The State of Delaware is entering a period of heightened economic risk that demands immediate, coordinated action. While Delaware has long benefited from a reputation for business friendliness, legal stability, and quality of life, recent economic indicators point to gathering storm clouds that threaten the state’s long-term fiscal and economic health.​

 

Today, Delaware has more people looking for work than we have jobs to offer. Our unemployment rate now stands at 5.4 percent, notably higher than the national rateof 4.3 percent. While a difference of slightly more than one percentage point may appear modest, the divergence is meaningful. It signals that Delaware is underperforming the national economy and that job creation is not keeping pace with population needs or workforce availability. If left unaddressed, this gap risks becoming structural rather than cyclical.

 

Even more concerning are Delaware’s demographic trends. The state’s senior population is growing faster than its working-age population and significantly faster than job growth. This demographic imbalance places increasing pressure on public finances, as a larger share of residents rely on fixed incomes and public services while a shrinking proportion of workers generate the tax revenue needed to support those services. Over time, this imbalance threatens the sustainability of Delaware’s budget, infrastructure investment, and social safety net.

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Historically, states confronting similar challenges have often turned to increasing marginal tax rates to close fiscal gaps. For Delaware, this approach would be counterproductive. Higher taxes risk accelerating out-migration of working-age residents and discouraging business investment, thereby shrinking the tax base further. The only durable solution is to increase the number of taxpayers by increasing the number of good-paying jobs with benefits, rather than attempting to extract more revenue from a stagnant or declining workforce.

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This proposal identifies four areas where specific steps must be taken to address Delaware’s economic challenges by accelerating job creation, fostering a welcoming business environment, and positioning the state for sustained job growth in a competitive national economy.

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I. Make Delaware a Destination for Business Founders and Entrepreneurs

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At the heart of any dynamic economy is a steady pipeline of new business formation. Entrepreneurs are disproportionately responsible for net job creation, innovation, and productivity growth. For Delaware, increasing the number of business founders must be a central economic development objective.

 

Delaware already enjoys strong brand recognition in corporate law andincorporation. However, incorporation alone does not guarantee that businesses locate their operations, employees, and capital in the state. Delaware should build on its legal strengths by becoming equally known as a place where entrepreneurs can easily start, operate, and grow a business.

 

An essential step is to establish founder-focused incentives, such as targeted tax credits

or grants for early-stage companies that establish headquarters or significant operations

in Delaware.

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• For example, the Delaware General Assembly should pass the proposed Tech Residency Act which would provide a tax incentive for entrepreneurs relocating to Delaware after they meet certain specific requirements.

 

Other strategies could include:​

 

• Create streamlined startup support, including one-stop portals for business registration, licensing, and compliance guidance.

• Expand pathways for residents facing barriers to entrepreneurship, including first-time founders, minority entrepreneurs, and individuals transitioning from traditional employment. Expanding access to seed capital, technical assistance, and mentorship can unlock untapped potential and ensure economic growth is inclusive and broadly shared.

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II. Make Permitting Faster, Predictable, and Transparent

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One of the most frequently cited obstacles to business investment in Delaware is the complexity and unpredictability of the permitting process. While environmental stewardship and transportation safety are essential public goals, inefficiency and delay impose real economic costs.  

 

Importantly, permitting delays and unpredictability fall hardest on small and mid-sized businesses that lack internal legal and compliance resources.  Even modest delays can derail financing, hiring or expansion decisions.  

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Agencies such as Delaware Department of Transportation and Delaware Department of Natural Resources and Environmental Control play critical roles in approving projects that create jobs and expand the tax base. However, prolonged review timelines, duplicative requirements, and inconsistent standards can discourage investment or drive projects to other states such as Pennsylvania and Maryland, which are outpacing Delaware in terms of permitting efficiency.  

 

While Governor Meyer’s recent Executive Order 18 is a significant step in the right direction for certain projects outlined in the Executive Order, Delaware must commit itself to broad action across many agencies if we are to compete with neighboring states for jobs.

 

Recommended reforms include:

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• DelDOT should move away from project-specific traffic impact studies which result in piecemeal and inconsistent transportation infrastructure improvements and consider an impact fee paid by developers to ensure balanced and effective traffic outcomes.  

• Duplicate sewer and water permits required by more than one agency should be eliminated to require only a single permit.

• Statutory review timelines should be implemented with clear deadlines for agency decisions.

