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Monday, March 8, 2021

Delaware's Economic Puzzle: What's the Real Problem?

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John Connolly
John Connolly, a lifelong resident of Wilmington, graduated from the Charter School of Wilmington in 2013. He is now attending the University of Virginia on a Jefferson Scholarship and is an Opinion Columnist for The Cavalier Daily, where this piece first ran.

Burying the news in the relative obscurity of the local section, the News Journal reported, on June 10th, that Delaware’s GDP growth was second-to-last in the nation. Delaware’s GDP grew by only 0.2%, a rate equal to those of Wyoming and South Dakota and leading only Connecticut’s lethargic 0.1% growth rate.

This news reflects poorly on the state of Delaware, but is not necessarily indicative of the state’s overall economic health. Delaware, as Governor Markell spokeswoman Cathy Rossi points out in the article, has “stabilized the economy in the midst of and in the immediate aftermath of the recession, so we are in a better position than many other states.” In terms of the unemployment rate, this is certainly true. Delaware’s 7.2% unemployment rate outstrips those of neighboring states Pennsylvania and New Jersey, which post 7.9% and 9.0% respectively. And Delaware’s GDP per capita is actually the nation’s highest, indicating the presence of a highly skilled work force.

 And so the sluggish GDP growth may not represent the true health of Delaware’s economy, but it does foreshadow a potential dark cloud on the state’s financial horizon, a cloud that is briefly alluded to in the News Journal’s article. Guy Faucher, senior economist at PNC Bank, told the News Journal that he believes that Delaware’s growth “will lag over the long run,” due to the fact that young workers flee Delaware for brighter economic futures.

This statement hints at the true malaise underlying Delaware’s economic future. Indeed, Delaware has demonstrated a remarkable ability to attract highly skilled lawyers and financial professionals, not to mention the scores of scientists who come for DuPont and AstraZeneca. But there is another class of workers in Delaware. As the New York Times Magazine reported last November:

“After all those workers return to the wealthy suburbs at the end of the day [referring to Wilmington’s lawyers and bankers], what’s left behind is one of the most dangerous cities in America, its unemployment stuck stubbornly two points above the national average. For those who live there, the future is grim.”

For all the high-paying, high-powered, high-profile jobs in Delaware, there are few jobs that cater to those who live and die in the dangerous neighborhoods of Wilmington. This is a major problem. Fifty years ago, these people would have sought jobs at the robust factories lining the Delaware River, at the plants which churned out gleaming new cars, at acres of oil refineries, elegant in their infrastructure. Now, for these same people, the future is indeed grim. No longer is a job available simply to someone willing to put in an honest day’s work. The days of the uneducated, untrained worker have long since passed. The factories have shut down, the plants have closed their doors, and the oil refineries only exist as a reminder of the Mid-Atlantic’s once strong manufacturing past, decaying monuments to an elapsed era.

Tapping a state’s full economic potential is a difficult task. North Dakota’s 13.4% GDP growth rate led the nation, but it came largely on the back of a massive oil boom. Delaware possesses no such fortune with natural resources. Its economic growth must be spurred on by vigorous pro-business ingenuity.

Young workers, at least those who are not lawyers or chemical engineers, feel compelled to leave Delaware for economic reasons. Those who remain behind, especially in certain sections of Wilmington, are often unable to find decent jobs.

Ameliorating these two problems would go a long way towards improving growth. Surely, the government of Delaware, along with the state’s businesses, is hard at work solving these problems. At the same time, however, the governments and businesses of other states are working feverishly to attract these workers and create jobs in their own communities. Delaware must be cognizant of this reality, for much of its economic future depends on its success in these efforts. Success in these efforts, moreover, would go a long way towards increasing the GDP growth rate to anything beyond 0.2%, to anything beyond finishing an ignominious second-to-last out of every single state.

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