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How will Delaware overcome the workforce shortage?

With COVID-19 cases on the decline, restrictions lifting and businesses beginning to operate as usual, now seems like the perfect time for those unemployed due to the pandemic to get back to work.  But, in Delaware – a state with an unemployment rate above 6 percent – employers are struggling to find workers.

 

This is an unusual problem while recovering from a recession, but that is partly because the recession caused by COVID-19 was itself unusual. According to economist Douglas Holtz-Eakin,  three major factors changed during this recession. First, people did not need to prove they were seeking employment while on unemployment, self-employed and contractual workers became eligible for unemployment and, a $300 federal benefit was made available on top of existing unemployment insurance.

 

These changes have meant that 37 percent of those currently on unemployment are bringing home more than they made while employed pre-pandemic. This in large part contributes to the 8.1 million unfilled jobs across the country.

 

The Foundation for Economic Education says that the labor shortage caused by these compounding financial factors was an unintended consequence, but it wasn’t difficult to predict. It calls the supplemental unemployment benefits a “cautionary tale about what happens when lawmakers meddle in labor markets.”

 

Delaware’s worker shortage will likely be most visible this summer at the beaches. In 2019, Delaware’s tourism industry contributed nearly $4 billion to the economy – 42 percent of that came from Sussex County, home to Delaware’s top beach destinations. As tourists return in what are expected to be large numbers this summer, business owners predict they will not be able to offer the same quality of quantity of services as before.

 

According to Delaware Online, dozens of beach business owners are calling the employment crisis a “nightmare scenario.”  Some businesses quadruple their staff every summer with most the positions filled by spring break, but this year, the Rehoboth Beach-Dewey Beach Chamber of Commerce were compelled to host a job fair to help businesses fill their open positions – a need that has not existed in recent memory.

 

 

As of May 18th, Governor Carney’s office announced that the requirement of those on unemployment to be actively seeking a job will be reinstated beginning June 12. Will this be enough to improve the worker shortage?  Only time will tell what additional moves Gov. Carney will make to get Delaware back to work.