Delaware’s Unemployment is Fourth Worst in the Nation

Delaware's Unemployment is Fourth Worst in the Nation

By Charlie Copeland, Director

Center for Analysis of Delaware's Economy & Government Spending

March 1, 2023

"That's the way it is with entrepreneurial people. You try one thing, it doesn't work, you try another." - Pete du Pont

Delaware's unemployment percent rate for December was the 4^th worst rate in the Nation at 4.4%. While 4.4% may not sound that "bad," Delaware's workforce participation rate simultaneously dropped to historic lows reaching below 60% for only the 2^nd time in State history. This means that the official unemployment rate understates the "real" unemployment by 5% or more. Plus, Delaware still has not recovered all the jobs lost during COVID-19. These facts imply that Delaware's "real" unemployment rate is closer to 10%.

(Map Source: Screenshot from U.S. Bureau of Labor Statistics.)

To fix this problem, Delaware's government keeps looking for government solutions, which continue to fail. The only way out of an economic malaise like Delaware's is for entrepreneurs to be able to take risks and thrive.

And Delaware has a lot of entrepreneurs. Delaware's economy now has over 26,000 firms with five or fewer employees. We need these businesses to grow. But Delaware is a rotten place for entrepreneurs because the government has created a destructive economic environment that is crushing Delaware's small businesses. Some examples:

• Delaware's hidden small business income tax (aka The Gross Receipts Tax),

• The Carney Administration's introduction of California-based regulations, and

• The Governor's failed COVID-19 policies which tanked public education (See GRAPH below).

(Source: Hoover Institute at Stanford University)

This State is no longer your parent’s Delaware. The State’s economy is no longer driven by large corporations like Dupont or MBNA but instead is driven by thousands of new small businesses. This change to the Delaware economy is monumental, and the State government has failed to respond. Without the billions of “free” dollars from the federal government, Delaware government would be in complete crisis. The time to fix this problem is now (and yes, State budget smoothing is necessary but is insufficient).

Pete du Pont became Governor during similarly awful times of economic and government crisis. We should look back to his administration for some ideas. Delaware should eliminate the hidden small business income tax (called the Gross Receipts Tax); eliminate two or more regulations for every new regulation; reduce State government employment by 5% through attrition; and expand parental involvement in public education. Otherwise, Delaware’s nation-trailing employment levels will continue, but without federal government bailouts.