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Delaware’s Labor Drought: Challenges and Solutions

By: Jane Brady, Chair, A Better Delaware 

We are all aware of the ridiculous amounts of money that the federal government was offering states during the pandemic. Many of those states, including Delaware, used the money to increase unemployment benefits, far exceeding any amounts paid in the past, and to continue those payments far longer. After the pandemic was declared to be over, our workforce was significantly smaller than before the pandemic. There are several reasons for that. Many workers enjoyed working from home and did not want to return to the office. More remarkably, in some instances, the worker would have had to take a pay cut to return to work. And, of course, expanded workers’ compensation payments were a big reason for that.

As time has gone on people are still leaving the workforce. According to WalletHub, in February 2024, Delaware has the highest rate of job resignations in the country. Last year, we were number 6 among all the states for job resignation rates.

Each year, the US government calculates the labor participation rate, which is the number of people over 16 years of age who are employed or actively seeking employment, divided by the total number of people in that population who are available or eligible to work or actively seek work. Students, retirees, disabled individuals or people who are voluntarily not interested in working are not included in that calculation. In Delaware, approximately 60% of all eligible and available workers are not seeking work, according to the Federal Reserve Economic Date (FRED).

So, against these facts, what has the government done to try and create incentives for people to go back to work? Well, actually, the government has acted counter to that objective. First, Delaware has continued increased unemployment payments, making it more feasible to not go back to work.

Are we administering those payments accurately and with good integrity to be sure those claiming unemployment meet the requirements to receive it? Were we careful with the literally, more than a billion dollars that passed through the unemployment office’s system? Well, we don’t know.

Delaware’s State Auditor, Lydia York, recently issued a report criticizing the financial management, or rather, the lack thereof, in Delaware’s unemployment insurance office. York identified a lack of oversight, outdated systems, and limited training of the staff, so severe that independent auditors could not even determine where all the money in the system came from. Employers pay into the unemployment insurance fund for the benefit of those employees who leave their workplace and are determined to be eligible to receive unemployment compensation. A great deal of money passed through the unemployment insurance fund as a result of the Covid pandemic and federal monies. In fact, $1.4 billion, according to the Delaware’s unemployment insurance office, was paid to over 100,000 people in the first two years of the pandemic. Poor training, the influx of significantly more money, expanded eligibility and an increase in claimants all served to overwhelm the capacity of the computer management systems and staff alike. It is not known how many people are receiving payments who should not be, and how much money those payments represent. Steps need to be taken to improve the hardware and better manage the monies paid into the fund by Delaware’s businesses.

Abut at least as significantly, Delaware’s occupational licensing requirements, which is a form of government regulation, affects workforce participation. Delaware has among the strictest licensing requirements for certain occupations in the country. These types of regulations have been found to deprive millions of Americans of opportunities and career advancement, and as a result, drive up the cost of goods and services. A recent report by the Institute for Justice found that the effects of licensing regulations impact particularly low-income Americans, who already struggle to find work and open small businesses. The training or classes to comply are expensive and take time to complete.

These regulations also limit employment mobility, especially across state lines. Delaware’s current shortages of teachers, doctors, nurses and other professional service workers has been attributed to outdated licensure requirements which are too restrictive. We all want capable and competent professionals in those jobs, but our requirements keep entirely capable and competent workers from locating here or advancing in their careers. One of the most recent examples is Naaman Center, which has been working for nearly a year with Delaware’s Health and Social Services Department to secure the certificates and licensure the agency requires to provide substance abuse treatment. This is an organization that has other facilities in Pennsylvania and has been in the business of providing treatment for over 2 decades.

Delaware needs to make a commitment to improve opportunities for workers in order for businesses to attract and retain quality employees, and for businesses to locate here and thrive. We have written about the shrinking economy in Delaware, many have written about the fact that our kids leave the state for better employment opportunities and there is much documentation about the shortages of professionals in our schools and hospitals. It is time for leadership in Delaware’s government to recognize we need to improve our schools, reduce regulation and red tape, and provide the kind of work and business climate that attracts and retains the best and brightest for the benefit of our citizens.

 Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.