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.
Wilmington, Delaware – May 4, 2021 – Chris Kenny, founder of A Better Delaware, Inc. (ABD) has selected Kathleen Rutherford as its new Executive Director to lead his political advocacy organization which supports pro-growth, pro-jobs policies and overall transparency in state government.
Rutherford will succeed Zoe Callaway who for two years was at the forefront of driving over a dozen advocacy campaigns, including raising public awareness about a possible soda tax and income tax hike. ABD was also a frequent critic of the Health Resources Board, the authority of which was recently stripped by the state Legislative Oversight and Sunset Committee. Currently, A Better Delaware is advocating for more rapidly opening up our state completely so our families, kids, and businesses can heal mentally, emotionally, socially and financially from the disastrous effects of the prolonged lockdown during the pandemic.
Callaway has accepted a position at the highly regarded Tax Foundation in Washington, DC as Manager of Education and Outreach and will hand over the reins to Kathleen in the beginning of May. Kenny and Callaway have worked seamlessly together to build the ABD brand. Kenny commented, “While I am saddened to see Zoe leave after such an incredible performance launching ABD to become a formidable presence in Delaware, I am very happy to see her land a much larger role in such a prestigious national organization in DC.”
Over the past six years, Rutherford has directed several major political campaigns in Delaware helping to raise over one million dollars in donations, recruited hundreds of volunteers, and consistently lead a record number of voters to the ballot box in support of her candidate clients. During this time, Rutherford also formed Rutherford Consulting, Inc. offering communications and marketing strategies to advance her clients position with the Delaware General Assembly and the regulatory bodies of the State of Delaware. Kenny is looking forward to ABD’s continued success with his new hire stating, “Kathleen brings that seasoned Delaware political experience coupled with fundraising prowess that will bring ABD to new heights. I am excited to see what we can achieve with her at the helm.”
“The work at A Better Delaware is consistently in motion and the organization is affecting change. This is where I want to be,” said Rutherford. “My goal as Executive Director for A Better Delaware, is to continue their year-round communications which promote policies benefiting Delaware’s economy, and enhance their grassroots efforts, which have to date earned 10,000 Facebook followers and over 13,000 email subscribers. I am extremely excited to carry forward A Better Delaware’s mission of advocating for a transparent government with common-sense policies that benefit all Delawareans.”
ABOUT A BETTER DELAWARE A Better Delaware is a non-partisan public policy and political advocacy organization that supports pro-growth, pro-jobs policies and greater transparency and accountability in state government. A Better Delaware can be found on Facebook @abetterdelaware and at www.ABetterDelaware.org.
One of A Better Delaware’s four pillars is lower taxes for Delawareans and businesses. While we usually focus on just state-level issues, new tax increases are being discussed at both the state and federal level.
Outside of President Biden’s new tax proposal, Delaware has had a few of its own recently, including a new income tax bracket that failed in the house. Despite still recovering from a pandemic and expecting over $2 billion from the federal government, state lawmakers said raising taxes was simply the right thing to do.
Why?
Raising taxes discourages economic development, business growth, and personal spending and saving. When our economy is looking to recover, how could this be the right thing?
Even the Secretary of Finance Rick Geisenberger worried the bill would risk decreasing personal income tax revenue. This is because high-income individuals, including tens of thousands of people who pay nonresident taxes, would simply leave Delaware or work from home in neighboring states to avoid the higher tax. The bill would also mean Delaware has more tax brackets than any other state except Hawaii.
Increasing the income tax would make Delaware less competitive with our neighbors, particularly Pennsylvania, as Delaware’s top marginal rate would be higher than the rates in neighboring states, with the exception of New Jersey.
Outside of this bill, raising any taxes over the next few years would be irresponsible fiscal policy. Delaware is looking at a surplus of over $600 million, plus over $2 billion total from federal stimulus. Any additional revenue grabs would serve no purpose for our residents.
You’ll hear many people tout Delaware’s status as a “tax-free” state, but that simply is not the case. Yes, Delaware does not have the sales tax, but we more than make up for that. Take for example the reason why we are able to avoid having a sales tax: the gross receipts tax. Delaware is one of only seven states with a gross receipts tax. These invisible sales taxes raise prices as these taxes are shifted onto consumers, and tend to impact lower incomes the most.
Since 2016, Governor Carney approved large tax increases, but he did not work alone. The taxes started as bills heard and voted on in Dover that were approved for his final vote. Delaware’s tax increases over the last two General Assemblies (2016-2018, 2018-2020) were the 6th highest in the nation.
Instead of hurting residents, businesses, and the overall economy, we should avoid adding new spending programs that would require any tax increase, and focus on funding our $1.9 billion in unfunded pension benefits that have been largely ignored for years. This total is massive: for perspective, our pension debt is more than a quarter of the state’s annual budget.
Delaware’s fiscal condition is ranked 44th in the nation, in part due to its unfunded pension deficit, and is why Truth in Accounting’s audit of Delaware’s financial situation resulted in an F grade.
Delaware will eventually be obligated to pay its pensions, and lawmakers should turn their attention from what they believe is the right thing to do, to what is actually best for their constituents.
For too long, Delaware lawmakers morphed our state into a place that is unrecognizable from what it was once known as: a low-tax business haven. While this may have been decades in the making, we don’t have to continue to accept the status quo and the Delaware Way and continue down the path to a dismal economy and fewer opportunities.
