How Bad is Delaware's Labor Market?

How Bad is Delaware's Labor Market?

Across a variety of measures, Delaware's labor market is hurting.

 

First, the state's official unemployment rate is 7.2%, double the historic average of 3.5%. This means 32,000 persons have actively looked for a job in the past four weeks without success. Five years ago this group totaled 15,000 Delawareans.

Today the U.S. Bureau of Labor Statistics (BLS) collects more detailed data on "discouraged workers."   Discouraged workers are people who are not in the labor force but want to, and are available for, work, and had looked for a job sometime in the prior 12 months. They have not searched for work in the prior 4 weeks, specifically because they believed no jobs were available for them. There are an estimated 4,000 discouraged workers in Delaware at this time. 

In addition, the BLS measures the extent of "marginally attached" workers. The criteria for the marginally attached are the same as for discouraged workers, with the exception that any reason could have been cited for the lack of job search in the prior 4 weeks. Currently the population of marginally attached workers in Delaware is estimated to be 27,000.

So, totaled together, the unemployed, the discourage workers, and the marginally attached workers make up 14% of Delaware's labor force.

And it must be noted the pain is not evenly distributed. According to the latest American Community Survey data the unemployment rate for persons with less than a high school degree is 16% and drops to less than 4% for workers with a bachelor's degree or more.

Finally, there is the issue of the employment rate. Defined as the percent of the total population that is employed, the employment rate typically rises as the unemployment rate falls, and falls as the unemployment rate rises. As shown in the graph below, however, the last three years Delaware has experienced a departure from this relationship.

In 2006, as the state's unemployment rate was 3.5%, the employment rate was 63%. The state unemployment rate peaked at 8% in 2010 and has been falling since. Instead of rising as the unemployment rate has fallen, Delaware's employment rate has stalled out around 58%. The nation has followed a similar pattern.

National research concludes there are two reasons why workers who have dropped out of the labor force have stopped actively seeking work during the past three years. First, the economy is sluggish and uncertain, making companies reluctant to hire new employees. Second, there has been a substantial surge in enrollment in government benefit programs tied to being out of the labor force, such as disability and food stamps.

Given the comprehensive picture, the road back to a healthy Delaware labor market is going to be steep and challenging.

Dr. John E. Stapleford

Director

Center for Economics and Policy Analysis

 

Open the PDF attachment to see the easy-to-read graph on Delaware's unemployment.

Download Document Here.