On January 2, 2019

The particularities, pitfalls and promise of Vt’s labor market

By Anne Wallace Allen/VTDigger

As chief of the Vermont Department of Labor’s economic and labor market information section, Mathew Barewicz is in charge of collecting and interpreting federal and state employment data for policymakers, job-seekers and the public.

Among other things, Barewicz is the researcher on a project partnering with the McClure Foundation aimed at showing prospective workers some of the careers that might be suitable for them. The department creates data every two years for a pamphlet called “Pathways to Promising Careers” that categorizes jobs by pay, projected openings, and skills required.

Barewicz is a state employee in a federally funded position who tries hard to stay apolitical; he’s now working in his third administration.

Q&A with Mathew Barewicz

VTDigger: Finding workers seems to be the number one concern of most Vermont businesses. What is going on?

Mathew Barewicz: I’ve never seen employers more willing to discuss what their open positions are. They’re maybe looking at the duties differently, maybe creating two part-time positions for one job, looking at internships and mature workers or people who have had a gap in employment. Labor is a scarce resource.

Different parts of Vermont are experiencing this economic expansion differently. This economic expansion is urban-based. That’s part of the national conversation, not just in Vermont. In Vermont, a lot of our economic activity over expansion has been concentrated in the Burlington area. We’re seeing more rapid aging of the populations in rural areas, more retirements in those areas, and the contraction of the labor force is occurring more in more rural parts of the state.

The Bureau of Labor Statistics is projecting declining labor force participation rates across all ages and genders. BLS just says, “Here’s our forecast.” We’re left asking why. For mature workers, it could be they’re transitioning out of the workforce.

The 25- to 54-year-olds also have a declining labor force participation rate. A lot of research is going on there. We haven’t seen that decline in the state of Vermont.

The 16- to 24-year-olds have had a declining labor force participation rate since the 80s. It could be they are getting more post-secondary education, or participating in extracurricular activities, or their household structure doesn’t have the economic necessity that used to occur. There are a lot of different explanations. But the outcomes for those who delay their entry into the labor force is significantly worse than for those who get early exposure to careers.

VTD: So is the Vermont labor situation any different from that in other states?

MB: There is a higher concentration of manufacturing employment in the Vermont economy than the U.S. economy, by percentage. And the unemployment rate is lower than in other states. The labor force participation rate is higher, and that is typically correlated with higher educational attainment.

VTD: Is pay rising in Vermont as a result of the labor shortage?

MB: Yes. We have a 4.1 percent increase in average wages year-over-year in Vermont for quarters one and two of 2018 compared to the same quarters in 2017. The annual increase, typically a more stable metric, shows a 2.5 percent increase in the average wage from 2016 to 2017.

As the competition for labor increases, employers will have to look at their total compensation package to see how they can be more competitive, whether that’s wages, benefits, or providing flex time.

For certain employees, some wages might be lower. This wage competition isn’t universally distributed.

VTD: When is this expansion going to end?

MB: There’s no way to know. Every economist has their statistics. We’re a small state, so as the country goes, so do we. During economic downturns we don’t get as cold; during upswings we don’t get as hot.

A lot of people think of Vermont as being overly reliant on certain industries, like leisure and hospitality or agriculture, but we actually have a quite diverse and balanced industry profile in our economy, including a high concentration of manufacturing and government employment that includes public education. The Canadian border gives us a lot of federal employment.

With our diversity, even our leisure and hospitality industry does not act like traditional leisure and hospitality in other states where it is boom and bust. Because of our proximity to population centers including Boston and New York, plus when the dollar is weak Canada, our leisure and hospitality employment over the business cycle is much flatter than other areas.

The things that will cause the greatest fluctuations in our leisure and hospitality is weather.

Because of that, we have a balance. During the downturn of this last recession, the US economy lost six out of every 100 covered employment positions, and Vermont lost four out of every 100. That’s evidence that we don’t get as cold during downturns, but during economic recovery, the U.S. started growing at a much faster rate than the Vermont economy did. Vermont’s rate of growth is much lower than the rate in the U.S. right now as they continue to heat up.

VTD: What is going to be the long-term impact of this expansion on Vermont?

MB: When you look at this last round of economic expansion, there is a greater amount of economic activity in the urban areas. The rural areas are starting to wonder where their economic niche is, what their long-term plans are.

I’ve been spending more time in southern Vermont, and they are raising these questions. They have 11 years of little to no job growth. In Bennington County, in percentage terms there are 6.5 percent fewer employment opportunities than at the peak before the downturn, in 2007. Windsor, Windham, and Rutland counties are also down.

There are only a couple ways you grow GDP: Natural resources, population growth, and then a blend of technology, human capital, and then innovation to improve productivity. If you’re looking at southern Vermont, if you discount natural resources, we haven’t found anything new or thought of new ways to use it. A lot of these counties are experiencing a downturn in population, and coupled with demographics it will create a challenge for employers who are trying to recruit and hire.

VTD: What’s the solution to all this?

MB: We’re small and nimble and can potentially position ourselves very well. We need to change our conversation about what employment opportunities are. Just because a job isn’t right for you doesn’t mean it’s not right for someone else.

There is still a stigma around career-technical education. There’s a blueprint of four-year college for all; we still have a hangover from that narrative. But there are some tremendous opportunities that don’t necessarily require a four-year degree.

You can get valuable experience moving to an urban area, but in Vermont you’ll get greater career exposure faster than if you are pigeonholed in one job and told to do that same job every day. In a large company that’s what happens. In Vermont, we need someone to do marketing, help out with delivery, logistics, human resources, web design – you’re able to expose yourself to different things.

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