PHOTO COURTESY OF RICHARD F. BIEKER
By Dr. Richard F. Bieker
Dr. Richard F. Bieker of Dover is a retired economist. He has taught and/or conducted research at a number of institutions, including Delaware State University, the University of Delaware, Purdue University and Central Michigan University.
Newsweek recently reported that, according to data provided by the moving company HireAHelper, Delaware had the second-highest net in-migration rate of all U.S. states in 2024. The findings are based on an analysis of 114,000 Americans who relocated during 2024 and booked their moves with HireAHelper.
Who is moving to Delaware?
IRS data is available that allows us to examine the number of tax returns that were filed in Delaware in 2022 but in a different state in 2021. Of those returns, 90% were filed in Pennsylvania, Maryland, New York, New Jersey and Virginia in 2021. Thirty-five percent of the in-migrants were 55 or older. In-migration rates were highest for Kent and Sussex counties.
This high in-migration rate of older individuals is significant, since Delaware already has one of the oldest populations of all states. According to World Population Review, the median age of Delaware’s population is about 41, and about 19% of the population is 65 or older. This is comparable to states such as West Virginia and Maine. The high in-migration of older persons compounds the problems associated with an aging population.
Challenges posed by older in-migrants
The large influx of older individuals creates the following challenges for Delaware:
- Strain on the health care system — An older population causes an increased demand for medical services and long-term care facilities.
- Strain on the housing market — Older in-migrants are generally wealthier than younger local residents and, as a result, tend to drive up housing prices and reduce housing availability for young citizens.
- Lower labor force participation rates — Since older in-migrants are typically retired when they move to Delaware, the already low labor force participation rate of 58% falls even further. When fewer people are working or actively seeking work, the economy produces less output, and residents experience a lower standard of living. Additionally, a shrinking workforce can increase the tax burden on those who are employed.
Delaware public policy is driving in-migration
The in-migration of older individuals into Delaware is driven largely by the current public policy of granting tax preferences to these citizens. These preferences include:
- No state income tax on Social Security benefits or railroad retirement benefits
- No state income tax on up to $12,500 of qualified retirement income from pensions, individual retirement accounts and 401(k) distributions for individuals 60 or older
- Property tax relief for homeowners 65 or older. In addition, Delaware has no retail sales tax.
Potential public policies to slow the in-migration
Given the challenges an aging population pose, how might Delaware slow the in-migration of older individuals? Here are some possibilities:
- Tax policy adjustments — It could begin by eliminating or modifying the tax preferences currently granted to older people. In addition, substituting a modest sales tax of 2%, combined with a flat income tax of 2% for the current progressive income tax, would tend to encourage the in-migration of upwardly mobile, working-age individuals seeking to enter the Delaware labor force rather than retirees.
- Zoning and housing regulations — It could limit the development of age-restricted housing (55-plus communities) and limit state housing assistance to recent in-migrants to reduce the in-migration of older individuals.
- Limiting health care benefits — It could impose minimum residency durations before someone qualifies for certain state-funded benefits, like home care subsidies and state Medicaid waivers, to discourage older individuals from relocating to Delaware.
- Workforce incentives — It could develop policies that favor younger in-migrants, such as granting tax credits to businesses that hire working-age in-migrants or making direct payments to such workers, to induce them to migrate to and labor in Delaware.
Of course, these policies would have to comply with federal antidiscrimination laws and constitutional protections.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
