From: Delmarva Now Maryland will lift nearly all remaining COVID-19 restrictions on businesses, restaurants and venues across Maryland on Saturday as vaccines make progress in slowing the virus’s spread.
Gov. Larry Hogan said capacity limits on indoor and outdoor dining, entertainment venues, sporting events and all businesses will end in response to improving COVID-19 metrics.
“Effectively, as of Saturday, every business in Maryland will be able to open at 100% with no restrictions,” Hogan said Wednesday.
A state council that forecasts Delaware’s state budgets is predicting there will be a surplus of more than $1 billion in 2022.
It’s a stunning rise from the $669 million predicted in December, which was already surprising against the backdrop of the COVID-19 pandemic.
Members of the Delaware Economic and Financial Advisory Council’s expenditures and revenues committees heard Monday that jump came about largely because of the amount of federal stimulus money coming in, particularly checks sent to residents.
The full committee is voting on their recommendations Monday afternoon.
Withholdings from personal income tax has risen 16.4%, said David Roose, director of Research & Tax Policy for the state Department of Finance. The sharp increase is partly because the numbers are being compared with last year, when so many people lost jobs and withholdings fell.
Net corporate income tax in April, covering the first quarter, is one of the four best Aprils in the last 25 years, Roose said. Some of the higher industries were healthcare, finance and home building.
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The state has also seen an increase of nearly $16 million in franchise tax, a 50% rise in transfer tax — a state record, and rises in general receipt taxes from retailers, general wholesalers and services as the economy has started to improve.
Amid the amazement at the rapid transformation of Delaware’s financial fortunes was worry about what happens next.
From: DelawareLive: Two state representatives are among 15 Delaware Jewish leaders who have taken another Delaware state representative to task for what they describe as “hurtful and inflammatory” language describing Jewish attacks in Gaza as “ethnic cleansing.”
In a May 21 open letter to Rep. Eric Morrison, D-Glasgow, the 10 rabbis and five other leaders singled out his May 16 Facebook post, in which he calls attacks in Gaza “ethnic cleansing at best, genocide at worst.”
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.
Many of those who tried got this message: “This website is under heavy load (queue full). We’re sorry, too many people are accessing this website at the same time. We’re working on this problem. Please try again later.”
As of June 12, signing up at that link will be first step that the unemployed must take in Delaware in order to keep getting their benefits, the Department of Labor announced Tuesday.
On orders from Delaware Gov. John Carney, as of that date, anyone on unemployment must prove they are looking for jobs in order to keep getting state and federal benefits.
When COVID-19 hit last year and the unemployment rolls swelled by tens of thousands overnight, the requirement to hunt for a job was dropped and payments were increased to $900 a week in a combination of state and federal money.
As vaccinations have risen and the community opens up, employers have complained that they can’t find enough people to take the jobs that are open. One reason, they say, is because of high unemployment payments, coupled with no requirement to seek a job.
Carney said Tuesday he will not drop the extra $300 in federal pay as other governors have. That extra money runs out in September.
But he did order the Department of Labor to reinstitute the job-seeking requirement.
Now, the unemployed once again must first sign up with JobLink, which will require creating or uploading a resume. In addition, they also must complete at least one unique job search a week to remain eligible.
JobLink, which was required before the pandemic, allows employers and job seekers to create and post jobs and resumes in a sort of state-sponsored matching system.
“Delawareans are getting vaccinated, and businesses are reopening and expanding hours of service,” said Secretary of Labor Karryl Hubbard in a press release. “Thousands of jobs are currently available and UI claimants want to get back to work. JobLink is a key tool for connecting potential employees to employers.”
Claimants should check in JobLink to ensure they are properly registered, the Labor Department stressed. The system will include information about the most in-demand occupations by industry and on-the-job training and apprenticeship opportunities.
Once registered, claimants can begin their weekly required job search, which they must document and record to keep getting unemployment payments. For more on how to do that, go to labor.delaware.gov.
The Department of Labor is planning a number of customized communications, including phone calls and posts on the website, to alert those in the system that the rules are changing.
“With nearly a month to complete the JobLink registration, we are seeking to provide Delawareans ample time to comply with the reinstatement of these requirements, said Darryl Scott, director of Unemployment Insurance, in the press release. “We want to strongly encourage people to start this process now.”
On Wednesday, it looked like people were taking that seriously.
Unemployment benefits are available to workers in Delaware that are unemployed through no fault of their own, who are ready and able to accept work, who are actively seeking work and whose past income meets a minimum amount based on an 18-month base period.
A Delaware state senator has been charged with offensive touching and disorderly conduct after police say he punched an acquaintance and threw a glass of water at a Talleyville restaurant Sunday evening.
