Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.
Vermont’s just-issued January unemployment rate of 3.2% remains low, and it also continues to be a misleading indicator of economic activity and the health of the state’s labor market.
There are much better indicators of how poorly the state labor market is doing and how far we are from normalcy.
The number of workers on employer payrolls increased in January — a good sign — but Vermont employers had no more workers on their payrolls in January than they did in September.
When the full impact of Covid hit the economy in April, employers shed 61,000 jobs in one month, nearly one in five employed workers. By August, more than half of them had returned to work — but for the past five months there has been no job improvement.
Job losses are still widespread — no sector of the Vermont economy has more jobs now than in pre-Covid March 2020. The private sector has 20,000 fewer jobs than last March, and more than half of that decline is in the leisure and hospitality sector — bars, restaurants, hotels and inns. Total employment there is still 30% below what it was last March.
Unlike past recessions in Vermont, the government sector also has a lot fewer jobs than one year ago. State government is down 1,400 jobs and local government is 3,400 below its March 2020 level.
Nearly all the state government decline is from job losses at state colleges and the University of Vermont. It’s possible that many of those are student work-study jobs, but it’s impossible to know if that is indeed the case. Local government job declines are also primarily in schools, not in other parts of local government.
Moreover, there are still 26,000 Vermonters who are getting some form of unemployment compensation from state and federal sources, and 9,000 more formerly self-employed workers who were not eligible for traditional unemployment but are getting special benefits from federal relief bills passed in the past 12 months.
That’s 35,000 Vermonters getting checks, a huge number by any historical comparison and, unfortunately, a number that has not come down since last fall.
Vermont’s employment numbers remain worse than most states. While all states except Idaho had fewer jobs in January 2021 than in January a year earlier, Vermont’s 8.8% job loss is eighth-worst in the nation.
There are two worrisome implications of the newly released data:
- First, Vermont continues to have a bigger job loss than most other states.
- Second, the state job recovery has essentially been frozen since last fall.
Three factors will help undo those. More Vermonters are getting vaccinated, and that should help local businesses as people begin to feel more comfortable about eating out and shopping more than they have over the past 12 months. And the state has been relaxing some of its guidelines on businesses, especially in the hospitality industry. That should help workers in the most hard-hit industry in the state.
And, with more than $1.2 billion in federal relief money coming to Vermont, at least some of that should start circulating in the economy and translate into job growth.
Summer is fast approaching, and it remains to be seen how many out-of-state tourists will show up, whether they will want to patronize restaurants and bars, and what restrictions the state will maintain on out-of-state tourists and on restaurant capacity.
The bigger picture is to what extent and how fast the national economy improves, which will affect manufacturing employment, still down by more than 1,000 jobs. It’s unlikely state and local government losses (primarily in education) will be reversed before the school year begins in the fall, so that won’t be any source of near-term job growth.
At best, we will see slow job growth this summer. But Vermont is unlikely to get back to our pre-Covid level of employment anytime before 2022. And my best guess is that it won’t be until at least one year after that, if it happens at all.
