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Will raising the base wages for tipped workers really improve things?

A proposed measure in Delaware would increase base wages for tipped workers (servers, bartenders, etc.) to 65% of the current state minimum wage, claiming to provide these workers with a fair pay structure and rate. But would this action actually help Delawareans? A Better Delaware, a new political advocacy organization supporting pro-growth, pro-job policies, wants tax payers to have all the facts.

Do tipped workers and restaurant owners want this?

Measures to increase the base pay of servers are designed to stabilize their earnings. However, in an Upserve survey, 69% of tipped workers said that they would favor keeping their tips over a “substantial increase” in their hourly wage. Anecdotally, other cities who have instituted such measures have experienced mixed reviews from tipped workers – some of whom found they actually made less.

In cities like New York City and Seattle that have enacted higher minimum wages for tippers, restaurant and bar owners (in addition to organizations like the National Restaurant Association) have spoken out again and again about the harm an increased minimum wage can and has had on business. With higher labor costs, some small businesses have struggled to remain profitable, and efforts to pass on the cost to customers have often been met with resistance. Some restaurants who have replaced tipping with a mandatory service charge or who have raised menu prices have found that customers are less likely to return.

What the data tells us

Though small business owners and servers are concerned about changes to the tipping structure, what do we know about the efficacy for improving workers’ financial position? Few precedents currently exist, but Seattle’s foray into raising the minimum wage has not yielded especially positive results. A report from the University of Washington and the bipartisan National Bureau of Economic Research (NBER) revealed a loss of over $100 per month for low-wage workers and 5,000 fewer jobs after the implementation of a $13 minimum wage.

Additionally, NBER found that from 1989-2013, small businesses in states tied to the federal minimum wage experienced lower employment, lower bank credit and higher loan defaults.

According to these studies, this legislation has had negligible impact on tipped workers’ earnings but has hit small business owners particularly hard.

The implications for Delaware

Delaware has 79,417 small businesses that account for 98.3% of all businesses in the state, and employ 180,179 individuals, or almost half of all Delaware employees, according to a 2018 report from the U.S. Small Business Administration. As the lifeblood of the local economy, any disruption has the potential to worsen unemployment in the state, which has already risen above the national rate.

But businesses and tipped employees aren’t likely to be the only ones affected by minimum wage legislation. Taxpayer dollars will pay for increased government wages as well.

Delaware’s recent minimum wage bill, Senate Bill 105, estimates a fiscal burden of $30.9 million just to raise the wages of state employees. The cost balloons each year: in 2020 it is estimated to add another $1.16 million, over $3 million in 2021, and $5.4 million in 2022. The fiscal note on the bill does not include the non-profits and contractors that will be impacted and will also inflate the state budget from a wage increase.

Groups like A Better Delaware are monitoring issues like these and hope that concerned citizens will stay informed and weigh in when and if legislation is introduced. For those who want to learn more about pro-business policies, visit A Better Delaware or contact Executive Director Zoe Callaway.

First State dead last in the nation for GDP growth

From the Bureau of Economic Analysis

Commentary from A Better Delaware

Delaware ranks dead last in the nation for GDP growth in new Bureau of Economic Analysis report.

Delaware’s 3rd Quarter 2019 GDP growth was 0.0 percent, making DE the only state (including the District of Columbia) to see no growth in real GDP.

Read the report here:

https://www.bea.gov/news/2020/gross-domestic-product-state-third-quarter-2019?fbclid=IwAR2ywg0puCqKMskyylL4h-9LDDspIbbdIOREK6m9fFnayTHEWAK5z8iwD2o

Public-private investment poises Delaware for fintech prominence

From the Delaware Business Times

Economic Forecast: FinTech

WILMINGTON – Build it and they will come.

That’s the idea behind the $38 million FinTech Center announced by the University of Delaware in November in partnership with Discover Bank and Delaware Technology Park. The project aims to prepare hundreds of new technologically skilled financial services workers beginning in 2021, but the question remains: Will those workers stay in the state for their careers?

Delaware has been a banking center of the United States for nearly 40 years, ever since Gov. Pierre duPont IV signed the Financial Center Development Act in 1981 that axed restrictions on interest rates and gave tax breaks to the nascent credit card sector. Today, names like Chase, Barclay, M&T and WSFS dominate the Wilmington skyline, but in an increasingly modern and competitive marketplace, Delaware is once again competing for C-suite attention.

While major financial hubs like New York City, San Francisco, Boston and Chicago will continue to outpace the First State, other small cities like Cheyenne, Wyoming, are now clamoring for jobs that may once have considered Delaware as well.

