The job surge from Delaware businesses continues and some of the benefits are beginning to trickle down to the rest of the state’s economy. The net annual gain in total 12 month moving average employment is nearly 9,000, for a growth rate of 2 percent. This leaves the state 8,700 jobs below the pre-recession peak, meaning that should the 2% pace continue, total employment in Delaware will finally recover by early 2015.
Over the past 12 months, Delaware’s unemployment rate has dropped from 6.8% to 5.9% as the number of employed residents has risen by 6,700 and the state’s labor force is up by 2,900 persons. Delaware’s unemployment rate is well below New Jersey, and slightly higher than Pennsylvania and Maryland (both 5.6 percent). The state’s labor force participation rate is beginning to stabilize, although remains at a historical low due to persons who have stopped looking for work. Today, 26,500 Delawareans are unemployed with an additional 29,000 discouraged or marginally attached workers for a 12.6 percent adjusted unemployment rate.
The primary Delaware job growth industry continues to be professional and business services. However the bulk of the gain is concentrated in temporary help services (primarily the new Amazon warehouse in Middletown) which has led to a drop in the industry’s average wage in the state. And the net flow of wages from the higher skill jobs (computer system design and scientific research) is to workers who reside outside of Delaware.
Year over year, earnings by place of work in Delaware are up 4.2% while earnings by place of residence increased just 2.9%. Income from transfer payments (Social Security, Medicare, Medicaid and welfare) has grown by 4.5%, but this is well below the double digit growth rates experienced three years ago.
The growth rate in financial services in Delaware remains above 3%. Depository banks are hiring again and credit card institutions have added around 500 jobs on a year over year basis. The rapidly increasing population of persons 55 years of age and older is driving up demand for portfolio management and investment advice and securities brokerage. However, the advance of technology is increasing the obsolescence of many less skilled transaction occupations in the financial industry.
Merchants, for example, are moving away from using the traditional card readers replacing them with tablets and smart phones. This will slow the industry’s rate of job growth and shift demand to software development and competitors such as Pay Pal.
Leisure and hospitality is also adding jobs at a healthy rate, hovering around 2%, but the outlook is mixed. Gaming is still losing market share and demand for the performing arts, spectator sports, and museums continues to be weak.
The majority of new jobs are being added in eating and drinking places, yet the growth rate in restaurant sales has fallen from 7% to 3% and profits will be squeezed by recently rising food prices due to drought and disease. The low average wage, $18,700, limits the leisure and hospitality industry’s impact on Delaware personal income and consumer demand. In the face of the confusion from the implementation of Obamacare and uncertainty over reimbursement rates, the net annual growth in Delaware healthcare jobs has dropped from 2,100 in 2011 to less than 900 over the past 12 months.
As detailed by DECON First in a recent Economic Brief, retail trade hiring remains weak as market share shifts to the Internet and large discount warehouse stores. Automobile sales continue to benefit from low interest rates and steep price discounts, and recently from owners of recalled vehicles “moving up” to newer models. Purchases of other durables such as furniture, appliances and electronics are muted. Grocery store hiring is strong, but the recent jump in wholesale and retail food prices may slow demand.
Dr. John E. Stapleford, Principal
DECON First Expects positive but slower job growth for the remainder of 2014 with a return to pre-recession employment by early 2015. We also expect the rebound in construction industry employment to slowdown and reach a plateau by the end of the summer as residential starts fade. After that, employment in the construction industry should receive a moderate boost from heavy construction due to repairs to infrastructure.
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 SUMMER Delaware Economic Review (www.deconfirst.com).
Direct questions to info@deconfirst.com
