income in Delaware peaked at $70,220 in 2000 and fell to $58,046 in 2016, a nearly 20% drop in purchasing power.
As Dr. Stapleford goes on to say, Delaware’s economic output has stagnated in recent years and many workers are finding jobs in less remunerative sectors of the economy.
The bulk of the jobs being added in Delaware are in industries with lower wages and limited benefits, including restaurants, temporary help, janitorial services and home healthcare services.
Also noteworthy is the growing number of self-employed Delawareans, about a 2/3 increase since 1997 with the total now up to about 1/7 of the state’s workforce. Some of these individuals are well-paid, e.g., real estate agents, attorneys, and accountants, but many are barely making ends meet (although they may well enjoy the freedom of being their own bosses). Delaware’s gig economy numbers are higher than national average, Delaware News Journal, 8/9/19.
Broadening the focus to include family and social issues, is Delaware a good place to live? High school graduation rates are reportedly improving, which is encouraging, although test scores indicate many students aren’t college ready. Other purported pluses are hefty expenditures for state infrastructure and progressive legislation aimed at achieving various supposedly desirable social ends, from limiting use of plastic bags to battling manmade global warming.
In a recent survey of 182 urban areas (large and moderate-size cities), however, Wilmington, DE was rated near the bottom in terms of overall quality of life. 2019’s best [Overland, KS] & worst [Detroit, MI] place to raise a family, John Kiernan, wallethub.com, 7/23/19.
Wallet Hub’s survey sought to rate attractiveness of the surveyed cities in four areas based on a total of 47 key metrics. The ratings for Wilmington were as follows: Family fun (115); Health & Safety (178); Education & Childcare (53); Affordability (163).
These ratings are somewhat subjective, and they should be taken with a proverbial “grain of salt.” Also, an average of the four scores would produce an overall ranking for Wilmington of 127 vs. the 177 that was reported – what’s up with that? Still, Wilmington does have its share of problems, which detract from the overall attractiveness of our state. As noted in John Stapleford’s essay, for example, many higher-level workers in northern Delaware have chosen to live in Pennsylvania – importantly due to better public schools there – to PA’s benefit and DE’s loss. Last year, professionals who worked in New Castle County but lived in nearby Chester and Delaware counties exported over $3 billion of wages from Delaware’s economy. Even when Delaware can attract well-paying technical jobs, the employees tend to live outside of the state in communities with higher-quality public schools, and their spending power goes with them. What could Delaware do to improve its economic results and quality of life? In general, without getting into a lot of wonky policy ideas, I would suggest that our political leaders rethink their view of government action – funded with taxpayer dollars and/or mandated costs – as the solution to all problems.
For starters, it’s time to abandon the idea that the failure of worker earnings to keep up with inflation can be cured by hiking the minimum wage to, say, $15 per hour. The predictable result would not be to raise everyone’s pay to a “living wage” level, but rather to limit employment opportunities and encourage more people to remain on the dole.
The true key to higher compensation for Delaware workers is faster economic growth, which results in more choices and better opportunities for job seekers. And the best way for the state government to support economic growth is not to create mandates and subsidies for investment opportunities fancied by government planners – such as Fisker, Bloom Energy, or a 2nd Amazon headquarters - it is to create an innovative and vibrant private sector by keeping taxes low and streamlining regulations.
As matters stand, state government spending is growing faster than the economy – plus which billions of dollars of unfunded post-employment healthcare benefits are being allowed to build up - so periodic tax increases will be inevitable. Delaware’s prospects aren’t so rosy, William Whipple, News Journal, 8/2/19.
As for cutting “red tape,” there is a veritable mountain of state regulations in Delaware that needs to be whittled down. Consider the results achieved for Delaware with a computer program (State RegData) developed by the Mercatus Center of George Mason University. Time to lighten the regulatory burden on Delaware business? Peter Osborne, Delaware Business Times, 7/3/19.
. . . the 2019 Delaware Administrative Code (DAC) contains 104,562 restrictions and 6.7 million words. The average reader would need about nine weeks (at 40 hours per week) to get through the whole thing, Mercatus says.
What segments of the DE economy are hit with the most regulations? The answer is petroleum and coal products manufacturing, chemical manufacturing, and waste management & remediation services, which collectively represent nearly 60% of Delaware’s 105,000 restrictions.
Now to be clear, many business activities need to be regulated. But absent a proper sense of restraint, the power to regulate can become the power to destroy. Consider this comment by Bob Perkins, director of the Delaware Business Roundtable.
Certainly within the pages [of the DAC] are some regulations that are needed and important and certainly within those pages are some that are either redundant, unnecessary, outdated, or technology has passed them by. The challenge for legislators and other government officials is to determine which of those regulations are necessary and which are not.
Two things are needed to improve the results: (1) periodically review and prune existing regulations, and (2) subject proposed regulations to realistic cost/benefit analyses before allowing them to go into effect. We were encouraged to learn that some remedial legislation (HB 167) has been introduced in the General Assembly by Rep. Postel (R. 33rd), Sen. Wilson (R.18th), and co-sponsors Sen. Hocker (R. 20th), Reps. Briggs-King (R. 37th), Dukes (R. 40th), Morris (R. 30th), Shupe (R. 36th), M. Smith (R. 22nd), Spiegelman (R. 11th), and Vanderwende (R. 35th), although it didn’t pass this year.