I tried to work in ways that I believed would change that course as I learned more and more about policy in our state, but everything was just how it had always been. Taxes kept rising, taxpayer money continued to flow into massive corporations in failed corporate welfare, and the ballooning spending never seemed to fix the problems we faced as Delawareans.
In 2017, Chris Kenny saw the same problem and had the means and courage to tackle it head on, and I was lucky to be a part of a new grassroots movement that was abandoning the status quo in hope of real change. Over the past year and a half, we have been thrilled to see thousands more join us in what we believe is possible: A Better Delaware.
In that time and with your help, we have been able to manage an outfit that has worked towards better policy outcomes in taxes, spending, regulations, and government transparency and accountability, and have won on issues that we truly believe in.
Fewer taxes help people keep their own money and can even lead to higher state revenues. A balanced state budget with strong reserves protects and serves the constituents. Over-regulation keeps small businesses from success and make it harder to enter or stay in the market. Better governance leads to better policy and a more informed public.
These principles can benefit both sides of the aisle politically and produce better outcomes, opportunities, and benefits for people from Selbyville to Talleyville.
As Executive Director of A Better Delaware, I have come to learn more than I had ever imagined about this state and what it could offer. Every day and every connection made it clear that the work we were doing mattered and resonated. This role has been unbelievably fulfilling and insightful.
As I exit Delaware and the role with ABD, I am left with a feeling of great accomplishment for the victories we have had and the work we put into everything, including our losses. Thank you to the thousands of Delawareans who have rallied behind our efforts to sway the tide on these issues. From a statewide soda tax, to higher income taxes, to holding our officials accountable for their decisions, we have started the change we hoped to see at our inception just a short time ago.
A Better Delaware is going to continue to make change, and I look forward to seeing you all continue to spread the word and grow the movement. Delaware can really be first again if we fight for better policy that truly uplifts and serves Delaware residents, businesses, and communities.
Take with you the main lesson I learned with ABD: Delaware is a wonderful place, but together we can make it better.
In Sussex County, one of Delaware’s most rural, and fastest-growing, areas, there are only three hospitals in more than 1,000 square miles. In August 2019, plans to bring an emergency medical center for the Georgetown area were squashed when the Delaware Health Resources Board, Delaware’s Certificate-of-Need (CON) entity, denied Beebe Healthcare’s application to expand.
It was one of the most recent casualties of Delaware’s outdated, harmful CON laws, which require health care providers to prove to the state that there’s a need for new facilities, devices and technologies before they can expand or upgrade.
The result is a health care a market where competition is unfairly limited and select health providers are able to get a stranglehold on competition. It’s the people of Delaware who ultimately suffer, faced with inflated prices and limited options for care.
In Delaware, CON laws create a barrier to entry into the market, inhibit expansion, and, as we’ve seen recently in Sussex County, fail to provide adequate health care services in some areas.
Advocates of CON laws argue that they help the health care system by preventing duplication and keep prices down by restricting competition, but this contradicts the basic tenets of supply and demand. Instead, patients are forced to pay a higher price for care in older facilities with outdated equipment.
A report by the Mercatus Center at George Mason University estimates that by removing CON laws, Delaware could see a $270 saving on total health care per capita and $99 savings in physician spending per capita. The same study estimated increased access to services with a 42% increase in total hospitals and 17% increase in the number of ambulatory surgical centers.
In short, residents of the First State would have better access to care, and would pay less for it.
The benefits of repeal don’t stop there. The evidence from the Mercatus report suggests that hospital readmission, post-surgery complications and mortality rates would decrease in the absence of CON laws. Innovation and quality of health care would rise, in a market full of opportunity.
Delaware has had harmful CON laws on the books since 1978. Forty-one years later, and after a pandemic that strained our hospitals, it’s time to reevaluate, and make decisions that serve the health and well-being of every Delawarean.
The COVID-19 pandemic has shone a light on many issues in the state, from government transparency to education, but perhaps the biggest focus: health care.
Our Governor, along with many others, said that the mandatory shut downs one year ago were to prevent our hospitals from going over capacity. But was the problem COVID cases or our lack of hospitals in the state?
Delaware has certificate-of-need (CON) laws in the form of the Delaware Health Resource Board. These laws require that health care providers show a need in the community for new devices, certain technologies, or expand or establish a practice. However, research finds that CON laws are associated with higher health care spending per capita and higher physician spending per capita. In Delaware, CON laws create a barrier to entry into the market, inhibit expansion, and fail to provide adequate health care services in some areas.
This isn’t the only negative impact these laws have had on our state. The presence of a CON program tends to be associated with fewer rural hospitals. Last year, we saw a battle in Sussex County regarding an expansion of services, since currently only three hospitals service 1,196 square miles of the rural county. The request to expand was denied by the HRB.
Why does Delaware still allow a virtual monopoly in health care that drives up everyone medical bills?
Proponents of CON laws argue that they help to reduce health care costs and increase access to care. Contrary to typical supply and demand, they also argue that a shorter supply of health care services in the market results in a reduction of average prices.
A report by the Mercatus Center at George Mason University estimates that by removing CON laws, Delaware could see a $270 saving on total health care per capita and $99 savings in physician spending per capita. The same study estimated increased access to services with a 42% increase in total hospitals and 17% increase in the number of ambulatory surgical centers.
If this outdated Board had been sunset by the Joint Legislative Oversight and Sunset Committee last year, our COVID story may have been different.
Residents of the First State deserve to have better access to care with lower costs. Delaware has had harmful CON laws on the books since 1978. Forty-one years later, it’s time to reevaluate, and make decisions that serve the health and well-being of every Delawarean.