• Concurrent permitting should be implemented, allowing reviews to occur in parallel rather than sequentially.​

 

Permitting reform does not require weakening environmental or safety standards. Rather, it requires improving process efficiency, clarity, and accountability.  Predictable timelines enable businesses to plan investments, secure financing, and hire workers with confidence.

 

III. Expand Small Business Innovation Research and Technology Transfer

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Delaware is home to well-funded universities conducting world-class research, yet too much of that innovation fails to translate into in-state businesses and jobs. Strengthening technology transfer and commercialization is essential to building a high-wage, innovation-driven economy.

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Institutions such as the University of Delaware and Delaware State University generate valuable intellectual property across disciplines including engineering, materials science, agriculture, biotechnology, and data analytics. Delaware should invest in mechanisms that move these discoveries from the lab to the marketplace.

 

For example:

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• Delaware should establish a State Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) Matching Grant Program.  Among the most successful business development programs offered by the federal government, these programs offer highly competitive, nondilutive seed funding for R&D with strong potential for commercialization. Unlike venture capital or loans, these awards are grants or contracts that do not require repayment or equity stakes, allowing entrepreneurs to de-risk early-stage technologies while retaining full ownership.  Many states already have adopted matching grant programs to incentivize entrepreneurs and small businesses with high growth and jobs potential. 

• Because retaining talent is a critical need for Delaware, the state should fund the Stem Talent Advancement and Retention (STAR) Fund that was piloted in the FY 25 budget with $100,000.  The STAR Fund provides funds to individuals that accept a position after graduation with a Delaware-Based STEM company (Associates to PhD).  The funds are used to pay down eligible student loan debt after the applicant provides proof of debt.  In collaboration with the Division of Small Business, last year the program was over-subscribed, assisting 20 recipients to remain in Delaware in STEM jobs.  The program should be reauthorized in next year’s budget.

• Delaware can further accelerate commercialization by developing innovation districts near university campuses, offering shared lab space, incubators, and accelerators. Co-locating researchers, entrepreneurs, and investors increases the likelihood that ideas become companies—and companies become employers.

 

IV. Support for Existing Employers

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Importantly, Delaware must continue to support and protect the employers already in Delaware if we are to retain a stable tax base from which we can create more jobs in support of Delaware families.  Maintaining the businesses and jobs they provide is the best way to attract all businesses – entrepreneurs, small and mid-sized businesses and large, multi-national employers. There are several ways to ensure our existing businesses feel they are valued for the important jobs they provide and are encouraged to increase jobs for Delawareans.  

 

• State leaders must constantly view proposed legislation through a lens of job creation and job retention. We must remember that many large Delaware employers – financial institutions, for example – have the means to either bring jobs to Delaware or to move them to other locations out of state.

• The Delaware Prosperity Partnership (DPP) has long engaged with existing employers to better understand the challenges they face.  We encourage DPP and the Delaware Division of Small Business to join with state-elected leaders to remain in even closer contact with existing employers to ensure we are meeting their needs and helping them maintain their presence in Delaware in support of the jobs they provide for Delaware families. 

 

Measure Success and Ensure Accountability

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To ensure these strategies deliver results, Delaware must establish clear performance metrics and accountability mechanisms. Key indicators should include:

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• Growth in business formations and survival rates.

• Reduction in permitting timelines.

• Job creation in high-wage sectors.

• Net in-migration of working-age residents.

• Increases in labor force participation and tax base growth.

 

Regular public reporting on these metrics will build trust, enable course correction, and demonstrate the state’s commitment to results-driven economic policy.

 

Conclusion: Choose Growth Over Drift

 

Delaware stands at an inflection point. Rising unemployment, unfavorable demographic trends, and increasing fiscal pressures are warning signs that cannot be ignored. The path forward is clear: generate good-paying jobs with benefits, expand the tax base, and position the state for long-term competitiveness.  Historically, Delaware is strengthened and benefits when state government, the business community, the legal community, and the academic community work together.  Given the present economic uncertainty, we owe it to all Delawareans to encourage communication and intentional collaboration to expand job opportunities for Delaware families and grow our tax base.

 

By increasing the number of business founders, attracting entrepreneurs, modernizing permitting processes, and unlocking the commercial potential of university research, and working closely with existing employers, Delaware can transform today’s storm clouds into an opportunity for renewal. The choice is not between growth and responsibility—it is between proactive leadership and costly drift.

 

With deliberate action and sustained commitment, Delaware can secure a prosperous future for its residents, workers, and businesses alike.

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