CRI News


Delaware's Workforce Labor
A glance before and after COVID-19
 
By Charlie Copeland, Director 
Center for Analysis of Delaware's Economy & Government Spending
September 29, 2022
 
 

 

It has been clear that Delaware’s educational system has been substandard for several decades. In addition, previous analysis conducted by the Caesar Rodney Institute has shown that our young people are moving out of the state for better economic opportunities elsewhere.

 

But not every worker moves away from Delaware. How is the remaining workforce faring in Delaware? In short, worker productivity growth is among the lowest in the Nation, inflation-adjusted wages are flat, and the labor force participation rate remains at historic lows.

 

Without a dramatic change in direction, these trends will continue.

 

 

Delaware Worker Productivity 2010-2021

 

During the eleven-year span from 2010 to 2021, Delaware was one of only five states with a decline in worker productivity (see Table 1 below). Worker productivity drives economic growth, and without increases in productivity, economic growth suffers - which is what we have seen in Delaware when adjusting for inflation. According to data from the Bureau of Economic Analysis, New Castle County's economy was 2.8% smaller in 2020 than in 2001.

 

Furthermore, worker productivity is tied directly to wage growth. A more productive economy leads to more wages for workers.

 

TABLE 1.

 

(Table 1 Source: "2010-2021 Annual Productivity Percent Change by State," U.S. Bureau of Labor Statistics.)

 

 

Delaware Wages over the Last 20 Years

 

The state of Delaware publishes an annual book on Delaware Wages broken down into numerous categories. Graph 1 (see below) shows the average entry level wage and experienced wage in Delaware and the median wage (the middle wage*) from 2002 to 2020. These wages are then adjusted using the St. Louis Federal Reserve CPI numbers for the Philly-Wilmington-Camden area.

 

As you can see, from 2002 until 2017, wages were completely flat for entry level and median wages, while experienced or skilled labor saw a real increase in earnings. Then in 2018-2019, there was a slight uptick in median earnings. Then COVID-19 hit, and experienced and entry-level labor both declined. The median continued to rise, but not because earnings rose but because low wage earners were laid off, skewing the ratio of experienced workers versus entry level workers.

 

As wages have flatlined, Delawareans have simply left the workforce. Why work for lousy pay when government benefits provide the same economic return?

 

GRAPH 1.

(Graph 1 Source: Delaware Department of Labor, " Delaware Wages Report from 2002-2021)

 

 

Delaware Labor Force Participation Rate

 

Delaware's Labor Force Participation rate plummeted after the "2008 financial crisis" to levels not seen since before 1976 (see Graph 2). While this is bad, what is worse is that during the last decade, the rate has not returned to anything close to normal numbers. While Delaware "claims" an unemployment rate of 4.4%, adjusting for our low participation rate, Delaware's real unemployment rate is over 8%.

 

In addition, according to Delaware Department of Labor statistics, Delaware had non-farm employment of 469,500 people in March 2020, when COVID-19 started. As of July 2022, the non-farm employment was 462,900 people. Two and a half years after the start of COVID-19, Delaware's employment sector has 6,600 fewer employees - a reduction of 1.4%.

 

Maybe, jobs in Delaware are simply NOT enticing enough or have such low pay that an increasing number of Delaware's working-age population would rather stay at home collecting government benefits than hold a job.

 

Graph 2.

 

(Graph 2 Source: St. Louis Federal ReserveDelaware Department of Labor - - https://fred.stlouisfed.org/series/LBSNSA10) 

 

 

What Caused Delaware to be in this Situation?

 

Government policies that make local employment and business development extremely difficult, along with a failed public education system, caused Delaware to be in this situation.

 

These issues are fixable, but Delaware's Governor and Legislature need to change tack!

 

The Caesar Rodney Institute has produced reports that analyze and provide real solutions for improving Delaware's economic outlook. Our recommendations and reports addressing some of these major issues are below:

 

 

 

 

  • Establish sensible energy policies with significant economic and environmental benefits for Delawareans. CRI analysis & recommendations: "Zero emissions impact from Delaware energy Policyby David T. Stevenson. June 28, 2022. Center for Energy & Environmental Policies.

 

 

 

(NOTE:  All reports produced by CRI are free to the public and can be located on our website; about 95% of Delaware legislators receive our reports, and a few acknowledge our recommendations and want to discuss them further. If there is an issue you are most concerned with and there is a report on it, we encourage you to connect with your district Senator & Representative!)

 

 

The Middle Wage - In Mathematics, the median is defined as the middle value of a sorted list of numbers. The middle number is found by ordering the numbers so that there are an equal number of values above the median as there are below it. The median is the "middle" number in the list.

 

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