A look into "Delaware's Economic Recovery": strongly suggests it's time for a tax cut
Co-Director, Center for Analysis of Delaware's Economy & Government Spending
April 29, 2021
On April 13th, the Philadelphia Federal Reserve Bank president, Patrick Harker, spoke to members of the Delaware State Chamber of Commerce. According to Harker, the real Delaware economic recovery is underway, but it is "a work in progress."
Total Delaware employment is almost 25,000 jobs below the pre-COVID-19 level. The unemployment rate has fallen (currently at 6.3% vs. pre-COVID-19 at 4.5%). The labor force participation rate is slowly rising, although still below the pre-COVID-19 level.
In practical terms, how soon might we expect Delaware's economy to return to the pre-COVID-19 level?
According to the Delaware Department of Labor, total Delaware employment can be expected to grow 0.5% a year through 2028. As it turns out, since the start of the COVID-19 economy in Delaware through March of 2021, total Delaware employment has grown 0.55%.
With an annual growth rate of 0.55%, it will take until the year 2030 for total Delaware employment to reach its pre-COVID-19 peak. If that annual growth rate can be doubled to 1.0%, the pre-COVID-19 peak won't be reached until 2026-some recovery.
The Delaware Department of Labor's 2028 projection breaks employment out by detailed industry. Of the industries that are projected to grow, 83% pay an average wage that is below the overall state's average wage. As a consequence, leaving inflation aside, the weighted average overall wage in Delaware in 2028 will be 10% below the overall average in the base year of the projection (2018).
So, Dr. Harker is correct that the Delaware recovery is underway, but we have miles to go before we can sleep. To avoid this dismal future, state legislators must act boldly.
For example, refer to the strategy proposed by CRI's Executive Director, John Toedtman: The solution is tax cuts to spur economic growth.