The Governor is in Europe looking for jobs. There have been some barbs thrown at him because he’s in England & Germany while we’re here digging out from record setting snow falls. I have no problem with his trip to Europe — his job is to help employment in Delaware. I hope that he is amazingly successful. If he can convince Fraunhofer to expand it’s scientific research activity in Delaware, that would be great. If he can convince Barclays and HSBC to bring more financial services jobs to Delaware, I’m all for it. If AstraZeneca chooses to expand employment in Delaware, we all benefit.

And let’s be honest… Delaware needs the jobs, more than almost any other State in the Nation. Let me explain why:

Number 1: According to the Delaware-based think tank, the Caesar Rodney Institute (It’s website can be found here):

Over the past decade Delaware personal income has been growing at about the same rate as the nation. Since Delaware population growth has exceeded the nation’s, per capita income in Delaware has dropped from 4% above the nation to less than 1% above today. This per capita income convergence is driven by demographics and the changing structure of the state’s economy…

At the same time, wage and salary income growth has fallen behind the nation due to a series of structural hits on the state’s economy. Financial services stopped growing and job cuts in the industry tended to focus on the higher wage positions. Automobile manufacturing disappeared. The chemical industry continued to shrink. Most job growth occurred in the lower wage industries such as retail trade and tourism or in healthcare where wages are average.

Number 2: According to the United States Department of Commerce, in 2008 Delaware tied for the second worst economic decline in the nation — a 1.6% decline in GDP. We were second to Alaska which got hit due to cheaper oil. According to the Commerce Department, “In Delaware, the contraction was due to a significant decline in finance and insurance.” While the Commerce Department also reports that “Delaware’s per capita real GDP of $56,401 was the highest in the nation”, item Number 1 above demonstrates that the trend is not favorable to keep our number 1 ranking.

Number 3: I have blogged previously about Delaware’s last place ranking by the Kauffman Foundation. Kauffman found in 2007 that “The five states with the lowest rates of entrepreneurial activity were Michigan, Pennsylvania, South Carolina, Illinois and Delaware,” and yet Kauffman also found that “Delaware, Massachusetts, Minnesota, California and Connecticut top the list of states that are leaders in innovation as measured by international patent applications…”

There is a huge dichotomy here. Delaware ranks at the bottom in entrepreneurial activity, but at the top in patent applications. The answer? The scientists all work for large corporate entities. These entities can move this knowledge elsewhere to develop. We don’t have entrepreneurs working in their “garage”. It is the next Apple or Microsoft that will drive future employment, and they are not being formed here.

Number 4: According to The Atlantic magazine (The whole article can be found here), Delaware tied for the 6th worst state in the Nation in 2009 in terms of job creation. According to the article:

The states listed in the northeast mostly felt the burn of the financial crisis. Even though the big banks have largely recovered, thousands of jobs were lost in financial services during the recession. The companies that remain aren’t in a hurry to ramp up their hiring yet.

Summary: Delaware’s economic assets are almost exclusively tied to large companies who are ambivalent about the local economic environment of Delaware. The Minner-Carney Administration spent 8 years ignoring the changing economic landscape to the point that Delaware’s entrepreneurial activity has almost stopped. Governor Markell spent his first year grasping at the sports betting gambit and touting “green” jobs as our co-saviors while government employment was not curtailed and taxes on small businesses were raised.

He is right to be in Europe, and I hope that he is successful. However, this trip won’t solve the basic problem… Delaware remains a lousy place to start and grow a high-tech/bio-tech business, and you won’t find a solution to that in Europe.