Opinion: Jobless rate has fallen, but near-term future does not look rosy
Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.
Vermont’s unemployment rate fell to 9.4% in June, down from its 16.5% peak at the height of the economic shutdown in April and 12.8% in May. Vermont’s experience is nearly identical to all other states and the nation. The U.S. rate in June was 11.1%, so Vermont is at its customary level of a couple of percentage points below the U.S. average.
Although the unemployment rates in Vermont and the U.S. are improving, they are both far above any semblance of normal. Last June Vermont’s rate was 2.4% and the national rate was 3.7%, both either at or near record lows.
The state’s employers put 14,300 workers back to work in June. Some of that reflects normal seasonal hiring changes, but with 274,000 workers on employers’ payrolls there are still 42,000 fewer people working in Vermont than one year ago.
Most of the employment growth was in the hardest-hit sectors of the economy. Nearly one-quarter of the jobs added in June were in health care, as hospitals began performing non-emergency procedures and dental and other health care offices reopened. And, importantly, people began to be less afraid of going into a health care office.
Nearly as many jobs were added in retailing as stores reopened and customers began returning to shopping in brick-and-mortar stores, not just online. Restaurant employment accounted for another fifth of the job growth as summer weather allowed dining establishments to begin serving food outdoors while maintaining the requisite distance between tables.
Each of these industries — retail, health care and restaurants — added about 3,000 jobs in June, accounting for two-thirds of the total job growth in Vermont. Hotels added another 1,100 jobs as they slowly began reopening (and hoping some tourists would be traveling to Vermont).
The near-term future does not look rosy. About 1,800 workers are being laid off each week and filing unemployment claims, four times as many as one year ago. And 40,000 laid-off workers are receiving unemployment benefits, 10 times as many as last year, with another 10,000 self-employed getting special pandemic unemployment benefits.
Those numbers have shown only very slight declines over the past several weeks, which means that it is unlikely that July’s unemployment rate will fall much, if at all. And if Congress does not renew the special $600 in additional federal weekly unemployment benefits that is scheduled to end July 30, or enact something similar, consumer spending will be hard-hit with more layoffs likely to result.
Moreover, with the number of COVID-19 cases and deaths rising in the U.S., it is likely that the U.S. economy will stall this summer. The future course of Vermont’s economy will follow what happens to the U.S. economy, and that is dependent on how the pandemic unfolds over the next few months.
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