With the United States national unemployment rate hovering at or near historical lows, the statewide figures in the state of Delaware are showing continuing signs of breaking with national trends and continuing to rise. The national jobless rate is currently at 4.4%, which is one-tenth of a percent higher than the 16 year low of 4.3% which was first reached in May.
Despite the overall rosy numbers coming from the Federal Department of Labor, the local economy in Delaware has seen significantly different results. In August, the state’s unemployment rate reached 4.9%, which represented the 12th consecutive month that it had remained neutral or risen. This stand in sharp contrast to the other states in the region, such as Maryland, whose rate is at an all-time low of 3.9%. Here’s a comparison of the trends in surrounding states:
- Pennsylvania –4.9% unemployment, but trending down
- New Jersey – 4.1% unemployment, a 16 year low for the state
- Maryland – 3.9% unemployment, with months of steady job gains
What’s Causing The Rate Increases
There are many factors that are contributing to Delaware’s sluggish job growth and rising unemployment rate. In recent months, fewer large-scale employers have been retaining or creating jobs in the state, causing downward pressure on the job market.
Employers like Amazon, who recently finished staffing a large fulfillment center in Middletown, is no longer driving growth in the state. The large numbers of jobs that they were adding previously had contributed to a temporary mirage of unemployment declines. Now that their hiring cycle is completed, the state has lost an engine of job growth.
Other industries, such as banks and the finance sector, are also experiencing slower rates of growth. Since these industries play an outsize role in the overall employment picture for the state, they’re having a major negative impact as well.
DuPont Retreating From Their Home State
Another major blow to the state economy came at the beginning of September when a merger between Dow Chemical and DuPont was finalized. DuPont is an iconic presence in the state of Delaware, with its’ headquarters located in Wilmington. The company began there in 1802 and is considered the most recognizable corporate entity in the state. With the completion of the merger, however, a major reorganization is already in progress with even more changes in the offing. In preparation for the merger, there have already been 1,700 job cuts, and that’s likely to be the tip of the iceberg. As management and production are integrated by the two formerly separate entities, Delaware can expect even more jobs to evaporate statewide.
State Budget Reduced Public Workforce
A massive state budget deficit which was addressed at the beginning of 2017 with major cuts throughout the state, has severely limited the growth of the public sector workforce. The lack of funding has threatened the education sector, as well as many non-profit and community groups. A program called Grants-In-Aid, which provides local municipalities with funds for things like paramedics, police, fire, and senior centers has been eliminated entirely. This has forced further job losses in these areas, as the state’s budget woes have been passed to local governments all over the states.
Light At The End Of The Tunnel?
While the labor market in Delaware remains an issue, the good news is that some of the losses may be temporary readjustments in certain industries and that there could be a bounceback. In the meantime, the Delaware Department of Labor is launching new programs to try to bring the state’s workforce to the jobs that are available. Once such program involves the creation of a mobile jobs unit, which seeks to bring the department’s services for job seekers directly into the neighborhoods with the highest local rates of unemployment. The state government hopes that by aggressively attacking the issue in the pockets of the state where the joblessness problem is the most severe, they can have an immediate impact towards bringing down the statewide rate.
Despite their efforts, however, the trend continues to look bleak. With the stagnation and job losses now reaching a full year, the state can only hope for a turnaround in their fortunes. If they don’t see one, it’s likely that Delaware will continue to trail its’ neighbors and the country as a whole with little reason to expect a reversal.