Making The First State First Again

The last time a Republican has occupied the Governor’s mansion was in January 1993.  In January 1993 then Governor Michael Castle went to Washington to become Delaware’s lone Congressman and Democrat Tom Carper became Governor.    During the reigns of Tom Carper, Ruth Ann Minner and now Jack Markell, Delaware’s economy has been a roller coaster.   As of late the roller coaster ride is on the straight away track waiting for an uphill climb, but we are not sure when or if that will ever happen.

Delaware’s economy mirrors the same trajectory as the national one, with unemployment hovering over 8.2 percent.  In the last few years we have watched Delaware’s corporate landscape shrink with General Motors, Chrysler, Valero shutting down their plants sending thousands to the unemployment lines.  MBNA was sold to Bank of America and as of this writing 30,000 Bank of America employees face pink slips.  DuPont, one of Delaware’s oldest and storied employers has been shrinking its North America workforce and shipping jobs overseas as emerging markets become the growth sector.

The last twenty years in Delaware has eroded Delaware’s prominence with elected leaders ignoring the warning signs and failing to react with positive leadership to change course.  With the changing economic landscape in Delaware, what can our elected leaders do to change course? 

Make Delaware a Right To Work State – Currently, Delaware is a forced unionism state which prevents companies that do not want to hire a union workforce to avoid Delaware in favor of states that allow them to operate without forced unions.  A right to work state allows employers and its employees to decide for themselves if they would like to become a union shop.  If Delaware become a right-to-work state, Delaware would become more attractive to potential employers.

Make Delaware the Silicon Valley of the East – What propelled Delaware to world-wide prominence with du Pont, Hercules and W.L. Gore, must be the focus of the 21^st Century Delaware if we are to create high-tech, science and technology jobs.  It is unknown if Delaware will ever be a manufacturing state again or what Delaware’s banking sector will look like in the future, but Delaware must make it easier to explore research and development, including start ups in the science and technology field.  Delaware’s high schools, colleges and universities must have strong curriculums that embrace science, technology, engineering and math.  Governor Jack Markell emphasized this, but little has been done to date of making this a reality.

Deregulate Energy – While it has been tried in the past, we must deregulate the energy industry in Delaware.  Increased competition with lower rates and more advanced greener solutions will not only reduce the energy cost burdens on Delaware families and business, but will also open the gates for green technology jobs.  While the jury is still out on green jobs, America’s success has been on the trial and error of innovation entering the free markets to see what sticks and what doesn’t.  Who knows, Delaware could become the hub of green technology jobs if we let it, and do it right.  With rising costs on energy and fuel, the environment for success is ripe for the taking.

Create a Medical School in Delaware – Much talk about opening a law school in Delaware has been done, but with Delaware’s aging population health and health technology is more important than ever.  Delaware already has a law school with Widener in North Wilmington, but Delaware lacks a medical school.  The future demand on health care demand is ripe for Delaware to enter the foray of medicine and medical technology. 

Lower Tax Burden on Individuals and Businesses – Historical evidence has proven that when the tax burden is lowered on individuals and businesses, consumer confidence and spending goes up and businesses respond with higher growth and increased employment.  Lowering Delaware’s tax burden will also attracted small businesses that otherwise would not have been started to open and given an opportunity to flourish.

Remove Bureaucratic Red Tape for Business Start Ups – In order to make Delaware the economic laboratory of innovation, Delaware must become once again a center of entrepreneurship and innovation.  Delaware’s elected leaders must review all red tape and bureaucracy that hinder a business start up from happening.  Small businesses historically create the most net jobs, and this is the engine of Delaware’s economy.  Until Main Streets through Delaware are filled with store fronts and businesses, Delaware’s economic success will be nothing but a distant memory. 

Delaware’s economic success is contingent on the vision and leadership of its elected leaders.  Elections matter, and elected leaders must focus on free market enterprise, not government regulation to drive Delaware’s economic engine.  Let’s band together for a prosperous free-market Delaware.

This article was previously published in the October 2011 edition of The Conservative Caucus of Delaware's quarterly newsletter.  To become a subscriber contact ccofde@yahoo.com.

Why Delaware should become a Right-to-Work State

Simply put, right-to-work states are economically better off.

The study conducted by Republican Senator Jim DeMint of South Carolina shows that right-to-work states have benefitted from workers migrated to those states for jobs.  The result is that states that protect workers rights to unionize and collect dues, resulted in less jobs and corporations willing to establish there.

