Delaware’s aging population, shrinking workforce and rising costs signals a pivotal economic shift, report warns

From Philly and the Pa. suburbs to South Jersey and Delaware, what would you like WHYY News to cover? Let us know!

Delaware is at a turning point, facing a wave of demographic change that’s reshaping its economy, labor force and cost of living. The state’s population has grown by nearly 21% since 2006, driven largely by retirees and migration, but that growth brings new challenges. With housing prices surging, birth rates falling and a shrinking labor force, business leaders say now is the time for data-driven action.

To better understand the road ahead, the Delaware State Chamber of Commerce released a report titled The Trends Shaping Delaware’s Future. The paper, developed with the business strategy firm Economic Leadership, paints a detailed portrait of how key shifts, from immigration to infrastructure, are influencing Delaware’s trajectory.

But for Chamber President Michael Quaranta, the most important takeaway isn’t just what’s changing, it’s what comes next.

“The goal was to start out with some very strong foundational information,” he said. “And what we discovered validated a lot of what we thought or felt, but we felt it and that was still kind of anecdotal, but this documents it.”

Immigration and age driven growth

Some of the data revealed was surprising for Quaranta. One of the most eye-opening findings involved Delaware’s foreign-born population and its growing role in the state’s economy.

“We did not know that one out of 10 Delawareans was born in a foreign country and one out of seven in the workforce was born someplace other than the United States,” he said. “That was interesting … and [we] actually shared that with the governor and he was a little surprised about that too.”

That level of immigration-driven workforce growth represents a significant shift in Delaware’s demographics. From 2010 to 2023, the state’s foreign-born population grew by 44%, according to the report. Meanwhile, the state has also experienced a dramatic 92% increase in residents over the age of 65 since 2006 – a trend that is poised to alter consumer behavior and reshape long-term planning for employers.

“We are watching the largest generation in the history of the planet hit retirement,” he said. “These are the people who have been the drivers of the consumer market for the last 50, 60, 70 years.”

As that generation ages, their spending habits change, and so will the economy.

“They’re not out in the market buying business suits. They’re not buying things for their kids,” he noted. “They’re not running over to a home improvement store every weekend to repair something in the house, you know, remodel the room. [They’re] pretty much kind of finished with a lot of that.”

He added that not only will spending in certain areas decrease, but retirees are also changing how capital flows through the economy.

“Consumer spending will inevitably shrink,” he said. “Capital markets won’t be available because people who are in retirement will retreat from owning stocks and bonds and go into things that are more conservative and stable because they want their money to last and not be in a volatile set of circumstances.”

“As they hit retirement, they tend to get more conservative. Look at what the markets were like the last couple of weeks. And they move into more conservative things like cash, treasury bills … because they don’t want their 401(k) to turn into a 201(k),” he added.

Declining labor supply

According to the study, the state’s labor force participation rate dropped from 62% in 2019 to 59% in 2024, the lowest rate compared to Delaware’s neighboring states. As more older adults exit the workforce and fewer children are being born, Delaware faces the dual challenge of declining labor supply and rising demand for services like health care.

“We’re going to enter times where we have fewer and fewer kids entering schools and more people using more healthcare than ever before,” Quaranta said. “It’s a fact that more people use healthcare in their sixth, seventh and eighth decades of life than they do when they’re in their 20s, 30s or 40s.”

Limited housing options

The report also shines a light on housing affordability – an urgent issue as home prices in Delaware have surged by more than 56% in just four years. For employers trying to attract young or mid-career professionals, limited housing options in the state have become a barrier.

“There’s not enough variety across all segments of housing to accommodate people in different circumstances,” Quaranta said. “When there’s enough, the prices will settle down and the percentage increases will start to decrease.”

He explained that people don’t just choose where to live based on job opportunities alone. Factors like school quality, commute times and housing availability — whether a small apartment or a downsized single-floor home — all come into play.

“There’s a whole variety of factors that play into this,” he said. “There are places in the state that are growing and people’s proximity to where they work has then become a bigger challenge … because living near where they have to work, there may not be enough available housing that’s affordable based upon the salaries that they make.”

Looking ahead, the Chamber will use the report to shape its next phase of action, guided by five major focus areas. That includes things like workforce development and business climate improvement, “that’s tax policies, regulations … having infrastructure in the ground and ready for manufacturing expansion,” he said.

The study serves as a snapshot, a foundation for understanding what Delaware looks like today to help the state prepare for what it will look like in the future. Moving forward, the Chamber’s goal is to work at a deeper level, examining each trend more closely and using that research to shape and advocate for policies that respond to the state’s evolving needs.