Downturn means big worries in Delaware

September 16, 2008 6:52:19 PM PDT
The steady stream of bad news about the economy has people across the country worried. Delaware, with thousands of jobs in the financial industry, is especially vulnerable. It's too soon to tell exactly how the government's bailout of insurer AIG and Monday's bankruptcy filing by Lehman Brothers will impact the state. It's something few people wanted to talk about Tuesday.

Workers could be seen inside a Lehman Brothers office, but from outside so could the boxes. In 2003 alone, Lehman Brothers paid Delaware $11.6 million in tax revenue. AIG's tax contribution aren't known, but the company is said to employ more than a thousand people.

Professor Lawrence Hamermesh of Widener University blames America's present financial roller coaster ride on the past downturn in the housing market, a market tied to banks like Lehman's and insurance companies like AIG.

"When the housing market goes down, it drags a lot with it," Professor Hamermesh said.

Complicating matters more, Delaware's largest employer, Bank of America, made a $50 billion acquisition of Merrill Lynch Monday, even though workers here know the company plans to trim $7 billion from it's budget by 2012.

So far, no one knows if the recent merger means more jobs or layoffs. But Hamermesh predicts, in the end, Delaware will find it's economic balance.

"For every bank that fails, we might have another bankruptcy case that comes to Delaware and gets a lot of lawyers and their people working on it," Professor Hamermesh said.

State officials are said to be circling the wagons now because, in Delaware, trouble in the business sector means trouble all around.

Click here to get the latest Philadelphia news and headlines from across the Delaware and Lehigh valleys.


Load Comments