Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.
The top-line numbers from this month’s Vermont Department of Labor jobs report look good. Vermont’s unemployment rate notched down to 2.9%, only slightly above where it was one year ago, before the Covid-19 recession began.
Vermont’s March jobless rate, along with Nebraska, South Dakota and Utah, was the lowest in the country. By comparison, the U.S. rate was twice as high at 6%.
Another piece of good news: Vermont employers added 1,600 jobs to their payrolls last month, which means more people are employed at any time since the recession began last March.
That’s where the good news stops. Looking at the bigger picture of the state’s economy, at least through the lens of these labor force and jobs numbers, presents a much more negative view.
Even though Vermont employers added jobs in March, the job picture remains grim. After losing 61,000 jobs between March and April of 2020 — the largest monthly decline in history — Vermont’s employers brought back 36,000 workers over the next five months.
But since September there has been virtually no job growth in the state. That month, 287,800 people were working at the state’s private, public and nonprofit employers. Last month, that number stood at 288,700, a gain of less than 1,000 in six months.
Vermont’s total employment is still 8.6% below what it was a year ago. Only four states — Hawaii, Nevada, New York and California — are worse than Vermont. To put that in some perspective, during the worst of the Great Recession of 2008-09, Vermont employment fell by 4.2%. The national economy is recovering, but Vermont’s employment loss is still more than twice what it was then.
Although Vermont’s unemployment rate is low, a record number of Vermonters are receiving unemployment benefits. (For technical reasons, the way the unemployment rate is measured has serious shortcomings when unemployment is caused by a very unusual event like the pandemic.)
As of mid-April, 22,000 formerly employed Vermonters are receiving unemployment checks, and another 9,000 self-employed people, who would not normally be eligible for benefits, are receiving checks from a special federal program called Pandemic Unemployment Assistance.
Despite an unemployment rate not much different from that of pre-pandemic days, 31,000 Vermonters are receiving unemployment benefit checks. That compares to about 5,000 people before the pandemic hit. And the number of people receiving benefits has barely budged since last fall.
As measured by jobs and the number of people receiving unemployment benefits, the Vermont economy has been stagnating for the past five or six months. At the same time — although we don’t have any hard data on this — it appears that Vermont employers are looking for workers but having a hard time filling job vacancies.
What accounts for this discrepancy? I can think of a few possible explanations.
- Some Vermonters would like to work but are afraid of contracting Covid-19. If this is the case, many should return to the labor market as more and more people are vaccinated.
- Parents of school-age children are having a difficult time juggling work schedules, given the erratic nature of school openings and closings, and have to stay home to take care of their children. But that’s also the case in many other states, so it doesn’t explain why Vermont has had one of the weakest job recoveries in the nation. Moreover, Vermont has proportionately fewer children than most states, so that reason should not be as important here as in most other states.
- In the past, to receive unemployment benefits, a recipient had to be looking for work. That requirement was waived during the pandemic in nearly all states, but many states have now reinstituted that requirement. Vermont has not.
- The average unemployment benefit in Vermont is about $340, with an additional $300 federal supplement. That’s $640 per week. After accounting for Social Security and Medicare taxes on wage earnings, an employer would have to pay someone about $17 an hour for that person to be earning as much as he or she would get from unemployment. If an employer offered $18 an hour, the average unemployed Vermonter would essentially be working for $1 an hour more than they could earn by not working. That’s not much of an incentive to return to work.
If the high level of unemployment benefits explains why so many people are not returning to the job market, we won’t see much of a change until the $300 federal supplement ends in September. After that date, the economic benefits of working should prompt a lot of people to fill those positions Vermont employers are advertising. In the meantime, expect to see a high number of people getting unemployment benefits, a weak or nonexistent job recovery, and lots of “help wanted” signs.
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