Delaware is not a right to work state, which may explain why General Motors and Chrysler bailed.  Despite not being a right to work state, Delaware has not been on the list to attract new businesses as of late.  Delaware ranked 42nd (out of 50, in case you forgot).  Delaware ranked number one in business friendliness thanks to the Chancery Court of Delaware, but failed on the rest:

• Ranked 36th on cost of business
• Ranked 17th on quality of workforce
• Ranked 47th on quality of life
• Ranked 45th on the economy
• Ranked 40th on transportation infrastructure
• Ranked 33rd on technology and innovation
• Ranked 25th on (quality of) education
• Ranked 20th on access to capital
• Ranked 32nd on cost of living

For the ruling party in control, the liberal agenda in Delaware is not working.  High taxation, education with mediocre or no results, red tape to open a business plague Delaware's prospects.  Gone are the days of being a business mecca like during the era of Gov. Pete DuPont. 

Maybe, just maybe if Delaware leaders realized that forced unionization and the hidden cost of prevailing wage has driven businesses to other states.  Wouldn't you?

Delaware State Unemployment Edges up to 8.5%

Liberal policies that stifle economic growth and continue to permeate throughout Delaware.  The infection has taken the job market and put it in the ICU here in Delaware.  Of note:

• In all of 2010, Delaware only added 500 jobs, excluding agriculture. 
• 1,700 jobs were lost in December 2010
• 35,900 Delawareans who want work remain jobless

Is it going to take every Delaware to be on food stamps to realize that progressive policies really are regressive.  Not sure how it could be put any other way. 

More here from the News Journal.

Analysis of Gov. Markell's 2011 State of the State Address

Today's Delaware State of the State Address highlights very fundamental confusion by the Markell Administration on how to fix Delaware's ailing economy, schools and transportation departments.  Let's address these one-by-one:

Markell Proposes Job Creation Infrastructure Investment Fund

The entire premise behind this concept hinges on offering tax credits.  Rather than utilizing more taxpayer funds for this fund, why not just lower the corporate tax rate?  Delaware's corporate tax rate as of 2010 stands at 8.7 percent.  Regional competitors such as Virginia offer a corporate tax rate of 6.0%, which is more business friendly.

Another recommendation is to reduce and eliminate the gross receipt tax.  This tax punishes businesses, as it taxes them on goods produced or services rendered in the state.  Punishing businesses on what they must do to thrive is a deterrent to stay in business and create jobs.

Announcement of Joint Effort with Delaware Manufacturing Association

Only after General Motors, Chrysler and Valero shut down operations and shed thousands of manufacturing jobs does the light bulb go off with the Markell Administration.  Talk about being a day late and a dollar short. 

While this is a step in the right direction, this is a reactive measure by an administration that was elevated to office by union labor that was employed at at least GM and Chrysler.  Where was this administration when they were losing their jobs?

Education Proposals on Language Requirement and Science/Technology/Engineering/Math Focus

Governor Markell should be commended for realizing that educating Delaware's children is a driving factor to having a workforce that businesses want to hire.  The language requirement is essential to have a workforce competent of global perspective and conversant with another non-English nation.  While Delaware may be home to several non-US businesses (e.g. Astra Zeneca) it does have businesses that conduct business globally.  This is step in the right direction.

Markell's second proposal to create Science, Technology, Engineering and Mathematics was sorely need and refreshing to read and hear.  This focus has been long overdue and there is no reason why Delaware cannot be a STEM hub to complement what the chemical giants have done to make Delaware home. 

State Employees Health Care and Pension Cost Obligations

With the revealing that taxpayers have been bearing the burden of the explosive health care and pension cost obligations, Delaware leaders can now focus on reducing this burden.   It was very startling to hear that the health care burden by taxpayers explode by 594% and the pension costs exploded by 257%.  This clearly is unacceptable.

Delaware needs to address health care costs by increasing competition by allowing more health insurers to compete in Delaware, implementing tort reform and asking state employees to share the health care cost burden just like it done in the public sector.  It is not fair for private citizens to fund their own health care for themselves and also that of the state employees.  For this, the state must act like a business and ask employees to share more of the cost after they improve competition and availability of more choices for health care coverage via the private sector.

Markell must make a stand and reject Obamacare.  Join the other twenty-six states and demand that we inject state reforms on health care to diffuse the unconstitutional federal government mandate.  This issue commands leadership, and now is the time.  Compel Attorney General Beau Biden to do his constitutional job and invoke nullification of Obamacare, for this legislation is violation of the U.S. Constitution on the mandate requirement.

