Vermont unemployment hits 3 percent, but many unemployed simply not counted

MONTPELIER, Vt. — The Vermont Department of Labor has announced that the state unemployment rate for August is just 3 percent, about the lowest in the past decade. However, that standard statistic leaves out a significant percentage of Vermonters who aren’t working for one reason or another.

This accounts for about a one-tenth of one percentage point drop from July’s 3.1 percent rate, and it’s also favorable when compared to the national rate of 4.4 percent for August.

“Overall, Vermont’s unemployment rate was tied for the seventh lowest in the country,” a press release from the department states.

“As of the prior month’s preliminary data, the Burlington-South Burlington Metropolitan NECTA was the sixteenth lowest unemployment rate in the country for all metropolitan areas at 2.6 percent (not-seasonally-adjusted).”

While the 3 percent rate is positive, the statistic is categorized as the U-3 unemployment rate and does not account for Vermonters who are unemployed but not actively looking for work, or who have found part-time work but seek full time hours. To include those people in the mix, economists look to something called the U-6 alternative unemployment rate, which is often many points higher than the standard rate.

Unlike U-3, the U-6 rate does account for both discouraged would-be job seekers and the underemployed. For the third quarter of 2016 through second quarter of 2017, the Vermont U-6 unemployment rate was 6.6 percent.

There is another reason the 3 percent unemployment statistic may not be all good: Vermont’s  disproportionately small and shrinking population of young working-age people.

“I have heard employers expressing concern about available labor,” Mathew Barewicz, labor market information chief for the Vermont Department of Labor, told True North.

Barewicz said this could be part of a larger national trend first discovered in 2012 when President Barack Obama asked his advisers to examine the contracting labor force.

“They found that over 50 percent at the compression is strictly due to demographics, or retirement,” Barewicz said. “There were also some post-recessionary negative impacts that occurred as well.”

He also said young people are not entering the workforce as fast as they use to. This could be for a variety of reasons, such as increased schooling or choosing to live with parents.

“Young people have a declining labor force participation rate,” he said, adding that Vermont does not have many discouraged workers.

Art Woolf, an associate professor of economics at UVM, agreed that the low unemployment report is not all good news.

“In Vermont we’ve got an unemployment rate that’s low because we’ve got a labor force that’s not growing — it’s actually shrinking,” he said. “So, there’s fewer people unemployed, but there’s also fewer people in the labor force. That’s a problem, and Vermont’s been in that situation for quite a while.”

He said when unemployment gets too low it becomes tough for employers to find workers.

“It means firms are having a hard time finding workers because they are not around, so they are going to have to raise wages, and that’s good for workers. And that will attract people into the labor market that normally wouldn’t have gone in.”

Woolf added that when wages go up, costs of goods and services will likewise increase for consumers. He also agreed with Barewicz that the number of discouraged workers has dropped considerably since the most recent recession.

“In 2009 and 2010 in the depths of the recession, there were a lot of workers who just gave up because they just looked around and things looked awful. You’d be hard-pressed to find a significant number of people today who believe that now,” he said.

Overall, the low unemployment number is a good sign for Vermont.

“When times are really bad and the unemployment rate is shooting up, it tells you a very important story,” Woolf said. “But when it’s low you have to ask yourself other questions, you have to look at other measures of the economy.”

Michael Bielawski is a reporter for True North Reports. Send him news tips at and follow him on Twitter @TrueNorthMikeB.

Image courtesy of Wikimedia Commons/Public domain

One thought on “Vermont unemployment hits 3 percent, but many unemployed simply not counted

  1. “Overall, the low unemployment number is a good sign for Vermont.” Not sure that is right. Lot of people love welfare which is generous in Vermont. They won’t show up in the unemployment rate. Others work under the table and do not seek unemployment. Lots of people leave because they can’t afford to stay here. I know several in my neighborhood. We attract the very wealthy who can afford our ultra-liberal state and the very poor who come for the welfare. We drive out the rest in the middle- unless they work for the government, which is our largest industry. I may be wrong, but it seems to fit what is happening.

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