Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.ย
Vermontโs May unemployment rate fell to 12.7%, down from 16.5% in April. And the stateโs employers added a record-busting 15,700 workers to their payrolls. Of course, that comes on top of the most dismal employment report ever in April.
The big picture: The stateโs economy improved in May but is still in very poor shape.
First, the good news: Vermontโs unemployment rate fell, as it did in 36 other states. Only three states reported higher unemployment rates in May than in April. While Vermont had one of the highest unemployment rates in the nation in April, it is now just under the national rate of 13.3%.
Vermontโs employment growth in May was 6.4%, the fastest in the nation. And employment growth was widespread in the private sector with no major sectors of the economy reporting a job decline.
The bad news is that the state economy is still deeply in a hole. Unemployment one year ago was 2.3%. Moreover, there were 55,000 fewer jobs in Vermont in May 2020 compared to a year ago. That is a 17.7% rate of job loss, the fourth worst in the nation.
While no part of the economy has been spared, job losses are concentrated in a few sectors. Restaurants and bars have 13,100 fewer jobs than one year ago and hotel employment is down 6,000. Both of those represent employment declines of more than 60% compared to last May and they are nearly 40% of all the jobs lost in the state.
Health care employment is 6,100 less than a year ago and represents 12% of all the jobs lost. Construction employment is down by 4,200 and manufacturing by 3,800. Those two sectors account for another 15% of the year-over-year job decline.
Job losses in five sectors of the economy โ restaurants, hotels, health care, construction, and manufacturing โ represent two-thirds of the stateโs job losses but account for less than half of total state employment.
Some of those jobs should come back quickly. Most of the decline in health care jobs was at health care offices, not hospitals. As doctors, dentists, veterinarians, chiropractors, and other medical professionals reopen their businesses this month, most health care jobs should come back.
With low interest rates, the housing market and public construction projects should also come back, so construction employment this summer should be close to normal. Vermont manufacturing jobs are more highly tied into the national and world economy, and most forecasts call for slower growth for the rest of this year and into next year. So, I expect manufacturing jobs to come back much more slowly.
The big obstacle for a full recovery of Vermontโs job market is at restaurants, bars, hotels, and inns. One issue is when and how the state will lift restrictions on the number of people who can be seated inside restaurants. Another is even if all restrictions were lifted, whether people will want to sit close together inside restaurants.
Similarly, even with extensive cleaning requirements, will as many tourists come to Vermont as in a normal summer, or will they stay home? We already know that no Canadian tourists are coming to Vermont and the U.S.-Canadian border will remain closed at least until July 21. Northern Vermont businesses that rely on Canadians for a large part, or even a small part of their business, will be suffering just from this.
The tourism and hospitality economy will not recover to its previous employment level this year. That means that nearly all establishments will have many fewer employees than normal, and many will not survive the year.
Vermontโs unemployment rate will remain high, and the job count will remain below last yearโs level for at least the remainder of 2020.
