By James DeChene
There is a fascinating article in the Wall Street Journal Thursday edition that sheds more light on Amazon’s ultimate decision to abandon New York from the corporate headquarters competition to instead build in northern Virginia. Delaware, along with every state and metro area competing for development, can learn a thing or two on how companies react to how they are perceived when making expansion decisions.
The crux of the article focuses on Amazon’s “burn book," a Microsoft Word file of all the public statements made by elected officials and other leaders who stood in opposition to the project. Ultimately used as evidence to back up the decision to give up on New York, it highlights the importance that words, public perception, and overall feedback is weighed when making important decisions. In Delaware we pride ourselves on our size, our intimacy, and the ability to gather all the necessary players in the room quickly and easily to successfully woo companies here.
That still leaves the other side of the coin to be dealt with, the court of public opinion. When companies are excoriated to “pay their fair share” (whatever that means), are accused of not being good corporate citizens for not blindly acquiescing to the latest trend that hits a company’s bottom line, and made to feel like nothing more than an ATM machine dispensing directly into state coffers, that’s where problems rise.
In the next year I expect a number of debates happening in this court of public opinion where these claims will be thrown about. From finding ways to deal with the cost of healthcare and how employee coverage is paid for, to new forays into labor law that will ultimately cost companies time, effort and resources to adjust to, to continued calls for increases in gross receipts taxes, licensing fees and other revenue generators, the perception of the business community will increasingly be under scrutiny.
Delaware’s size is certainly an important asset in attracting companies here, and without annexing land on the Delmarva Peninsula, its size will stay the same. What needs changing is how businesses are viewed and recognizing their positive impacts on Delaware’s economy and long term success, and taking measures to make sure they remain successful and grow. Without that, we may as well put up “I Love NY” signs at our borders.
by James DeChene
The announcement of a 500K plus downward revision to the number of jobs created since 2018 coincides with this month’s Delaware labor report showing that Delaware, while not being revised downward, saw most of its recent job creation over the last 12 months happen in 2018. What is unknown as of now is whether or not this is a sign of a weakening economy. Bear in mind that nationally there are over 7 million more jobs than employees to fill them, and wage gains are among the highest in the last 20 years. (I’ve written about the wage increases catching up for low skill workers in the last few years, surpassing where they were pre-Great Recession). Consumer confidence remains high, and all eyes are on whether the ongoing trade war with China will erode that confidence, and if so, how fast.
Locally I hear employers remain confident about overall economic conditions. Concerns when raised revolve around available access to talent (join us on October 8th for our Developing Delaware event to learn more), and more specifically finding younger workers for positions to replacing their soon-to-be-retired older colleagues.
A recent article in SFGate focused on how Maine’s aging population is putting a strain on the healthcare industry—from retirement homes to home health aides, there aren’t enough people to staff these jobs forcing closures and cuts to services, even if they are state mandated.
Maine now classifies as “super aged” meaning over one-fifth of its population is over the age of 65. By 2026, 15 other states, including Delaware, are expected to follow suit.
Let that sink in.
While Delaware touts itself as a retirement destination, and it certainly is (Hello, Sussex County) the flip side is the strain placed on care workers as more and more individuals require assistance and care. The cost to provide these services isn’t expected to decline any time soon, and as last year’s minimum wage debate highlighted, the cost to the state to increase reimbursements for direct support professionals ranges into the millions per year.
Delaware should be following closely the situation in Maine and the other 13 states, as we collectively advance to “super aged” status. We need to be looking at creative ways to lower costs for businesses so they can apply those savings to the inevitable cost of labor increases. For example, Maine allows businesses to pool together to purchase insurance under associated health plans, an idea the State Chamber and others has begun to flesh out.
It will take creative and innovative thinking to help solve these and other problems facing Delaware, and it will take the cooperative efforts of the general assembly, business, health care and other communities coming together to be successful.
This week Governor Carney signed into law a number of bills important to businesses throughout Delaware.
SB95 creates a contractor registry for commercial and residential contractors as a way to combat improper use of 1099 labor. In addition, it allows for contractors to sub out portions of their work to other contractors, bringing Delaware in line with surrounding states.
House Bill 130, the Plastic Bag Ban bill was signed and goes into effect January 1, 2020. The bill bans most plastic bags for retailers over 7,000 square feet or that have three locations, each being at least 3,000 square feet. But it does allow the continued use of bags to enclose raw meats and vegetables, along with restaurant carry out bags and containers.
SB61, the Transportation Infrastructure Investment Fund bill, was also signed. This DSCC-backed bill creates a fund to help offset infrastructure requirements on commercial development projects.
Also this week was a Senate pre-file of legislation impacting Delaware’s renewable portfolio standards. Important because of how it mandates the ratio of renewable energy Delaware power companies must offer, the legislation increases to the use of renewables to 40% by 2035, of which 7% must come from solar. The DSCC is currently reviewing the language to provide feedback.