Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.
Vermont’s unemployment rate fell by more than one percentage point in July to 8.3%, two points below the U.S. July rate and half of what it was in April. That’s a sign of an improving economy.
Still, more than 28,000 Vermonters are officially counted as unemployed, up from 8,150 one year ago and the unemployment rate is still higher than at the depths of the Great Recession in 2009, when it peaked at 6.9%.
We still have a long way to go to get back to what the economy looked like before the pandemic hit the state and nation. In February, Vermont’s unemployment rate was 2.4%. Although official state unemployment rates go back only to the mid-1970s, it is safe to say that Vermont’s rate has not been this high since the Great Depression of the 1930s.
The state’s employers added 5,000 workers to their payrolls in July, bringing total Vermont employment to 278,700. That’s 36,000 fewer than in February. Looking at it in a larger perspective, Vermont’s economy has lost all the jobs employers have created since 1997.
It won’t take 23 years to regain all those jobs (although there is a case to be made that due to our changing demographics, Vermont will never get back to the peak number of jobs we had last year). Although no major Vermont industrial sectors have recovered all the jobs lost during the pandemic, some are getting close to their pre-pandemic levels.
Others, however, are far from where they would be in normal times. The construction industry, which would normally have about 15,000 people working, has only 10,000. Manufacturing is down about 3,000 jobs, or ten percent below where it would normally be in the summer. Retailing has recovered a lot of the jobs lost when almost all retail stores were shuttered, but it is still 3,000 jobs short of where it was a year ago.
The hardest hit sectors are accommodations—hotels, inns, bed and breakfasts—and restaurants and bars. Hotels have 5,600 fewer jobs than they had a year ago, which is more than a 50% loss. Restaurants and bars are down by nearly 10,000, a nearly 50% decline.
Both of those parts of the economy are most affected by the decline in tourism. And the restaurant sector is doubly affected because many Vermonters are reluctant to eat out and be close to other people. Add to that the government-imposed restrictions on the number of customers who can be served inside of a restaurant and it’s easy to understand the dire condition of most restaurants and bars, and especially of their employees.
Vermont’s economy is still improving. The number of people applying for unemployment insurance is half the level it was three weeks ago and lower than at any time since early March, although it is still twice the level of a year ago. That’s a sign that firms are healthy enough to keep most people on their payrolls and they think the future looks better than the past.
The number of people receiving unemployment insurance benefits is also falling. Last week, 30,000 Vermonters received state unemployment benefits, down from 40,000 at the end of June and 60,000 in late April and early May.
Barring a major change in the pandemic’s severity, Vermont’s unemployment rate should continue to fall in August (we won’t know until the numbers are released in mid-September) and I think we will see employers add another 5,000 to 10,000 workers to their payrolls this month.
