CRI News

Is Delaware Attracting Families or just Retirees?
CRI broadens its migration analysis to cover other key factors. 

By Charlie Copeland, Director

Center for Analysis of Delaware's Economy & Government Spending

November 14, 2023




Last year, CRI published a migration analysis showing Delaware's inbound and outbound migration trends over a decade. Focusing on inbound migration, our May 2022 analysis implied that only retirees were moving to Delaware. But let's test this insight and look at other "key factors" that might make a family want to move to Delaware (i.e. wealth accumulation, wealth preservation, and educated children). 


Delaware's inbound migration data has been updated with the most recent data through 2021. Delaware is gaining most of its new residents (91.1%) from only four States: PennsylvaniaNew JerseyNew York, and Maryland


Three states (PA, NJ, MD) are in our immediate economic area. Let's look at how Delaware compares to these neighboring states in terms of state GDP growthper capita income levels (and mix of income), local tax environment, and schools.



Delaware's GDP Growth 


Twenty-five years ago, Delaware had the strongest relative GDP in the Mid-Atlantic, but the state's economy never recovered from the 2001 recession (Graph 1.0). Fortunately for Delaware, however, our neighbors are not much better. Maryland tracked ahead of its regional peers primarily because of historic Federal spending. Still, Delaware, New Jersey, and Pennsylvania have all been anemic performers, although Pennsylvania looks to supplant Delaware in the number two regional position.


DE's GDP Summary: Given the GDP trends over the last 25 years, it is doubtful that people from the Mid-Atlantic have moved to Delaware because of its strong economy, which Delaware does not have. However, its neighboring states' economic weaknesses do not penalize Delaware for its poor economy.



Graph 1.0 

 (Source: St. Louis Federal Reserve Gross Domestic Product: All Industry Total by State, Millions of Dollars, Annual, Not Seasonally Adjusted, Normalized Base Year 1997)


Delaware's Per Capita Income Levels


During the last 25 years, Delaware's per capita income has gone from 2ndworst to worst regionally. While the downtrend is bad, further analysis exposes a very serious problem for Delaware. 


Personal net income can be divided into three categories: 

  • Net Earnings (a paycheck), 
  • Dividends/Interest/Rent (investment income) and 
  • Government Assistance. 


In 1997, 66.7% of Delaware's personal net income came from a paycheck. Today, that number has declined to 59.5%. While earnings from a paycheck have declined, government assistance has nearly doubled (Graph 2.0). In 2022, almost 25% of personal net income came from government assistance (a change dwarfing any of our regional competitors). This trend line is very concerning!


DE's Personal Net Income Summary: Delaware's Personal Net Income has trended behind other Mid-Atlantic states for 25 years, and the share of that income from government assistance has almost doubled (a staggering amount). Therefore, people are unlikely to have moved to Delaware because of their paychecks.




Graph 2.0 

(Source: Bureau of Economic Analysis


Delaware's Local Tax Environment


Given the previous data on Delaware's GDP and personal net income, how does Delaware rank in its citizens' ability to keep their money?


According to the Tax Foundation's 2024 State's Business Climate Index (Table 2.0), Delaware's corporate and individual tax rates are among the highest in the Nation but are competitive with adjacent states. While Delaware brags that it does not have a "sales tax," it has a "gross receipts tax," which harms small business development. 


DE's Taxation Summary: Delaware's tax rates are no better than our regional competitors and probably did not encourage job seekers or entrepreneurs to move to Delaware as part of inbound migration.



Table 2.0:  2024 Business Climate Index (DE vs. Adjacent States)

(Source: 2024 Tax Foundation)


Delaware Schools


Delaware, like every state, participates in the National Assessment for Education Progress (NAEP) (often called the "Nation's Report Card"). Comparing 4th and 8th graders in Delaware to its neighboring states shows that Delaware students perform poorly compared to our Mid-Atlantic peers (Graph 3.0). In fact, Delaware is dead last.


DE's Schools Summary: Delaware's failing public school system, as graded by the federal government, means that it is unlikely that families moved to Delaware to educate their children.



Graph 3.0 

(Source: The Nations Report Card)




In our pursuit to understand migration motives to Delaware, CRI's analysis aligns with our May 2022 findings, underscoring that Delaware's inbound migration is predominantly retirees who are looking to stay near their family while taking advantage of low relative real estate taxes.


In short, Delaware's inbound migration is dominated by retirees. The economic and tax implications of this trend are enormous.


In two upcoming pieces, CRI will look at Delaware's outbound migration. Where are Delawareans moving? The reader might find this data equally alarming.


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