The numbers of people coming and going over the past 18 years have seesawed. For 10 of those years more came; for eight, more left. But since the peak of inmigration in 2001, when a little more than 17,000 people relocated to the state, the number of newcomers has been declining. And since 2005, the number of Vermont residents moving out each year has exceeded the number of new arrivals.

Those coming to the state still have higher average incomes. So, even in years when out-migration has exceeded in-migration, the total personal income in the state has increased.

In 2010, however, that changed. Vermont saw a net loss of income for the first time since the IRS began to publish this data. According to the latest report, 13,422 people moved into Vermont in 2010. Their total adjusted gross income was $353.9 million. The same year, 14,071 Vermonters moved away. Their income added up to a bit more: $356.3 million.

Download a PDF of the report.

1.  The IRS reports the number of income tax returns filed each year and the number of exemptions, including dependents, that are taken on those returns. The number of exemptions is considered to be a close approximation of the number of people who are moving into or out of Vermont. So “exemption” means “person” in this report. There may be additional people moving into or out of Vermont who have not filed an income tax return or who have not been claimed as an exemption on a filed return.
2.  The numbers presented in this report involve the change from one year to the next. The data labels reflect the most recent year of the two (e.g., data labeled “2010” refers to the change from 2009 to 2010).

Without a single nay, the House voted to use future budget surpluses to restore General Fund support for education. For the last three years, the Legislature has cut the annual transfer from the General Fund to the Education Fund, which covers all pre-K to 12 education costs in Vermont. The effect has been to push up property taxes even though local school boards have held the line on spending. Now the House wants to reverse that trend and dedicate half of any future budget surpluses to restore the transfer to pre-recession levels (with an adjustment for inflation).

Why the change of heart all of a sudden? And why was the vote so easy? Two reasons.

First of all, this is an election year, and no House member wants to be branded as voting  against lower property taxes if he or she can help it. This amendment to the annual mid-year budget adjustment bill (H.558) sends a clear message: every representative wants to provide property tax relief.

Second, and more important, this action requires no increase in broad-based taxes, which are commonly defined in Montpelier as taxes that go to the state’s General or Transportation Funds—taxes on sales, income, rooms and meals, and motor fuels are examples, but not school property taxes. The only thing that our elected officials are more afraid of than raising school property taxes is raising broad-based taxes. Governor Shumlin has committed his administration to not raising them.  Given the choice of increasing broad-based taxes or school property taxes over the past few years, the Legislature chose, more often than not, to raise property taxes.

So now legislators get to make a statement that they want to lower property taxes, and they don’t have to raise broad-based taxes to do it—because all they’re committing to is the use of any future General Fund surpluses. No surpluses, no property tax relief.

What may be most notable about this vote, though, is that it reflects a very different dynamic than existed in 1997. In those days, most General Fund aid to public education went to property-poor towns with insufficient tax base to pay for their children’s education at reasonable property tax rates. Most towns, however, did not qualify for this aid, so their elected representatives, not surprisingly, didn’t support the increases, which were often voted down.

Act 60 of 1997 and Act 68 of 2003 changed that. Now every town in the state gets a property tax break when General Fund support is increased, and every town sees higher property taxes when that support is cut. All state representatives and senators are in the same boat, so to speak. And on Friday they were all rowing in the same direction.

Low fuel tanks in a mild winter
A record number of Vermonters are in need of heating fuel assistance this winter. The state projects that more than 40,000 households will be eligible for one of the four programs offered through the Low Income Heating Assistance Program (LIHEAP). That’s nearly double the number receiving assistance in 2007, before the start of the Great Recession. And because the federal government has cut its funding for the program, eligible households are getting less help.

Illusory unemployment rate drop
Vermont’s seasonally adjusted unemployment rate ticked down again in December, but not because more Vermonters found jobs. The rate went from 5.3 percent in November to 5.1 percent in December. However, there were both fewer employed workers and fewer unemployed workers actively seeking work last month; the Vermont labor force, which is the sum of the two, lost over 1,000 people. The official jobless rate declined, but the job market didn’t get any better.

Download the Jobs Brief in PDF.

The governor has the opportunity tomorrow when he presents his budget to the people of Vermont, to again speak about the plight of the middle class. He can describe, as he did so eloquently in his acceptance speech following his 2010 election, the anxiety of many middle class Vermonters and tell them how his budget will begin to lift them from their malaise.

As we note in our recent two-page issue brief on the middle class, their incomes have been stagnant for 20 years even as the cost of a college education and health care have risen sharply. It’s not that there hasn’t been income growth in Vermont over those 20 years, it’s just that most of the growth has gone to those at the top.