The explosive pension cost burden borne by taxpayers is no different.  It is not fair that private citizens must finance their own retirement and that of state employees.  Delaware must do a multitude of things to address this problem.  The first is to switch from a defined benefit pension plan to a defined contribution plan where state employees contribute to their retirement.  This is the same decision many private sectors firms faced, and government employees should be no different. 

Markell must renegotiate all union employee contracts to reign in employee costs.  Consult with New Jersey Governor Chris Christie on tactics on how to negotiate with the DSEA and other unions.  It won't be easy, but it must be done.

Conclusion

Delaware's fiscal picture is bleak due to state health care, Medicare and pension cost obligations.  Delaware'[s schools need reforming.  While recognition of these areas is a first step to recovery, the road to sanity is a long one.  The time for tough and unpleasant decisions is now.  The time of the public's financing of fiscal recklessness and failed leadership is over.

HSBC Layoff Announcement Highlights Delaware's Failing Business Climate

Today's announcement by HSBC to shed 500 jobs at its New Castle, Del. site highlights Delaware's failing business climate.  What drove HSBC to discontinue credit card and collections at this site, may only be a partial truth.  What was not report in the News Journal article, was whether HSBC is shifting those functions to another state or country.

Since HSBC did not outright state it was divesting the entire credit card operation, the likeliness of shifting these jobs to another state or country are pretty high.  And that is a bad story for Delaware and for New Castle County. The next follow-up to this story should be why did New Castle County and Delaware governments fail HSBC to make such as decision. 

The questions that need to be answered are:

• What did Delaware or New Castle County not do, that others states or countries do to prevent another recurrence?
• What did the Delaware Department of Economic Development not do to retain those jobs?
• What factors did HSBC utilize to evaluate why to shed those jobs?

Governor Jack Markell, New Castle County Executive Paul Clark and Delaware Economic Development head Alan Levin have a daunting task ahead in trying to understand what happened here.  Not only do they need to be held accountable for this action by a private employer in our governments inability to have a favorable business climate, but they need to put in stop-gaps to prevent another firm from doing the same thing.

Delaware may have the top bill in legal ranking nationwide that supports our business community, but this alone is not enough.  Delaware needs businesses and jobs for every Delawarean that wants a job.  The Tax Foundation's 2010 state rankings on business friendliness  may have Delaware ranked 8th nationally but state and county budget shortfalls will lead to higher taxes in 2011 and beyond.  Delaware's education ranking by the American Legislative Education Council as 19th best in the nation is a call for dire improvement to create an educated workforce.

Another facet to Delaware's ailing business climate could be that marketing (or lack thereof) of what Delaware has to offer businesses.  A September 2010 report by Development Counsellors International, and independent firm that analyzes business friendliness for governments submitted a report to Delaware's Department of Economic Development.  The report highlights Delaware's weaknesses and challenges.  Some highlights includes Delaware's weaknesses on infrastructure, small labor pool, high cost to establish business and lack of incentive to conduct business in Delaware.  The challenges include addressing the same weaknesses, as well as overcoming more competitive incentives from other states and having more business zones with established commercial sites.

Delaware and New County Government leaders facing a daunting task, and we can only hope they have the knowledge and fortitude to get us out of this conundrum.  Delaware's workforce is reeling from bad political decisions and state and county coffers are suffering as a result.  Until Delaware focuses on jobs and job retention, this picture will not improve.  Delaware and New Castle County needs leadership and leadership now.

ICYMI: Unemployment Rose Again

As Americans either work or venture out to conduct holiday shopping, the business world woke up this morning to find out that the economy is far from recovered.  Unemployment surprisingly rose to 9.8% (u3), or 17% for real (u6) unemployment. 

The real unemployment is more troubling as this represents the total unemployment number in America.  While reported u3 represents those on unemployment benefits, u6 (or total unemployment) represents everyone who wants a full-time job, but cannot get one.  And 17% total unemployment, is nearly one out every six Americans. 

And to make matters worse according to a New York Time article, the longer one is out of work; the less of a chance they will find work.  So the bad news just got worse for many. 

The only positive news of today's developments, is this may give incentive to Congressional Democrats to back extending the 2001 and 2003 tax cuts for the foreseeable future.  Let's hope they see the light.