Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.
The monthly Vermont Department of Labor employment report sent some very mixed messages about the Vermont economy. We had the third lowest unemployment rate in the nation, but the state also has the third biggest year-over-year job loss of any state.
Vermont’s September unemployment rate notched down to 4.2% from August’s 4.8%. Only Nebraska and South Dakota have lower rates, and Vermont’s rate was nearly half of the U.S. level of 7.9%. At the peak of the pandemic’s economic impact, in April, the state’s unemployment rate was four times its current level.
That month was also the peak of the pandemic’s health impact. On March 31, 13 Vermonters had died of Covid-19. By the end of April, deaths stood at 49. As of today, more than five months later, the total death toll is 58.
We should not be too optimistic about the low unemployment rate. Due to these unusual times the unemployment survey miscounts some people who are truly unemployed. The survey’s questions, and the way people answer them, don’t tell us all we need to know about the economic hardship Vermonters are facing.
Vermont’s labor force, the number of people working or actively looking for work, fell by 1,900 people in September. That means some people just gave up looking for work. The number who said they are working also fell, by nearly 1,000. Neither of those are signs of a healthy economy.
The number of people on employer payrolls did rise in September, by 2,800, which is a good sign. But the total number of jobs in Vermont is still nearly 10% below what it was a year ago, the third worst performance in the nation. Only Hawaii and New York are farther below their year-ago employment levels.
Of the nearly 30,000 jobs that have not been replaced, 13,000 are in the leisure and hospitality sector — bars, restaurants, hotels, inns and recreational facilities. Nearly one in three jobs that existed in those industries one year ago do not exist today.
The other industry with a major job hole to fill is construction, with 4,200 fewer jobs than a year ago, a decline of more than 25%. News reports are full of stories about increased sales at home improvement stores, shortages and rising prices for lumber, and the surge in home remodeling activity.
Why isn’t that showing up in rising construction employment? One reason may be that increased residential construction activity is more than offset by a decrease in commercial construction. Given the large number of employees working remotely, businesses are reluctant to invest in new facilities and developers aren’t committing to new office buildings. If that is the future, it portends a major shift not just in construction employment, but in the patterns of economic activity that have been with us for decades. It’s likely, then, that construction activity and employment will be depressed for several years.
Similarly, the lodging and restaurant industries are unlikely to get back to previous employment levels for a long time. With restrictions on the number of customers eating inside, and the coming cold weather reducing — indeed eliminating — the number who can eat outside, restaurants and bars won’t be adding workers. Many will likely go out of business.
And although hotels may be buoyed by the coming ski season, that’s still two months away, and it’s not at all clear how many people will be coming to Vermont to ski. And business travel is still, and will be, significantly depressed for quite a while. Vermont’s tourism and travel sector is in for a winter of tough sledding.