January 18, 2022

Delaware’s 40-year experiment: pro-growth vs. anti-growth policies

by Charlie Copeland, Center for Analysis of Delaware’s Economy & Government Spending

NEWARK, DE – In 1980, the US and Delaware economies were in shambles. Forty years later, at the end of 2020, the US and Delaware economies were again suffering because of the global pandemic. This 40-year period provides a real-life experiment in pro-growth versus anti-growth Delaware-based government policy. The results are clear.

 

The graph below shows the outcome of Delaware’s pro-growth versus anti-growth policies, including a forecast of what New Castle County could have been if the anti-growth forces had not won in 1998 when employment creation ended in the county.

growth5.png
Two eras in New Castle County – 1980-2000 and 2000-2020

 

As the 1970’s economic malaise ended in late 1982, the overall US economy roared to life, job growth in New Castle County riding on the back of the pro-growth policies implemented by former governors Dupont’s and Castle’s administrations also roared, averaging almost 3% per year for the decade of 1983 to 1993. The national recession of 1992 hit hard, causing a brief swoon until further growth promoted by the Carper Administration fueled a somewhat less robust 10-year average 2% per year growth from 1990-2000.

 

Then, in 1998, something changed, and economic investment in New Castle County quickly stopped. Within two years of the passage of the County’s Unified Development Code, employment growth in New Castle County was flatlined. Since 2000, employment in New Castle County has grown an anemic 0.3% per year through 2020.

 

The 1998 Unified Development Code passed by the New Castle County Council was an economy killer – dramatically destroying property rights and growth investment in the county. Once the legacy projects were completed, employment growth simply stopped. Anti-growth forces had won, and job opportunities were lost.

 

Meanwhile, in a County not far away — Sussex on a 40-year tear

 

Compare New Castle County’s trajectory — pro-growth policies followed by anti-growth policies — with Sussex County’s trajectory where pro-growth policies continued, unabated, for 40 years. In 1980, there were 46,558 jobs in Sussex County. Today, there are 114,297. Over this period, Sussex County employment has grown 145%, more than doubling the anemic 67% of New Castle. If not for the “Great Recession,” Sussex County would show a very consistent ~2.5% year-over-year employment growth rate over the entire 40-year history.

 

A New Castle County Forecast

 

No one could say for sure what New Castle County would have looked like if the forces of stagnation had not triumphed in 1998. But, using Sussex County as a guide, one could posit that there would be almost 50,000 more jobs in New Castle, and wages would be much higher due to the demand for employees–an increase in the workforce equates to an overall population increase of 100,000 or more in New Castle County. Population growth is economic growth. (See red dash line on the graph.)

 

Instead of recognizing New Castle’s errors, Delaware policymakers have begun to imitate New Castle County’s anti-growth agenda on a statewide basis. For example, increasing regulations, taxes, and employment costs on small businesses reduces business investment leading to lower employment growth. The graph shows that pro-growth policies would have solved the wage problem without government coercion as local businesses competed for quality workers for the 50,000 jobs that would have existed in New Castle.

 

The 2022 legislative session provides the perfect opportunity to return Delaware to the policies of employment growth.

(Source: All data from the U.S. Bureau of Economic Analysis)

111.0.png