In the both cases where the governor mentioned the middle class in his major addresses to the Legislature, it was in the context of health care. That’s fair. Rising health care costs are squeezing middle class Vermonters. Having access to decent health care has been an important part of a middle class Vermont family’s life. But many have been forced to accept higher deductibles or even drop their policies altogether in an effort to make their budgets match their incomes.

But rising health care costs are only part of the story of middle class decline in Vermont. In our State of Working Vermont 2011, we point out that the past decade was the worst for Vermont job growth since the U.S. Bureau of Labor Statistics began keeping records and that income inequality has been rising over the past three decades.

The good news is that it was public policies that created the problem for the middle class, and our elected officials can reverse those policies to revive the middle class. It just takes the will to do it. The governor can start by explaining to Vermonters tomorrow how his budget is built to bring hope again to middle class Vermonters.

If you listen to some who are weighing in on Vermont’s school spending lately, you’d think that a lower student count is causing increased spending.  In fact, VTDigger fell prey to this fallacy in a headline today about the newly released study of Vermont’s public education system.

Here’s the problem.  Some people are focused on spending per pupil when they talk about school costs.  As the number of students in school goes down, the spending per pupil goes up.  But increased spending per pupil doesn’t mean higher school costs.

Consider this:

If a couple with two children earns $50,000 a year and spends $12,000 for housing (mortgage, insurance, and taxes) you could say that the family is spending $3,000 per person for housing.

When the two children leave home to make lives for themselves, if the couple still makes $50,000 and their housing costs have stayed the same, their per-person cost will have doubled—now $6,000 per person—even though they’re not spending a dime more on housing.   The new situation with fewer people in the household is just as affordable after the children left as it was before. The couple may consider moving to a smaller house to save money.  But wanting to save money is not the same as having unaffordable cost increases.

The fuss about Vermont’s increased spending per pupil is confusing Vermonters into thinking that our public education system is unaffordable.  In fact, it’s as affordable now as it has been for the past two decades.

Let’s hope our policy makers don’t make the mistake of rushing to cut costs even when they aren’t rising, and leaving our children to face the consequences.

And he is correct in making job creation the state’s top priority and in recognizing that investment now in education and public infrastructure are key to Vermont’s economic future.

We disagree with his comments about taxes, however.  Vermont is not a high-tax state: a typical Vermonter would pay higher taxes in about half of the other states. There is no evidence that lower taxes create jobs: between 2000 and 2010, despite the Bush tax cuts that saved hundreds of millions of dollars in federal taxes for the so-called “job creators,” the state had the worst decade for job growth on record.  And finally, several studies in the past year have shown that increases in tax rates have little impact on individuals’ decisions about where to locate.

We typically think of a middle-class family as owning a home, having health insurance, a decent car, and a college degree (or aspiring for their children to gain one), and earning a reliable income that’s good enough to support a yearly vacation and a secure retirement. Polls tell us that most people consider themselves middle class.

A large middle class is evidence that the wealth in society is shared by a broad base of citizens. It’s an indication that a majority have hope for the future—their own and their children’s. 

This issue brief shows that Vermont’s middle class is slipping. This slippage is not an accident; it’s the result of state and federal policies over the last several decades. And these policies can be reversed to help rebuild Vermont’s middle class. 

Increased income inequality
Occupy Wall Street protests have focused public attention on growing inequality: a greater portion of the economic pie is now going to the top 1 percent, while the remaining 99 percent hold on to a dwindling slice. The pattern in Vermont has paralleled the national trend of the last 30 years. While the share of total income going to Vermont’s top 1 percent declined following the Great Depression, reaching a low of 5.9 percent in 1981, its share rose to 19.1 percent by 2005—more than tripling in 24 years.

Gains not trickling down
From 1990 to 2010, Vermont’s economy saw respectable growth, almost as good as the nation’s as a whole. Real gross state product (after adjusting for inflation) grew 56 percent; national growth was 61 percent. During the same period, Vermont’s real personal income rose 64 percent. However, inflation-adjusted income for the median Vermont household—half the households make more and half make less—rose just 1.5 percent over those 20 years.

Anemic job creation
A decent job has long been the route to the middle class, but Vermont has not created any net jobs in the past decade. Even before the start of the Great Recession in 2007, Vermont was creating jobs at the slowest rate since records have been kept. By 2010, Vermont was seeing a net loss of jobs. This poor showing occurred in a decade when the wealthiest Vermonters—the so-called “job creators”—saved hundreds of millions in federal taxes thanks to the Bush tax cuts.

