One of the interesting pieces of information in a story Sunday about Vermontís economy was that Vermont has a higher percentage of employment in manufacturing than the national average.
Everyone knows that Vermont is a tourist destination with much employment in hotels, restaurants, retail shops, resorts and recreation. And there is still a significant agricultural sector, with a growing diversity of farm enterprises to offset the decline in the number of dairy farms. Other important sectors include health care and higher education.
The strong role of the manufacturing sector comes as more of a surprise.
In fact, Vermont has a significant history in manufacturing. The state has never been Ohio. But Vermontís industrial history ranges from the woolen mills of Winooski to the machine tool plants of Springfield and Windsor, from the marble quarries of Proctor to the granite quarries of Barre. Much of the old wave of industry has faded away, but new industry has taken its place with thriving plants in Essex Junction, St. Johnsbury, Rutland Town, Bennington and in other towns throughout the state.
The state is still not Ohio, but with a population as small as Vermontís the manufacturing has a major impact on employment and the stateís economy. The defense industry continues to play a significant role, but new start-ups in electronics and other high-tech fields dot the landscape.
The strength of manufacturing is one reason that Vermontís unemployment rate rests at 4.6 percent, which is vastly better than the national rate of 8.2 percent. Economists point to a variety of reasons for Vermontís good performance, and one is the diversity of the economy, including manufacturing but also a wide range of economic activity. A diverse economy is better able to withstand the buffeting of economic trends.
Another reason Vermont is doing well is that the state did not indulge in the housing bubble as other states did. There was no mad spiral upward of housing prices, nor the crazy overbuilding that followed. When the crash came, Florida, Arizona, Nevada, California and other states were left with whole neighborhoods of empty houses and millions of foreclosures. Construction in Vermont slowed, and workers in the construction trades had to scramble for work. But Vermont did not suffer the crash as other states did.
As economist Art Woolf pointed out, another reason unemployment is low in Vermont is that the number of workers has not grown. Other states are experiencing the effects of immigration and higher birth rates, which means they have a growing number of people out looking for work and not finding it.
Going back to the 19th century, Vermonters growing up in a mostly rural state have often sought opportunity elsewhere, accounting for a steady flow of young Vermonters to other states. One result is a relatively tight labor market and also a relatively old population. State policymakers often stress the importance of keeping young Vermonters here, which underscores the importance of promoting a diverse and prosperous economy.
Vermont has fared well during the downturn partly because the state has a well-educated work force. Thirty-six percent of Vermont workers last year had at least a bachelorís degree, according to the Public Assets Institute of Montpelier, and thatís the 10th highest rate in the nation. That means that companies seeking a skilled work force can find it in Vermont and the workers here benefit from the good jobs that are available.
Vermont also ranks high on a Work Environment Index, meaning wages, workersí rights and working conditions are generally favorable to workers. These findings suggest that investments in education and in making employment attractive pay off for the state. A race to the bottom, where employers compete to cut wages and benefits, only takes a state to the bottom. Vermont, it appears, is doing well partly because it is doing well by its workers.
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