Delaware's Port From Final Approach to NCC Airport
Courtesy of WDDE

Total employment — job counts have two major limitations: (1) they don’t necessarily reflect the quality of employment opportunities, and (2) they cannot be easily compared to the public costs of attracting those jobs (through subsidies, tax breaks or public investments).

Aggregate personal income measures the monetary  increases as pay levels rise and/or additional workers are hired. This works as long as nearly all of the affected workers live in the study area.  This guide is  a reasonable measure of the personal income benefit of a project or program.

Value Added Corresponds to the GDP.  It reflects the total sum of wage income and corporate profit generated within the study area. However, in today’s increasingly global economy, value added can be an over-estimate of the true income impact on a local area, insofar as it includes all business profit generated there — all of which gets paid out as dividends to owners of the business who do not reside in the study area, and that which is reinvested into corporate facilities that lie outside of the study area.

Business Output (also referred to as revenue or sales volume) is the broadest measure of economic activity, as it generates the largest numbers. It includes the full (gross) level of business revenue, which pays for costs of materials and costs of labor, as well as generating net business income (profits).  Much of that money bypasses the local economic area.

Property Values  can rise in a community as a result of a new business increasing the demand for property, which may be a direct consequence of increasing aggregate personal income or the re- investment of business profits. It is also important to note that when property values go up in one neighborhood but down in another neighborhood, there may be a sufficient redistribution of wealth but no net change in the overall level of local wealth or incomes.

The point of this illustration is to educate you for when Alan Levin says, this will bring $100 million into the port of Wilmington, you can ask,… how much of that goes into the community?  The answer, if Kinder Morgan moves in, will be just the amounts paid in wages for operations and for future construction.

Currently, because the operation is under the auspices of the state of Delaware,  all of the revenue impacts the state and local economy.  With the moving in of Kinder Morgan, property values will decline, thereby adding a negative economic drag to the possible boost the sale is predicted to provide.

A very similar comparison would be to compare Alan Levin’s Happy Harry’s to the current Walgreen’s today.

Walgreen’s put money into each unit.  Construction dollars flowed to those hard hit in construction trades.  Those working at higher wages with Happy Harry’s are no longer there.  They were replaced with cheaper labor.  The quality of product that abounded at Happy Harry’s has now been streamlined.  The cost of everything but pharmaceuticals has risen.  The pharmaceuticals because of Walgreen’s size, have themselves become cheaper.   The profits originally went to Alan Levin who lives here in Delaware.   Today,  profits are transferred out of state to the headquarters in Deerfield, Illinois.

So was the transfer of assets good for Delaware?   You can see the problem with trying to assess the change of the Port of Wilmington’s ownership.  It could be Alan’s enthusiasm is driven by the success of his former negotiation…

The prime issue is jobs versus wage rates.

Here is a quick illustration.

$300,000 =  10 jobs at $30,000.

$300,000 =  15 jobs at $20,000

$300,000 = 30 jobs at $10,000

$300.000=  40 jobs at minimum wage and 20 hours per week.

So when you have massive unemployment, being able to say you will create 40 new jobs creates a big political boost in your favor.  One can see why corporations hire as cheap as possible.  Isn’t it better to have a pool of 40 people who can work, and are hungry for work, than 10 who are less productive?

But the downside, is those 40 people can’t buy anything.  There is no money for anything but subsistence living.   The state and town’s resources get strained covering the additional costs such cheap labor requires, like medical care, like food stamps, like EIC, all which are a drain of resources being taken away from other sources….

Keep in mind, it is the same $300,000 by the corporation that is being paid out.  So from a town’s point of view, having 10 people fixing their houses, paying their taxes, hiring yard work and carpenters, buying cars, buying higher priced food, affording their own insurance,  donating money to charities, is better than 40 people costing it food stamps, sucking up Medicaid, bleeding out supplemental unemployment, SIS benefits,  forcing extra police coverage, necessitating  anti drug efforts, causing  higher crime patrols, etc.

By far, it is better for the city to have workers who contribute, instead of cost.

Which is why, the privatization of Wilmington’s Port, is not in the best interest of Wilmington and New Castle County,  unless the union can negotiate a prevailing wage floor, unless local workers get to do the construction and re-investment, and unless no decrease in neighboring property values is ever allowed to occur……

And … as we learned from Fisker, unless a special clause is inserted guaranteeing the State gets first in line to receive assets if Kinder Morgan goes bankrupt or walks away from Delaware and Wilmington should it ever decide the rate of return is not what they expected…..