Courtesy of DECON First
Given all the conflicting economic trends, it is no surprise that Delaware businesses are confused. Driven by gains in health care and professional and business services, Delaware registered a solid net gain of 8,700 jobs over the last 12 months. Yet over the same time period, the number of employed Delaware residents dropped by 4,100 and the resident labor force dropped by 5,800. Fewer employed Delawareans explains the continued slow growth in personal income, especially wage earnings.
Part of the explanation for these contradictory trends was revealed in an excellent analysis of Delaware labor market trends by the News Journal. As is true across the nation, Delaware has become more of a two tiered economy. Persons with college education and technical training are experiencing a rapid rise in wages, while the wages of the bottom 40% of the work force are decreasing. The drop in wage earnings for less skilled workers has been driven by large job losses in manufacturing and construction.
This creates a substantial marketing challenge for Delaware businesses. Top income households are far more likely to eat at full service restaurants and buy new cars while the bottom 40% of the income distribution favors fast food outlets and used cars.
Housing sales are driven by the higher income households while apartment rents are being pushed up by the growing lower income population. Higher income households spend six times more per person on major appliances and entertainment. The other part of explanation, especially in New Castle County, is the flight of young professionals with children away from the lower quality Delaware public schools.
New Castle County has seen net out-migration of U.S. citizens for at least five years, primarily to Chester County, Pa. As of 2012, a net of over $2.7 billion of wages earned in New Castle County went to persons who resided outside of Delaware.DECON First Expects these trends to continue through 2014: an increased pace of jobs being added by Delaware businesses, but slow growth in residential personal income.
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DECON First uses economics to strengthen Delaware business. This is accomplished by providing accurate, objective, and relevant analysis of the economy, coupled with best practice recommendations that deliver new customers. The detailed analysis for the indicators above is found in the DECON First monthly Delaware Economic Review (www.deconfirst.com).Direct questions to info@deconfirst.com
