Delaware’s 2025 Labor Market Signals Structural Strain

The Delaware Department of Labor's Monthly Labor Review offers a valuable insight into the state's economic health. After reviewing all 11 issues from 2025 (Oct. 2025 was not available), a clear picture arises and one that should lead policymakers to carefully consider the fundamental structure of Delaware's economy.

For Delawareans, the numbers point to fewer private‑sector opportunities and greater reliance on healthcare and government jobs.

Jobs Up, Unemployment Up

On the surface, the numbers tell a mixed story. Total nonfarm employment grew from 490,700 jobs in January 2025 to 496,100 by December 2025, a gain of about 5,400 positions. Yet the unemployment rate climbed steadily from 3.6% to 5.2% during the same period. By year's end, Delaware's jobless rate exceeded the national average by nearly a full percentage point.

How can employment grow while unemployment rises? The answer lies in labor force participation. Delaware's civilian labor force expanded by nearly 10,000 people in 2025, but only 5,400 new positions were created, resulting in higher unemployment.

Health Care is Carrying the Economy

More revealing than the overall figures is the makeup of job growth. A single reporting category, Private Education and Health Services, accounted for nearly all of Delaware's employment gains, mostly healthcare. Month after month, this sector consistently added between 100 and 300 jobs. By December, it employed 91,300 Delawareans. In 2025, it became the state’s largest employment category.

Healthcare employment growth is not inherently problematic. An aging population needs medical services. However, when one sector dominates job creation, it raises concerns about economic diversity and resilience. Healthcare demand is mostly unaffected by market competition; it is greatly shaped by insurance, government programs, and regulations.

Employment growth in this sector does not indicate entrepreneurial spirit or private capital growth, which are the usual drivers of widespread prosperity.

Warning Signs for Delaware’s Private Sectors

Meanwhile, sectors more exposed to market forces showed weakness. Manufacturing employment declined throughout 2025, with both durable and nondurable goods producers shedding jobs. Leisure and Hospitality, a sector that depends on discretionary consumer spending, ended the year down. These patterns suggest that Delaware's private economy, outside of healthcare, struggled.

Government employment presents its own cautionary tale. Local government payrolls expanded modestly, while federal employment in Delaware declined noticeably in the second half of the year. State government employment also contracted.

Urban environments continued to struggle. Wilmington ended the year with a 6.5% unemployment rate and Dover a 6.8%. Newark recorded 7.0% unemployment, which has doubled in the last two years and is now higher than Wilmington. This is particularly surprising given the money invested in the University of Delaware’s STAR campus and the other benefits of a university town.

Taken together, these trends point to a central question: will Delaware’s economy generate enough diverse, private‑sector jobs to support its aging population, or will it drift toward a narrow base of healthcare and government employment?

What it Means for Delaware’s Future

What should Delaware's policymakers take from this data?

First, Delaware has the fourth-oldest population in the nation, according to the Delaware State Chamber of Commerce’s 2026 Competitiveness Bluebook. This fact should not come as a surprise to any longtime reader of the Caesar Rodney Institute. Policies for a small workforce supporting a growing retired population must differ from those in high-tax, high-regulation states such as California, whose policy playbook increasingly influences Delaware.

Second, the concentration of job gains in healthcare deserves scrutiny. The state should avoid policies that inadvertently crowd out other sectors. Delaware should open the market to more competition, including from adjacent states. It should also reduce barriers by repealing the Certificate of Public Review program, also known as certificate of need.

Third, the manufacturing decline warrants attention. Delaware was once home to a robust industrial base. Today, that sector continues to shrink. Reversing this trend will require an honest assessment of whether Delaware is interested in remaining a competitive place for manufacturing. So far, it is not.

Delaware enters 2026 with a growing labor force, a healthcare sector bearing the load, and important questions about whether its broader economy can create private sector opportunities. Business-as-usual strategies that copy California’s model of high taxes and heavy regulation is not enough.