[V]ermont’s economy is growing, but that growth isn’t helping many Vermonters move ahead, according to a new report from Public Assets Institute.
The Montpelier-based think tank has been putting out its State of Working Vermont report for more than a decade, and the trend of slow growth, low wages, and high costs hasn’t changed in that time, said Paul Cillo, the nonprofit’s executive director. Vermont is one of 10 states where median household income actually dropped in 2017, the report says.
“The surprise is that there is no surprise” in the findings of the report, said Cillo. “We’re now at 10 years since the Great Recession began. There has been recovery, and it has been slow and steady. But wages are low.”
The report, released in late December, outlines Vermont’s overall economic growth and who has gained the most from it; the ability of average Vermonters to make ends meet; and the state’s job market and wages.
Overall, it shows a pattern of very uneven earnings and growth, with a full 30 percent of the workforce concentrated in Chittenden County and nearly $10 billion — or 30 percent — of personal income growth in that county as well. That reflects a national pattern of economic growth increasingly moving away from rural areas to urban areas. In Vermont, as in the nation, economic growth has disproportionately affected those in the top 1 percent of the income range; wages have been stagnant for most Vermont workers, the report says.
The result: 17 percent of young adults in Vermont lived in poverty in 2017, and the average income at the top 1 percent was 16 times the average income of the bottom 99 percent, a pattern seen nationally.
In Vermont, “the gap is getting wider as time goes on,” said Cillo.
While some of the wage stagnation is seen elsewhere, the report shows it is just harder to get by in Vermont. While costs of living are average, wages are 82 percent of the national average, making it more difficult to meet everyday needs such as gas, heating, rent and food.
“Median household income basically hasn’t moved; it’s gone down slightly over the last 10 years,” Cillo said. “That’s happening even as prices are going up.”
The Public Assets findings closely match what Vermont State Employees Credit Union – the state’s largest — has seen after surveying its members, said Yvonne Garand, VSECU’s senior vice president of marketing and business development. In 2010 VSECU’s survey, carried out every two years, found that 32 percent of its member households earned less than $50,000, Garand said. That number rose after 2010, but it has dropped again in 2018 to 32 percent, she said.
“We’re experiencing the same stagnation among the lower-income households,” Garand said.
Along with the report, Public Assets published recommendations, including addressing the benefits cliff that discourages people from taking on additional work because they will lose services if they earn more. Changing eligibility for the state’s Child Care Financial Assistance Program would remove one obstacle for low-income workers, the report says.
The think tank recommends raising the minimum wage to $15/hour, creating a paid family and medical leave program, and expanding the state Earned Income Tax Credit further.
“Eligibility for the tax benefit needs to be broader so that working families have an adequate income to afford their basic needs,” the report says. “Employers also have a responsibility to see that one full-time job pays well enough to live on.”
It calls for increased transparency, as mandated by the Legislature in 2012, to show the full cost of the state’s service obligations.
“The current service budgets now published by the governor’s office are the most detailed in many years,” the report says. But they need to go further so voters can see how much it costs to provide the services the state has committed to, as well as how much money the governor and Legislature have appropriated.
“The state has put in place policies that say, ‘This is what we are committed to doing’,” said Cillo. “We want to see those two things connected.”
It’s well known to employers and policymakers that a shortage of qualified workers is holding the state back. The problem is national, but it’s particularly acute in Vermont, which in November reported a 2.7 percent unemployment rate. The Bureau of Labor Statistics reported a national unemployment rate of 3.7 in November.
The Public Assets report said Vermont is one of only 10 states where the labor force remains below pre-recession levels.
Garand said that officials from VSECU are talking to others about together raising wages in their industry.
“Employers in Vermont do not necessarily have to wait for legislative action to ensure that they are leveraging their resources in a way that pays fair wages,” Garand said. “At our credit union, and also some of our credit union peers and colleagues, we’re all having internal conversations about how we can move the needle to increase the minimum wage absent any legislative action.”
Gov. Phil Scott’s administration is focusing on growth as one solution to Vermont’s economic problems.
“I don’t think there’s anyone suggesting we need to be the size of New Hampshire, which is more than double our size, but we do need mindful growth,” said Mike Schirling, secretary of the state’s Agency of Commerce and Community Development.
Last spring, Scott vetoed a minimum wage increase.
“There’s multiple sides to that coin,” Schirling said recently of raising the wage. “We’re fortunate to talk to employers large and small all over Vermont. Many are increasing wages to maintain the current employee base, but they’re being pulled in many directions, It is not inexpensive to do business in Vermont; it’s not uncomplicated to do business in Vermont. We’re trying to hold the line on costs.”
Public Assets examines tax, budget and economic policy issues from the perspective of working Vermonters. It is supported by grants and individual donations; its largest funder is the Annie E. Casey Foundation.
