Vermont has the lowest unemployment rate in the nation, but some able-bodied Vermonters still are not joining the workforce for a variety of reasons — including fear of losing welfare benefits.
The state’s unemployment rate for October was just 2.2 percent, the same as the month before, and lower than the 2.6 percent rate from October 2018. The Green Mountain State compares favorably to the national average of 3.6 percent.
However, the recent report by the Vermont Department of Labor indicates that the state added fewer new jobs than was expected.
“Demographics continue to be Vermont’s biggest challenge,” Acting Labor Commissioner Michael Harrington said in a written statement announcing latest numbers. “This month’s Jobs Report shows a continuation of the unprecedented low unemployment rate, prolonging the struggle for employers. Because of this, it is critical for the Department of Labor to engage with employers and jobseekers early to be able to link skill with need.”
Despite the low unemployment, there are more potential workers out there for employers to seek than the report suggests.
The U-3 metric for reporting unemployment is the official unemployment rate, but it counts only workers who are actively seeking employment. That statistic ignores part-time workers who would like full-time work, and it also excludes “discouraged” unemployed persons who have quit looking for a job.
An alternative measure of unemployment, the U-6 rate, tells a different story. The U-6 rate counts both underemployed individuals and also discouraged unemployed persons who aren’t actively seeking a job.
In Vermont, the U-6 unemployment rate is 5.3 percent.
According to Mathew Barewicz, Vermont’s Economic and Labor Market Information chief, that includes Vermont’s 8,200 “involuntary part-time workers.” Some of these people are part-time because they are not being offered more hours, and others are working part-time for “economic reasons,” Barewicz told True North.
The U-6 number also includes about 500 “discouraged” Vermonters — unemployed people who have stopped looking for a job.
“They believe that there’s no work out there for them and so they’ve given up looking,” he said. ” … That could be maybe because they are in a remote part of the state, and maybe they don’t have transportation.”
Another alternative metric, the U-5 rate, counts total unemployed, plus discouraged workers, plus all other marginally attached workers. This statistic includes about 2,600 people, including the 500 discouraged Vermonters who have given up looking for a job.
“This means there are about 2,100 people who are marginally attached to the workforce and are basically saying they haven’t been looking for work recently, they might not be able to accept work if offered,” Barewicz said. “These are people potentially with barriers to employment.”
He said these people may be single parents, those taking care of the elderly, or people with health issues.
“There’s something that would put them in this basket where they, in essence, want work but they cannot accept work,” he said.
But another factor affecting who looks for work is welfare. Vermont’s welfare spending ranks fourth in the nation. The Green Mountain State spends $2,842 per capita, and $1.77 billion in total. How this impacts unemployment has to do with “benefits cliffs,” or situations in which gaining employment or additional pay results in losing one’s welfare benefits.
A 2017 UVM study explains how Vermont attempts to deal with this challenge.
“Vermont has been taking strides to smooth the benefits cliff, so that recipients of social assistance programs — Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Medicaid, and Unemployment — have the supports necessary to gradually lessen their reliance on public assistance, while increasing their income and wage-earning hours,” the study states.
Barewicz says his office doesn’t have data on how the benefits cliff affects unemployment data, but he said it’s a real issue.
“It’s difficult for a federal survey to collect information from people who’d be willing to share that, but having worked at the Department of Labor, I’ve heard the commissioner in conversations with employers who have said some similar things where an employer was willing to promote or offer more hours and the individual refused,” he said.
He added that he can’t be sure if such individuals are refusing jobs or more hours because of how it would affect their welfare benefits.
“It really comes down to the mindset — is that an economic reason in their mindset?” he said.
Labor Commissioner Harrington states he’d like to see more Vermonters get back to work through involvement in the State Registered Apprenticeship Program. There are at least 28 registered apprenticeship programs with more than 350 employers, and more than 2,000 apprentices were enrolled in the past year.
“If you are an employer with open positions, please consider one of our existing programs or creating your own registered apprenticeship program, and if you are looking for work, there is no better time than now to expand your skill base,” he said.