Delaware State Police were called to Taverna Rustic Italian Restaurant on Silverside Road just before 6:30 p.m. for reports of a “domestic altercation.”
When troopers arrived, a 44-year-old woman said she and Sen. Darius Brown, D-Wilmington, were arguing about a social media post when he punched her. He then threw the water glass, which “broke into pieces,” police said.
Brown left the restaurant before troopers arrived. The woman “sustained some redness to the side of her face but did not require any medical attention,” police said.
Brown, a former Wilmington councilman, chairs the Senate Judiciary Committee. He was elected to the General Assembly in 2018 as the District 2 senator.
Since then, he has been one of the Statehouse’s champions of criminal justice reform. In 2019, for example, he voted to pass a bill that expanded the types of offenses that can be expunged after a certain amount of time.
In the spring of 2018, while he was running for the District 2 seat, Brown was hit with a federal tax lien for $50,803 in unpaid income taxes from 2012 through 2016. A month later, the Delaware Division of Revenue filed a complaint in Superior Court for $9,854 in unpaid taxes and penalties from 2014 through 2016.
“I have a tax liability,” Brown said at the time. “I have a payment arrangement to make a monthly payment. That’s what I do to satisfy my liability, which is no different than other people with the challenges they have.”
Brown declined to provide an explanation for how his taxes appeared to have gone unpaid for years.
On Wednesday, Delaware Senate President Pro Tempore Dave Sokola addressed Brown’s arrest, saying accusations of domestic violence “are serious and in direct conflict with the values of the Delaware Senate Democratic Caucus.”
“However, a presumption of innocence is one of the most sacred principles in the American criminal justice system,” Sokola said. “I will carefully consider whether any formal actions are warranted in the coming days as we learn more about this incident.”
When a Delaware Online/The News Journal reporter called Brown for comment, they received a message that his voice mailbox was full. Other attempts have also been made to reach the state senator for comment.
Yesterday, the Bureau of Labor Statistics (BLS) released numbers indicating that the average price level of consumer goods has risen 4.2% since this time last year. This is the highest rate since 2008. In other words, the average consumer making the same salary this year has taken a pay cut when you consider what their paycheck can actually buy.
How does the BLS know this? One way the BLS keeps track of inflation is by using the consumer price index (CPI). The CPI uses some of the common goods urban consumers buy, and they keep track of the prices of these goods each year.
A CPI growth of 4.2% means this “basket” of goods the average urban consumer buys has gotten 4.2% more expensive. Economists call this measure inflation.
Why is inflation increasing now? It’s all about the money. Imagine tomorrow that suddenly all US money becomes a 10x larger number. Ten dollar bills become 100 dollar bills, bank accounts with $10,000 turn into accounts with $100,000, and the four quarters in your cup holder transform into a 10 dollar bill.
This might sound nice at first, but consider what happens next. If prices stay the same, suddenly people rush out to buy new things. Suddenly, a student with a $7000 student loan can buy a Porsche. Someone can afford a down payment on a house who was months away before. A kid with a generous allowance buys a flat-screen TV.
But now the problems appear. All cars for sale are being driven off the lot. TV shelves are empty. House offers pour in only minutes after listing. There is more money, but the exact same amount of goods exist. With so many customers demanding new goods, sellers have 10 customers fighting over one product. So what happens? The price is bid up.
In fact, prices in this world will make, on average, the same change as bank accounts. One dollar candy bars become $10, average quality TVs cost thousands of dollars, and the $100,000 two-bedroom in Kansas becomes a million-dollar purchase.
If more dollars chase the exact same goods, prices will rise.
The Money Printer Goes Brrr
Although the above example is simplified, the general idea holds in the real world. Unfortunately, not everyone has gotten 10x more money, but new money has been introduced to the economy.
The quantity of money (measured as “M2” by the Federal Reserve) has increased more than 32.9% since January 2020.
That means nearly one-quarter of the money in circulation has been created since then. As the following graph shows, a change like this is unprecedented in recent history.
Image Source: Federal Reserve Bank of St. Louis Series M2SL
The newly printed money helps fund the slew of trillion-dollar coronavirus spending which benefitted massive corporations. It also is an attempt to satisfy consumers’ demand to hold money so they will be comfortable spending again. And spending they are.
As lockdowns end and finally allow consumers to return to normal economic activity, the new money begins to move through the economy more quickly. Banks have more money to lend out and people are building new homes. As more homes are built, the demand for wood increases. As the demand for wood increases, the price of wood goes up. Sound familiar?
