Transcript Jobs & the Economy - Ethan Allen Institute

Jobs & the Economy:
The Truth Behind the
Numbers
Or How I Stopped Worrying And Learned To Love
Vermont’s Low Unemployment Numbers
Unemployment In
Vermont: The Real
Story
In other words, the story the Shumlin administration is
not telling you.
Total NonFarm Employment 2000-2014: Annual
Averages
310,000
308,400
308,000
307,700
307,200
306,600
306,000
306,000
305,500
304,300
304,000
303,000
302,100
302,000
300,500
300,000
299,300
299,200
298,700
298,000
297,900
297,200
296,000
294,000
2014 Data
through
June 2014.
292,000
290,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: BLS.gov - ESTABLISHMENT DATA, STATE EMPLOYMENT, SEASONALLY ADJUSTED
2011
2012
2013
2014
Total NonFarm Employment and Vermont Population Growth
Vermont Population Growth
Total NonFarm Employment 2000-2014: Annual
Averages
630000
310,000
625000
308,400
307,700
307,200
308,000
306,000
306,600
306,000
305,500
303,000
620000
615000
302,100
300,500
300,000
298,700
298,000
626630
304,300
304,000
302,000
625741
610000
299,300
299,200
297,900
297,200
608808
605000
296,000
600000
294,000
292,000
20
14
Da
ta
595000
2000
290,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2010
2013
Total Employment: Warning Signs
•Even though the recession was said to have “ended” in 2009, Vermont’s employment
levels haven’t returned to their pre-recession high in 2007. Vermont still has roughly
2,000 fewer employed now than in 2007.
•Vermont’s population increased by roughly 17,000 between 2000 and 2010.
Vermont’s employment numbers between those same dates was 298K and 297K,
respectively. Even if half that population growth was adult-aged people, 8,000 or so,
there was no net increase in employment in that same time period.
•Higher population numbers and the same employment numbers means fewer people
are working as a percentage of the population, which means they are retired or living
on some other source of income.
Vermont’s Employment Outlook
The Vermont Department of Labor periodically publishes a short-term employment
outlook. The July 2014 projections show where the state expects job growth to occur,
by number of jobs, and by industry. So where can Vermonters expect to find future
employment? Here’s the top 10:
Only 1 of the top10 occupations
projected to have the most
openings requires a college
degree.
The 2nd-highest occupation is
personal care aides, which reflects
Vermont’s demographic mix of
fewer young people and a growth
in the overall percentage of
retirees.
Vermont’s Employment Outlook
And 11-30:
The total projected openings for
2015 is 12,010, the bulk of which
are service positions.
Why Is Employment So Slow To Grow?
There are many reasons why Vermont’s employment picture is a grim one, but let’s
take a look at a few indicators.
Forbes ranked Vermont the 44th Worst State For Business in 2014.
A 5-Year Annual GSP Growth rate of
0.0% is not an outlook conducive to
hiring. Even with some Vermont
companies expanding, like Keurig
Green Mountain, the net outlook for
growth is zero.
Gross State Product: Top 10 Components
According to the 2010 U.S. Bureau of Economic Analysis
report, Vermont's gross state product (GSP) was $26
billion. Not accounting for size, this places the state 50th
among the 50 states. It stood 34th in per capita GSP.
Government – $3 billion (13.4%)
Real Estate, Rental and Leasing – $2,6 billion (11.6%)
Durable goods manufacturing – $2,2 billion (9.6%)
Health Care and Social Assistance – $2,1 billion (9.4%)
Retail trade – $1,9 billion (8.4%)
Finance and Insurance – $1,3 billion (5.9%)
Construction – $1,2 billion (5.5%)
Professional and technical services – $1,2 billion (5.5%)
Wholesale trade – $1,1 billion (5.1%)
Accommodations and Food Services – ~$1 billion (4.5%)
Source: http://en.wikipedia.org/wiki/Vermont
The largest component of GSP is
government – which is paid for by the
taxes generated in private sector
income. This is the very definition of
being upside-down. If government
dominates the economy, where will
private-sector economic growth come
from?
Vermont: Most Costly State for Manufacturing (2010)
Which might help explain why it’s
difficult to attract and retain
manufacturers here.
Source: http://www.pbn.com/Rhode-Island-third-most-costly-state-formanufacturers-says-UConn-study,52269
Vermont: 3rd-highest in Property Taxes (2010)
This additional cost of home ownership
is near the highest in the country, and
with income sensitivity, many retired
homeowners now pay a decreasing
percentage of the overall property tax
collected. This means the burden falls
on an even smaller group of people,
with a median household income at a
far remove from 3rd-highest in the
country.
Source:
http://taxfoundation.org/article/source
s-state-and-local-tax-revenues
Vermont Income Levels
In 2013, Vermont had a total personal
income (TPI) of $28,688,723*. This TPI
ranked 50th in the United States . In
2003, the TPI of Vermont was
$19,686,122* and ranked 48th in the
United States.
*Total personal income estimates are in
thousands of dollars, not adjusted for
inflation.
Components of Total Personal Income
Total personal income includes net
earnings by place of residence;
dividends, interest, and rent; and
personal current transfer receipts
received by the residents of Vermont
Source:
http://www.bea.gov/regional/bearfacts/action.cfm?geoType=3&fips=50000&areatype=50
000
Vermont ranks dead last in total personal
income. Without income, there’s no
spending, and with no spending, there’s no
economic activity. Vermont’s dreary
economic outlook is tied directly to this
reality.
Median Household Income Declining (2013)
Vt. Median Income Declines
Residents Earn Less Than a Decade Ago
Recent U.S. Census Bureau figures show Vermont’s median household income continues to
decline.
In fact, when inflation is factored in, Vermonter’s are earning less in real dollars than they were a
decade ago.
According to this month’s census data, the 2012 median income in Vermont was $52,977, which
means half of Vermont’s household earned above that figure and half below.
When inflation is factored in, the Census Bureau says Vermonters earnings have actually
declined — and while the recession has been a factor, the trend was under way even before that.
The decline in the past 12 years is about 1.6 percent.
“For low- and middle-income Vermonters, they’re essentially being pushed back in two ways,”
said Paul Cillo, executive director of the Public Assets Institute.
“One is that their incomes aren’t keeping place for inflation, and the other is that their costs for
essentials are going up faster than inflation; things like food and fuel, health care, college
education.”
http://www.vnews.com/news/state/region/8704977-95/vt-median-income-declines
Why Is Vermont’s Unemployment Rate So Low?
Vermont currently has one of the lowest unemployment rates in the country – even if the household incomes are
low, and job prospects are mostly in the service industry – but why would Vermont’s rate be so low if the
employment prospects are that grim?
There’s one answer: Labor force participation.
In 2013, the total labor force declined Jan-Dec by 2,650 participants. Total employment reduced 1,900 positions.
But since the number of participants is larger than the number of positions, the unemployment rate declined. It’s
all about the numerator. So the unemployment rate improves while the number of people actually employed
decreases.
Why Is Vermont’s Unemployment Rate So Low?
The same effect goes back to 2012 and prior years – the labor force shrinks
faster than the number of employed shrinks, and you have a continually
reducing unemployment rate. But you have fewer and fewer Vermonters
who are actually employed.