Low unemployment in Vermont now, but is it sustainable?

With the smallest economy among the 50 states, Vermont has a long history of ups and downs when it comes to jobs within its $34 billion economic sphere.

Recent data about the low employment rate in the Green Mountain State — currently the fifth lowest among all states — is a good reason why many state boosters are bullish about the future.

Yet, just like with Vermont’s undependable weather, if you happen to like the state’s current employment data — well, just wait a minute.

Vermont’s employment took nearly 10 years to stabilize following the Great Recession of 2008. Under today’s booming Trump-era economy, the state has benefited with a low 2.1 percent unemployment rate, as of July. But long-term employment prospects may not be so rosy, especially with Vermont’s nagging business costs that are 12 percent about the national average, and “progressive” state policies that penalize businesses partisans dislike.

Wikimedia Commons/Florian

Recent data about the low employment rate in the Green Mountain State is a good reason why many state boosters are bullish about the future.

Even with the rosy employment picture at the moment, Vermont Labor Commissioner Lindsay Kurrle included a cautionary note last week.

“Though our unemployment rate continues to be low, there are a number of Vermont workers looking for more hours or higher-paying jobs,” Kurrle stated in an Aug. 15 news release.

Kurrle reported that in July the lowest unemployment rate, 1.7 percent, was in White River Junction; the highest unemployment rate, 3.4 percent, was in Derby. Compared to other New England states, Vermont faired the best in July.

When you look at the key employment sectors in Vermont, systemic problems remain.

Recently retired UVM economics professor Art Woolf has examined the the state’s ski industry and jobs related to its growth. In June, he offered a long-term prognosis of Vermont’s slopes.

“The ski industry, and Vermont’s winter tourism economy, has a lot to be concerned about. Outside of a few very good years (and a couple of really bad ones) Vermont’s ski industry has been flat since the mid-1980s,” he wrote.

He added that Vermont faces competition from ski resorts in Utah and Colorado, or even winter cruises in the Caribbean, and predicted that “the low single digit growth rates the ski industry has become accustomed to is probably the best it can hope for in the future.”

Public domain

Vermont’s future tourism success will need to branch out beyond luring people to the state’s ski resorts.

The 2018 “Future of Vermont” report by the University of Vermont revealed clouds on the horizon for the state’s formerly robust farming sector.

“Although a reasonable portion (21.6 percent) of Vermont’s agricultural land is conserved,” the  authors state, “we must confront the possibility that much of Vermont’s agricultural land may be underutilized or at risk of being lost, potentially permanently, to development or alternative land uses in the near future.

“The number of agricultural acres in Vermont dropped from 1,315,315 in 1997 to 1,251,753 in 2012; over that same period of time, the number of farms in Vermont increased from 7,063 to 7,338.6 Thus, we are seeing a trend towards smaller farm operations in terms of acreage in active production.”

Tourism has often been Vermont’s ace-in-the-hole. But in a 2015 commentary, Woolf cautioned against relying too much on tourism: “When they are feeling good about their economic future, they spend more eating out and traveling. When the future doesn’t look so good, it’s easy to cut back on that spending. That’s clearly seen in the numbers.”

Even higher education in Vermont has been tarnished with the closing of several private liberal-arts colleges during the past two years. However, unlike those smaller colleges, the University of Vermont, being the largest employer in the state’s higher-ed sector, continues to hire especially within the UVM Medical Center network.

To find a bright spot, some may look to the high-tech job sector and Global Foundries, located in Essex Junction. The business decided to keep the former IBM semiconductor manufacturing plant open after its takeover of IBM’s chip-making operation, for which Big Blue paid out $1.5 billion in 2014.

While no jobs are being lost at the Essex Junction facility currently, Tokyo-based Toppan Photomasks and Global Foundries announced a multi-year supply agreement in which Toppan will provide photomasks (quartz or glass substrates, coated with an opaque film, that rare used in electronics) and other services currently supported by Global Foundries’ Essex Junction plant. As a part of this new agreement, Toppan will acquire some assets of the Vermont facility.

“There will be no impact to jobs at the GF Burlington facility,” last week’s press release states, but are GF officials confident enough to claim that Toppan will never move the photomasking operation to Asia?

According to the U.S. Bureau of Labor Statistics, high-tech jobs have been tapering off in Vermont in recent years. The industry currently comprises 9 percent of private sector jobs in Vermont, which is below the national average. However, the Green Mountain State has shown slow progress in the high-tech area.

John McClaughry, a former state legislator and policy advisor to President Reagan, sees systemic problems affecting Vermont’s long-term economic sustainability, despite the jobs numbers.

“Workforce participation is down,” McClaughry told TNR, “therefore the percentage of those ‘unemployed’ is down because they dropped out and are no longer counted.”

According to McCaughry, there is no silver bullet to reverse Vermont’s low workforce trend. Instead, policy makers should study the reasons behind the trends.

“Why have these men dropped out? Some have fled to the disability rolls, which often accept applicants claiming ‘back pain’ and ‘anxiety’,” McClaughry said. “Some are benefiting from welfare programs that they would lose with rising incomes. Some have given up looking for jobs because they are ex-convicts, and thus hard to hire.”

But others, McClaughry said, have no excuse for being out of the workforce: “Some live in the shadow economy of odd jobs, petty crime, drugs and gambling. Some are just hanging out, sponging, and playing video games.”

Lou Varricchio is a freelance reporter for True North Reports. Send him news tips at lvinvt@gmx.com.

Images courtesy of Wikimedia Commons/UFV Career Fair, Wikimedia Commons/Florian and Public domain

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