That’s one reason state officials are stressing how serious Delaware is in supporting fintech, or financial technology, services.

Read more:

https://www.delawarebusinesstimes.com/delaware-fintech-prominence/

Growth initiatives require communities to be ready when opportunity knocks

Editorial from the Delaware Business Times

Many factors must be considered when creating an environment that enables the economic health of an area like Sussex County to flourish.

Almost a year ago, the Sussex Economic Development Action Committee made a couple of suggestions that went to the heart of our efforts to create opportunities for Sussex County to grow properly. One of those ideas was a method for growth that would allow it to pay for itself, a so-called growth fund to pay for infrastructure. I know the idea had merit as I was asked to speak to both Democratic and Republican organizations. Time marches on, yet nothing has happened with this positive idea. The success in both Middletown and Bridgeville can be attributed to communities that understood that one must be ready when opportunity knocks.

Infrastructure was built and put in place to answer the call when it came. If you are ready, that call will come. Millsboro has taken steps to be ready when its time comes, as testified by the number of success stories already in place. Creating a growth fund from revenues tied to existing growth is one idea worthy of exploration before dismissing it.

High taxes are never conducive to economic development. Sussex County Council, since 1973, has maintained a low tax rate while continuing to fund all services required by the law. Back in 1973, property taxes in the county were responsible for funding 79% of the county’s budget; by the early 1980s, that number had dropped to 29% and that was without a transfer tax. The county continues to this day to avoid the use of property taxes as the main source of its revenue. But there are clouds on the horizon. A court challenge to the county’s assessment methods has been filed and all indications are that the court will move to require that all three counties do a reassessment. Assessments for tax purposes are supposed to be fair for every property owner. The court appears to think that they are not. We do not agree. Let us suggest some points that are not being made. Why am I comfortable doing this? I did the last county reassessment.

Read more:

https://www.delawarebusinesstimes.com/vp-sussex-economic-development-2020/

Proposed 202 master plan could devastate quality of life, without proper input: Opinion

From The News Journal

Commentary: Senator Cathy Cloutier

My service in the Delaware General Assembly and numerous community organizations over the years has taught me that while our state and local governments are often well-intentioned, from time to time their efforts get very myopic and insular.

Sometimes these plans are brought forth with a “central planning” mindset and a grand scale, where out-of-state consultants are often used. I have found especially that these cases often need to be stopped in their tracks and given full, careful consideration.

Unfortunately, this scenario describes the ongoing “Concord Pike Master Plan” under development by New Castle County, DelDOT and WILMAPCO, which aims to permanently change life in the Route 202 corridor.

This plan, in the works for almost a year, was unveiled again recently at what was deemed a “public meeting” at Brandywine High School.

The plan envisions a future with a massive influx of multi-story buildings, road changes that would devastate quality of life in some of our communities, and possibly even a future with no Naamans Little League fields. It is full of assumptions about traffic, development and even the way we may live 30 years from now.

Read more: https://www.delawareonline.com/story/opinion/2020/01/06/proposed-route-202-master-plan-could-devastate-quality-life-opinion/2823603001/

Funding for arts agencies in Delaware to reach $3.3 million in FY2020

From Delaware Business Daily

Legislative appropriations for Delaware arts agencies are projected to reach $3.3 million for fiscal year 2020, which equates to $3.43 per capita in the state, according to a report from the National Assembly of State Arts Agencies (NASAA).

The state’s per-capita funding for arts agencies is the fifth highest among all 50 states and the District of Columbia, the analysis said.

In fiscal year 2019, Delaware allocated $3.2 million to arts agencies in the state. The change in funding between fiscal years 2019 and 2020 was 3.3 percent.

The NASAA identifies a number of ways state governments provide revenue to arts agencies, but the primary source of funds is a state’s general fund, according to the report. Other sources of arts agency funding include special taxes or fees, lottery and gaming taxes, specialty arts license plates and income tax checkoffs.

The assembly surveys state arts agencies biannually to update its database on appropriations and revenues going to arts programs.

Read more: https://debusinessdaily.com/stories/522660617-funding-for-arts-agencies-in-delaware-to-reach-3-3-million-in-fy2020

Zip Code Wilmington gets workforce grant aimed at assisting small businesses

From Delaware Business Now

Zip Code Wilmington was recently selected to receive the Workforce Training Grant from the Delaware Division of Small Business.

The Workforce Training Grant funds training programs for eligible Delaware companies in an effort to attract and retain high-quality jobs. This grant gives small businesses the opportunity to offset the tuition reimbursement fee required of companies when they hire a Zip Code Wilmington graduate.

