Woolf: Vermont’s low unemployment rate tells only part of the jobs story

One area of job growth was in firms that specialize in shipping goods, including FedEx and UPS, because of the significant increase in online shopping, Creative Commons photo

Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont. 

Vermont’s economy continues to improve, but if this was a race, we’d be running neck and neck with a snail. The state’s employers added 1,700 jobs in November. While that’s better than October’s increase, the pace of monthly job gains has slowed from the late summer and fall, and the state still has 26,000 fewer payroll jobs than in February.

Moreover, there are only a handful of industries that have more employees than one year ago. Given the huge increase in online shopping, it’s not surprising that there are 300 more jobs in firms that specialize in shipping goods, including FedEx and UPS. 

The professional and business services sector has 400 more jobs than a year ago. But that’s more than explained by the 600 additional jobs at firms that specialize in cleaning services. That’s also not surprising, given the enhanced cleaning that offices are doing to enhance employee and customer safety. The rest of the business and professional services sector — including jobs at law and accounting firms, architects, engineering services, and the like — are still behind last year’s job level. 

So, there are 1,000 more jobs that we can directly attribute to the pandemic. And more than 25,000 fewer jobs that we can also attribute to the economic fallout from Covid. 

The unemployment rate, just like last month, continues to not reflect the true state of the economy. At 3.1{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} Vermont is tied with Nebraska for the lowest rate in the nation and we are only slightly above the rates that prevailed throughout 2019. 

But that is only because of quirks in how the unemployment rate is measured. A more realistic and accurate reflection of the health of Vermont’s economy is that Vermont’s labor force is still far below what it was pre-pandemic. Indeed, Vermont currently is experiencing the second worst labor force decline in the nation over the past 12 months. Only Iowa has a larger percentage decline than Vermont. And not all states have experienced a labor force decline as a result of the pandemic. One-quarter of the states have a larger labor force than a year ago. 

More than 20,000 laid-off Vermonters are collecting unemployment benefits. Roughly half get traditional unemployment, which lasts for 26 weeks and is funded from the state’s unemployment insurance trust fund. That trust fund, paid for by a payroll tax on employers, had a balance of $512 million one year ago. Today it has half that amount.

Another half of the unemployed, those who were laid off more than 26 weeks ago — in late May or early June — were getting extended benefits. Those federally funded benefits end this week.  

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Those numbers do not include 8,000 self-employed Vermonters who lost their livelihoods and are receiving special pandemic unemployment benefits from the federal government. That program ends at the end of next week unless the federal government passes a bill to extend them. If neither program is extended, nearly 20,000 Vermonters will lose their benefits, which average about $330 per week. 

The pace of job recovery in Vermont has slowed considerably in the past few months. If job growth continues at October and November’s pace, the state won’t have a full job recovery until the end of 2022. If 20,000 Vermonters lose their unemployment benefits, that won’t be good for the state economy, and it will be devastating for those Vermonters and their families.

On the positive side, as more and more people in Vermont and the region receive vaccinations, that should help boost Vermont’s economy. But it’s unlikely that enough vaccines will be available to have a tangible economic effect until this summer. Until then we shouldn’t expect much in the way of good economic news.

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