Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.
In what is now one of our least informative economic indicators, the state reported Vermont’s October unemployment rate was 3.2%, not too much higher than the record low levels Vermont experienced in the two years before the pandemic struck. And only Nebraska had a lower rate than Vermont. Good news? Anyone who thinks Vermont’s economy resembles what it looked like 10 months ago has probably been living in a hobbit hole in the Shire.
A better, and more informative measure of the health of the state’s economy is the 286,600 workers Vermont employers reported on their October payrolls. That’s 26,100 fewer than were collecting a paycheck in February.
To put that in perspective, during the Great Recession of just over a decade ago, 5% of Vermonters who were collecting a paycheck at the start of that recession had lost their jobs when the economy bottomed out. Today, job losses are over 8%, so we are still in worse shape today than we were at the bottom of the last recession.
Although Vermont’s unemployment rate may look good compared to other states, it’s just the opposite when we look at jobs. Vermont payroll employment is 29,500 less than it was a year ago. Moreover, in percentage terms only two states, Hawaii and New York, have fewer jobs than one year ago.
Having said that, the jobs picture is somewhat brighter than it was in September, and that continues the pattern of the previous five months. The state’s employers added 600 jobs in October, with government losing 1,000 and the private sector adding 1,600. Half of the job loss in government was at the federal level, probably because temporary Census Bureau workers lost their jobs as the Census count wound down (we will know the actual number of Vermonters in 2020 at the end of December, when the first wave of Census population numbers will be released).
There was some other positive news in the data release. Job gains in Vermont were widespread, with nearly every private subsector of the economy adding jobs. The only parts of the private sector economy losing jobs in October were wholesale trade, health care and private education. It’s not clear why health care employment fell, but that’s likely to be reversed next month and in the future. The decline in private education is most likely due to financial pressures on private colleges. Increased Covid-induced costs has led them to cut other expenses, including labor.
The bottom line is that the Vermont economy is still in slow recovery mode. Employment over the next few months will be determined by whether the infection rate rises and how the government responds. It’s likely that there will be another round of federal relief money to individuals and states early next year and by mid-year the economy should be improving as Vermonters begin receiving one of the new Covid vaccines.
But don’t look for any of that as a miracle cure. Vermont is in for a long period of sluggish growth and it will take years for employment to return to normal levels.
