Worker Shortage Is Suppressing Vermont Job Growth, Economists Say

Published: 11/24/2018 11:23:55 PM
Modified: 11/24/2018 11:23:56 PM

At its peak before the last recession started, Vermont’s construction industry counted 22,000 employees. Nowadays, there are only 15,000 workers in the industry — 30 percent less than at the peak — and Vermont construction companies are advertising 200 immediate job openings statewide, according to the state’s general contractors.

Economists say that’s one of the reasons Vermont this month ranked at the very bottom of the scale in a report on job growth from the president’s Council of Economic Advisers.

In a table showing labor market strength, the report, released in mid-November, showed payroll employment growth of 1.2 percent for the nation overall. Nevada was the highest at 3.4 percent growth; Vermont and Alaska tied for the bottom at around minus-0.1 percent.

Vermont economists and others agreed that the state’s very low unemployment rate, now around 3 percent, is one factor likely suppressing economic growth.

Vermont has been losing jobs since the summer, said Art Woolf, who is an associate professor of economics at the University of Vermont. Woolf said the state has lost 3,400 jobs, a little more than 1 percent of the total, since July.

“Essentially, we’ve kind of erased all the job gains in Vermont that we’ve had over the last 2½ years over the last four months,” he said.

Woolf blamed Vermont’s demographics.

Vermont’s population is the either oldest or second-oldest in the country, depending on the source of information, meaning many people are retiring right now; and Vermont has one of the lowest birthrates in the country, meaning there are fewer young workers to replace them.

Vermont’s population decline is well-known, and the Vermont Department of Economic Development has taken steps to address this with programs that encourage people to move to Vermont.

Woolf said migration into Vermont also is suppressed by high taxes and a housing shortage that drives up prices. The state could be doing more to address that, he said. With labor and materials costs similar to those in other states, “something else is driving housing prices, and that’s land development and permitting.”

State officials also blame the worker shortage.

“The tight labor market in Vermont is what you are really seeing in this data,” said Lindsay Kurrle, commissioner of the state Department of Labor. Most states are seeing worker shortages, but the problem is particularly severe in Vermont because of its small population and its unemployment rate, which has been at or below 3 percent for nine months. The national unemployment rate is 3.7 percent.

“We have less than 10,000 people who are actively trying to find a job, so you don’t have the resources to fill vacant jobs,” Kurrle said. She said her department is trying to recruit people who traditionally run into barriers to employment, including job-seekers with disabilities, people who were incarcerated and people who live in very rural areas.

“It’s really hard to move the needle because you’re really working on the hardest to employ,” she said.

While many of the state’s employers cite the high cost of housing as a barrier to recruiting workers from elsewhere, Kurrle downplayed that issue.

“We do have people who will say we have a lack of housing, and that depends on how you look at it,” she said. “There was a time when more people lived under one roof, and then shifted to a couple of people in a bigger home. We may see people trending back toward people sharing space and things like that.”

Matt Musgrave, the lobbyist for the construction industry trade group Vermont Associated General Contractors, said the state’s employers expect they’ll need another 2,000 workers in the next 12 to 18 months. Vermont AGC is working with the state college system to steer people toward training. As young people gravitate toward STEM jobs, Musgrave said, construction companies will try to interest them in new technical jobs in building.

“You have really tech-savvy people coming out of school,” he said. “The need for technology is growing because automated systems are coming into the industry. That’s an opportunity we have to maybe bring some more folks into the fray.”

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