Higher-cost higher education
A college education is key to a decent income and provides another entrée to the middle class. But while median household incomes have stagnated—even fallen by some measures—college costs have grown at more than twice the rate of inflation. The result is that the cost of college now takes a bigger bite of the income of the median household, making college unaffordable for more Vermonters.

Rising health insurance premiums
Access to doctors, hospitals, prescription medicines, and other care is a life essential. But rising health care costs and Medicaid cutbacks have driven up health insurance premiums and squeezed the middle class. Between 2003 and 2009, Vermont employees’ share of health insurance premiums rose 54 to 88 percent, depending on the type of plan. Premiums rose even though average deductibles more than doubled during the same period.

Download the issue brief in PDF

© 2012 by Public Assets Institute

This research was funded in part by the Annie E. Casey Foundation. We thank it for its support but acknowledge that the findings presented in this report are those of the Public Assets Institute and do not necessarily reflect the opinions of the foundation.

The State of Working Vermont 2011 analyzes the most recent data, from 2010.  It shows that Vermont’s 6.2 percent unemployment rate for 2010 was the sixth lowest in the country and the second lowest in New England. The wage gap between male and female workers is the sixth smallest in the nation—but only because women’s wages have fallen less than men’s.

“Vermonters didn’t get hit quite as hard by the recession as people in other states, and that’s good. But we need to be aiming higher,” said Public Assets President Paul Cillo. “A lot of Vermonters have lost ground in the last 10 years. Their real incomes aren’t much better than they were in 1990. Poverty is up and the pace of job creation is down.” The report argues that these losses are the results of public policies that put money considerations ahead of people’s needs—a priority that needs to be reversed.

The report also puts recent trends in historical context, documenting the widening of Vermont’s income gap since the early 1980s, anemic job growth even before the recession hit, and 20 years of income stagnation for the typical Vermont household.

“Governor Shumlin had it right when he described the fears of Vermont’s declining middle class, but the problems go beyond just the middle class,” Cillo said. “We need to make a commitment to build a Vermont that works for everybody.”

The report suggests steps the administration and the Legislature should take to reverse the trends of the last 30 years. The recommendations include:

• Policies explicitly aimed at closing the income gap, rebuilding the middle class, and a broader sharing of the state’s economic growth.
• Development of indicators to measure the state’s progress toward these policy goals.
• A results-based approach to public investment and restoration of the government’s capacity to measure the effectiveness of public programs and services.

Public Assets Institute is a nonprofit, nonpartisan organization that promotes sound budget and tax policies to benefit all Vermonters. Additional information is available at www.publicassets.org

- 30 -

By Jack Hoffman & Paul Cillo

Download this report in PDF

Three years after the start of the Great Recession, Vermont was faring better than many other states.¹ Its annual unemployment rate for 2010 was one of the lowest in New England and lower than in most other states.² The under-employment rate, which includes people who would like to be working more hours, was also among the lowest in the country. The percentage of non-farm jobs that Vermont lost between 2007 and 2010 was the second lowest in New England and 15th lowest nationwide. And the wage gap between male and female workers in Vermont was the smallest in New England and fifth smallest overall (Table 1).

That’s the good news—if we just want to know how Vermont workers are faring relative to workers in other states. But if the goal as a state is to improve Vermonters’ lives and give them hope for the future, it’s not terribly useful to know that things are worse elsewhere.

The bad news is what’s happened to working Vermonters over the last 20 or 30 years. The gap between the rich and everyone else—brought to dramatic light this year by the Occupy Wall Street movement—is widening in Vermont as it is nationwide. The real earnings of middle-income Vermonters weren’t much higher in 2010 than they were in 1990. And Vermont’s private sector is no longer creating new jobs at a rate sufficient to keep up with population growth. The number of Vermonters living in poverty is increasing. And we’re losing what we knew to be our middle class. This adds up to a society that works for only the few at the top.

Peter Shumlin, who won the governor’s office at the end of 2010, campaigned on a promise to rebuild Vermont’s middle class. He described Vermonters who were “fearful that they cannot send their kids to college; that they cannot pay their mortgage; that they cannot retire as they had hoped; that their dreams in Vermont to succeed may not happen in the way that they had hoped.”³

Too many working Vermonters have lost ground in the past 30 years because of state and federal policies that favor the wealthy and put money considerations ahead of people’s needs—profits ahead of job creation, low taxes at the expense of adequate public services, and weak regulation in place of sound public interest protections. It should come as no surprise that these policies have resulted in social and economic ills. It will take the focused attention and commitment of elected officials to reverse these policies—to put people first again and rebuild a vibrant society.