“We are excited to receive the Workforce Training Grant from the Delaware Division of Small Business as it helps diversify the types of companies that can hire our talented and highly-motivated graduates,” said Desa Burton, executive director, Zip Code Wilmington. “As a self-sustaining nonprofit, we rely on tuition reimbursement paid by our corporate partners when a graduate is placed. With this grant, small businesses seeking to hire our graduateswill have affordable access to the skilled tech talent they need to help their businesses grow and remain competitive in an ever-increasing technical marketplace.”

Zip Code Wilmington is eligible to receive upwards of $100,000 to help small businesses upskill, reskill or acquire tech talent through an affordable and smart process.

Read more: https://delawarebusinessnow.com/2020/01/zip-code-wilmington/

House Republicans: Protecting jobs and parents top agenda in 2020

From The News Journal

The 150th General Assembly returns to work Jan. 14, and Republicans in the House of Representatives want to advance measures proposed earlier this year aimed at improving state government and protecting parents and small businesses.

House Bill 137 would improve disclosure to voters by requiring that all candidates running in the general election disclose if they have unpaid state or federal personal income taxes or are in arrears on their local property taxes.

The consideration of new or higher taxes is one of the most significant duties an elected official performs. We believe voters should know if candidates seeking offices with taxing authority have met their own tax-related obligations.

Another bill proposed by House Republicans seeks to help prevent elected officials from “double-dipping” salary from two taxpayer-funded jobs.

Under present law, the Public Integrity Commission (PIC) has no authority to have the State Auditor review the salary records of elected officials that may be getting paid simultaneously for two government jobs. This proposal would require elected officials, as well as paid governmental appointees who are also employed by a government agency or public school, to disclose such employment to the PIC.

We have also proposed three bills that would put an end to our state’s embarrassing tradition of passing complicated or controversial legislation in the wee hours of the morning on the last day of the session — often without required public notification and input.

Read more: https://www.delawareonline.com/story/opinion/2020/01/02/house-republicans-protecting-jobs-and-parents-top-agenda-2020/2783181001/

Delaware’s jobless rate up one-tenth of a point to 3.8 percent

From Delaware Business Times

The gap between the unemployment rate in Delaware and the national figure widened in November, the Delaware Department of Labor reported.

Delaware’s seasonally adjusted unemployment rate in November 2019 was 3.8 percent, up from 3.7 percent in October 2019. There were 18,700 unemployed Delawareans in November compared to 17,200 in November.

Delaware’s 3.8 percent rate ranked 33rd among the 50 states and the District of Columbia, according to the Bureau of Labor Statistics. Illinois and North Carolina also posted a 3.8 percent rate. Alaska had the highest rate at 6.1 percent, with Vermont the lowest at 2.3 percent.

The US unemployment rate was 3.5 percent in November. That’s down from 3.6 percent in October. In October 2018 the US unemployment rate was 3.7 percent, while Delaware’s rate was 3.5 percent.

Read more:

https://delawarebusinessnow.com/2019/12/delawares-jobless-rate-up-one-tenth-of-a-point-to-3-8-percent/?fbclid=IwAR2zA_9rlll3CN14g0zivsyYRo3tjaF5bNawbUfEJTuohlunTM9MPIjE7mM

Wesley College seeks $3.2 million from state amid financial stress

From The News Journal

In its continued fight to restore its financial health, Wesley College has asked for another round of state funding.

This $3.2 million request is more than triple the $1 million the state released to the Dover liberal arts school just weeks ago. It is the third time the school has asked for public funds this year.

The school continues to reallocate money for operating expenses, including a scholarship fund, grants and public funds meant for library renovations.

The small private college has received multiple installments of taxpayer dollars since 2018, most recently totaling $3.375 million. If the current request is approved, that amount would nearly double to $6.575 million.

Earlier this year, the state released $2 million to the school in order to “retain the proper account balance” so the federal government would continue to provide students with financial aid.

The school has since been permitted to request additional state funds, but needed to demonstrate “a sustainable financial plan for the future,” said Robert Scoglietti, spokesman for the state Office of Management and Budget.

The request for $3.2 million will likely also be used to maintain eligibility for federal financial aid, Scoglietti said.

Mirroring small liberal arts colleges across the country, Wesley continues to struggle with finances in the face of dwindling enrollment. In June, the U.S. Department of Education placed the school on a monitoring list for the second time in three years because of concerns about “financial responsibility.”

Enrollment continues to decline, and money that was intended for the renovation of the old Dover Public Library has had to be funneled into general operating expenses.

Read more:

https://www.delawareonline.com/story/news/2019/12/09/wesley-college-seeks-3-2-million-state-amid-financial-stress/2632163001/