RECOVERY? Not in the Northeast. The Northeast lags the nation in post-recession recovery. Real GDP increased just 1 percent in 2013, the last full year for which data is available. As a whole,
that year the nation grew 1.8 percent. Slow job gains have frustrated efforts to bolster economic growth despite such positive signs as falling unemployment and rising personal income.
The news isn’t all dour. “There is quite a bit going on in the Northeast,” states a report from Wells Fargo Securities’ Economics Group, which hails job growth in New York City and Boston. Strong gains have been made in technology in these cities and elsewhere. At the same time, traditional employment strongholds as publishing, legal services and financial services have faltered. New jobs created in such fields as home health care, hospitality and retail have bolstered employment metrics but hampered income growth; many are low-paying McJobs.
Mapped out by state GDP growth, the region’s overall performance is visibly lame. Despite those gains in New York and Boston, the Mid-Atlantic states show the slowest real GDP growth of any region in the nation.
Delaware, whose revenue-forecasting practices during the slow recovery are raising corporate eyebrows, paced the limping pack with 1.1 percent GDP growth. The District of Columbia actually slipped, posting .5 percent negative growth. New England fared slightly better. Vermont led its neighbors with a 1.9 GDP growth. Maine and Connecticut, bringing up the rear, share a .9 percent expansion pace.
The numbers for 2014, when they arrive, should be better. Nationally, the economy expanded in the second half of 2014 at its fastest rate in more than a decade. Hopefully, some of that progress will shine a warmer light on the Northeast. Meanwhile, economic development advocates in the region cheer each positive news announcement with maximum enthusiasm, hoping the bottom has at last been reached—and that the only way out is up.
#23 Delaware: Plagued by Unemployment
DELAWARE’S BEEN ADDING jobs, but unemployment is still rising. The reason might be the long-term drop in labor force participation. Delaware enjoyed stronger job growth than its neighbors in recent years, but two-thirds of the new positions are part-time or short term.
While Delaware led the region in GDP growth in 2013, business leaders worry that the state’s gimmicky revenue projection models will eventually lead to shortfalls. Meanwhile, forecasts show fall-offs in professional and business job growth midway through 2015. DuPont’s decision to exit Wilmington for a new headquarters in the burbs rattled business leaders without seriously affecting the job rate. Corporate recruitment and retention efforts are small but potentially attractive. “I think Delaware is underrated,” says Dan Breen, relocation advisor and executive VP at Jones Lang LaSalle in Parsippany, New Jersey. “Their incentives are better than people think—for the right projects.”
Education is a divisive topic: nearly 40 percent of students have “choiced out,” leaving public schools depleted and underfunded. Increasingly, relocating executives put their kids in private schools—or buy homes across the border in Pennsylvania. “An executive considering relocating here better take a hard look at the public schools,” says Bob Byrd, a partner with Wolf Block Public Strategies Delaware.
The Tax Foundation ranks Delaware’s state and local tax burden 15th highest out of 50 states and ranks it 13th in business tax climate. Delaware spends over $43 million a year on incentive programs.