The research firm 24/7 Wall Street recently conducted a study of trends in middle-income stagnation and income inequality across all 50 states. The study was based on publicly available data from the Census Bureau, Labor Department and other government agencies. Vermont did not come out well, if you are someone for whom reducing inequality is a valued goal.
Looking at the data from the period 2009 to 2013, Vermont had the second-worst results of any state. Only California, where income inequality is driven by highly paid employee-stockholders in Silicon Valley, did worse than Vermont.
Income gains in Vermont are increasingly concentrated among the wealthiest 5 percent of households, those with taxable incomes of roughly $175,000 and up. These households accounted for approximately 90 percent of the state’s income gains between 2009 and 2013. Over the same period, incomes of Vermont middle-class households, those located closer to the state’s median household income of about $55,000, declined by 5.9 percent, one of the larger drops in the nation.
I learned of this study from a press release, sent out not by Sen. Bernie Sanders or Sen. Elizabeth Warren, but by David Sunderland, the chair of the Vermont Republican Party. For the past month or so, Sunderland has been issuing near-daily press releases highlighting adverse economic trends in Vermont since Democrats took control of both the governorship and the Legislature following the 2010 elections.
The Vermont Republicans may not have solutions to these economic problems, some of which result from national or international developments over which state government has little influence. However, at least the GOP recognizes that middle-class Vermonters have seen their incomes stagnate for several years now, while income gains and wealth have increasingly been concentrated at the top of the distribution.
This is more than can be said for many Vermont Democrats, who, although they advocated for an increase in the minimum wage that benefits lower-income Vermonters, have not had much to say recently about middle-class income stagnation and the concentration of wealth.
Is the relative silence from the Democrats on these issues related to their increasing reliance on campaign contributions from wealthy Vermonters? This question is worthy of discussion.
Two of the most-heavily Democratic towns in the state are Norwich and Charlotte, which also have among the highest household incomes in the state. The financial reports of Democratic statewide candidates show that candidates such as Peter Shumlin rely heavily on four-figure campaign contributions from residents of upper-income towns such as Norwich and Charlotte.
The Oct. 15, 2014, campaign contribution reports, covering money raised during the first two weeks of that month, showed that Shumlin out-raised Republican candidate Scott Milne by a substantial amount. However, Milne actually received more contributions of $100 or less from Vermont addresses than did Shumlin. If small contributions are an indicator of grass-roots support, Republican Milne did better than Democrat Shumlin.
Sens. Sanders and Warren speak regularly about both income inequality and the relationship between economic trends and campaign finance policy. Few Democratic officeholders or candidates in Vermont have discussed these subjects in recent campaigns.
When Howard Dean was governor, there was a strong reformist streak in the Vermont Democratic Party, and major campaign finance legislation was enacted. Subsequent Supreme Court decisions, and the increasing reliance of Democratic candidates on wealthy individuals and lobbyists for campaign funds, have meant that Vermont’s Democratic leaders now rarely mention campaign finance, or its relation to trends in income inequality.
Vermont Democrats could get squeezed on this issue in the 2016 election cycle, both from Republicans who are assiduously seeking votes among middle-class Vermonters, and from Progressives who are making the more ideological case about the relationships between income trends and the sources of campaign contributions.
Eric L. Davis is professor emeritus of political science at Middlebury College.