Although the new money won’t hit all markets at the same time, and it may take some time for demand to return to pre-lockdown levels, the inflation numbers indicate this process has begun. In order for inflation to slow down, either spending would have to slow down, or the government would have to lower the money supply.
Is It That Bad?
None of this means hyperinflation is coming tomorrow or ever. In fact, it could be a blip caused by a low CPI benchmark. But given all the new money floating around, it shouldn’t surprise anyone if this rate of inflation were to persist or increase.
After a year of lockdowns leading to job losses and pay cuts, many Americans aren’t in a position to pay 4.2% higher prices. It’s easy for someone with a comfortable job or nest egg to scoff at these price increases, but working-class and poor Americans feel the difference.
At a time when Americans work to rebuild their savings to protect their families from future uncertainty, is it wise to ignore a policy that slowly eats away at their savings while they scramble to find new coupons for groceries or consider taking a much longer public transit route to save on gas? These struggles are worth consideration.
So will inflation rise? Will it fall? No one can say for sure. But we can say for sure that inflation doesn’t need to be in the double digits to hurt.
While the COVID-19 pandemic has been difficult on the nation, Delawareans are lagging far behind its neighbors as the world begins to find its way back to normalcy.
According to Wallet Hub, Delaware is ranked 48th in economic recovery since the start of the pandemic. Unemployment claims are up 998% compared to this same week in 2019 – nearly twice the increase of the next largest jump in unemployment claims, New Mexico at 508%.
Four of the top five states recovering the quickest – South Carolina, South Dakota, Iowa, and Kansas have had more relaxed restrictions compared to Delaware since the start of the pandemic and have adopted practical, pro-business common sense measures to keep their states thriving.
South Carolina kept its manufacturing sector open during the pandemic, allowing the $200 billion industry to sail smoothly through the past year with a job decrease of only 2% which is expected to bounce back to pre-pandemic employment by the end of 2021.
South Dakota, which has an economy that relies heavily on tourism, took quick measures to keep travelers safe and top destinations open. The state only saw a 3.5% decrease in tourism revenue while its state parks welcomed 8 million visitors – an increase of 31% over 2019. In 2021, the state is expected to top pre-pandemic tourism dollars, with hotels already seeing a 41% increase in bookings over 2020.
According to NPR, Gov. Henry McMaster (R-South Carolina) lifted mask mandates and banned vaccine passports earlier this month. He stated this week that “maintaining the status quo ignores all of the great progress we’ve made.”
Gov. John Carney should take a lesson from Gov. Kelly and Gov. McMaster. Despite Carney’s repressive policies, Delaware’s positive test rate is just 0.6 percent more than South Carolina’s , and can be seen following a steady downward trend since January on the State of Delaware’s “My Healthy Community” website. Delaware is also slightly ahead with the percentage of adults having received at least one dose of the vaccine, 45 to 43.
Delaware is now on the cusp of its 28th modification to the original state of emergency order which will lift indoor capacity restrictions – as long as the space can comply with the new recommended social distancing of three feet (down from six). Despite these small improvements, customers must remain seated at both indoor and outdoor dining establishments and masks are still required.
While Delaware’s trends and modifications seem encouraging from a health and business perspective, from a financial one, they are not. Even as indoor locations increase their capacities, many employers are having difficulty finding new hires because they find themselves in competition with the government for labor.
The extra $300 per week unemployment benefit provided by the Federal Pandemic Unemployment program (FPUC) distorts incentives to work, and makes it more economically enticing for the unemployed to remain on the rolls rather than take available jobs.
Twelve states including South Carolina have announced cutting back on the federal emergency unemployment benefits with the goal of ending the labor shortage, hastening economic recovery, and saving taxpayer dollars.
Delaware is continuing with the assistance and in February, passed House Bill 65 which waived 2020 income tax on unemployment benefits.
This means a continual flow of generous benefits for the 6.5% of Delawareans who remain unemployed (the national unemployment rate is 6.1%) plus a tax break on those earnings. According to The Hill, some unemployed individuals could be bringing home up to 150% their usual earnings by relying solely on current unemployment benefits.
The Delaware Division of Small Business has been assisting small business owners throughout the pandemic, offering nearly $200 million in relief grants to approximately 4,000 businesses, but these businesses need to be open full-time at full capacity with a full workforce to be weaned off government assistance.
The combination of both employers and employees both relying on government assistance to stay afloat is unsustainable and will continually fuel the state’s labor shortage.
The responsibility of making the necessary changes to incentivize Delaware’s residents to work, allowing businesses to reach their full potential and giving Delawareans the return to normal that they desperately need lies in the hands of Gov. Carney.