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New York, Vermont have vastly different unemployment rates

New York, Vermont have vastly different unemployment rates

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The latest employment numbers come out on Friday and, if they follow the trend of previous months, New York will have one of the highest rates of unemployment in the country.

However, right across Lake Champlain, Vermont is reporting one of the country’s lowest levels of joblessness at 2.9%; an enviable rate at any time.

But it turns out those numbers don’t tell the whole story.

The unemployment rate is an estimate of how many workers who want a full-time job do not have one.

More than a year after the start of the pandemic recession, New York still has an unemployment rate of more than 8%; third-highest in the nation and a level not far below those seen nationally during the worst of the 2008 Great Recession.

In contrast, Vermont has the fifth-lowest rate of unemployment according to the latest data.

Sounds like cause to celebrate in Vermont. But why do the two shores of Lake Champlain tell such different stories?

The answer may not be good policy or economic dynamism, but rather bad data. That is the conclusion of Art Woolf, retired professor of economics at the University of Vermont.

“The unemployment rate in Vermont and probably in many states is not a very good indicator anymore,” Woolf said.

The economist, who specializes in the Vermont economy, has been writing about the topic for VTDigger.

It turns out the difference between New York and Vermont may not be so great.

The unemployment rate has always been a flawed measure, and Woolf says the pandemic only made that worse.

The standard assessment of unemployment does not count people who are not looking for a job, for instance, because they are afraid of venturing out and catching an infectious disease.

The data is also based on a standard set of survey questions, which Woolf says did not work well during pandemic conditions.

“The way the questions were phrased and the way people answered them, was very different than in normal times,” he explained.

Woolf says he prefers to use a different measure, something called the Current Employment Statistics or CES.

Instead of surveying workers, CES asks employers how many people they have on the payroll.

“You look at that, New York and Vermont look very similar, in terms of what percentage of jobs we have today compared to just before COVID started,” Woolf noted.

In both states, the news is not great. New York and Vermont were both in the top five worst states for percent of jobs lost during the pandemic, when comparing March 2020 and March 2021.

There are two likely reasons for that, according to Woolf.

Most of the states with poor job recoveries have two things in common: a big tourism economy and governments that instituted strict pandemic lockdowns.

Hawaii, New Jersey, California, and Nevada are in similar positions to New York and Vermont.

Using past recessions as a guide, it may be months or even years before those jobs come back.

“It took quite a while to get back all the jobs we lost,” Woolf noted. “So that seems to be a recurrent feature of modern recessions.”

The Great Recession in particular was noted for the sluggish pace of the job recovery.

The COVID-19 recession is already following that trend.

Nationally Gross Domestic Product has already recovered to pre-pandemic levels, but with 8 million fewer jobs than when the downturn began.


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