This report seeks to provide an understanding of where working Vermont stood at the close of 2010. It also helps explain how we got here, by putting this first decade of the 21st century into historical context.

Employment and Jobs

Many Vermonters lost jobs during the recession and many are still out of work. In December 2007, at the official start of the recession, Vermont reported 14,420 unemployed workers.⁴ Unemployment peaked in May 2009 at 26,397—an increase of 83 percent. During 2010, an average of 22,470 Vermonters were unemployed—60 percent more than before the recession began.

Joblessness worse than it looks
Vermont’s official unemployment rate in 2010 was 6.2 percent. But this rate doesn’t count people who had gotten discouraged and stopped looking for work. Vermont’s unemployment rate including discouraged workers and those who are under-employed was twice the official rate—12.5 percent.⁵

As bad as that was for Vermonters, they fared a lot better than workers in most other states (Figure 1). Vermont’s 60 percent increase in unemployment between 2007 and 2010 was the fifth-lowest growth rate in the country and the lowest in New England (New Hampshire’s rose 72 percent).

Fewer new jobs even before the recession
By the end of 2010, Vermont still had not recovered the jobs lost during the recession, which officially ended in June 2009. Vermont averaged 297,500 non-farm payroll jobs in 2010, a decline of 3.5 percent from before the recession. That was better than most of the other New England states. Only Massachusetts had a smaller job deficit in 2010; it was down 2.9 percent from its pre-recession level.

All in all, though, 2000-2010 was a dismal decade. Vermont was one of 28 states that had fewer jobs in 2010 than it had a decade earlier. The rate at which Vermont created new jobs during the decade was the slowest since the 1940s, the first decade on record (Figure 2). Even before the recession hit in 2007, Vermont’s pace of job creation was slower than during any of the previous six decades.

Less manufacturing, more health and education services
The biggest job loss in the last decade, in both percentage and number, was in manufacturing—traditionally the sector with some of the best wages. Vermont had a third fewer manufacturing jobs in 2010 than in 2000, and that didn’t include any adjustment for population. Vermont manufacturers employed more than 46,000 people in 2000; by 2010, the number fell to 31,000. Manufacturing accounted for 17 percent of the jobs in Vermont in 1990, and just 10 percent in 2010 (Figure 3).

The manufacturing sector has been shrinking in the U.S. for at least two decades, although Vermont bucked the trend in the 1990s, when manufacturing jobs here increased by 8 percent. From 2000 to 2010 the drop grew even steeper nationally. All but one state lost manufacturing sector jobs. Vermont’s 33 percent decline in manufacturing jobs that decade was the same as the U.S. decline overall.

The biggest sector for job growth—in the past decade as well as in the 1990s—was education and health services, which includes health care workers as well as non-medical workers who provide “social assistance” services.⁶ Education services in this sector include training programs, but not public schools. Jobs in health care and social assistance services nearly doubled in 20 years—from 25,000 in 1990 to more than 46,000 in 2010. Even during the decade ending in 2010, despite the recession, this sector added more than 12,000 jobs. Historically, most of the new jobs in the education and health services sector have been social assistance jobs, which pay the lowest wages of any jobs in this sector.⁷

In essence, over the past two decades, Vermont has seen the steady loss of higher-paying manufacturing jobs and gains in lower-paying service jobs. This means that to maintain its previous level of income, a family would need to work more than one job or reduce spending. Either way, many Vermonters are seeing a reduced standard of living.

Workforce

Vermont continues to have an older and better-educated workforce than many other states. Seven in 10 Vermonters were in the labor force, including those who are employed and unemployed, and 66 percent of Vermont’s population was working in 2010.

Older, more experienced workers
Half of all Vermonters 55 and older were in the workforce in 2010, which was the highest participation rate for that age group in the country (Table 2). These older workers accounted for a quarter of Vermont’s labor pool, which made Vermont’s the greyest workforce in the U.S. for the fourth year in a row.

Some worry about the aging of Vermont’s workforce, citing statistics about the needs of the elderly for more health care and other state-funded services. But in fact older workers offer the economy many benefits.

“While I feel sorry for every American who … wants to retire but can’t, there is a lot to like in this surge of experienced workers,” Harvard economics professor Edward L. Glaeser wrote recently in the New York Times. “Longer work lives mean more tax dollars, and that helps with America’s fiscal problems. Older workers also bring a diversity of perspectives and experience to the workforce.” Noting that “the mid-20th-century retirement boom seems like something of an aberration” historically, Glaeser added: “While some older workers will have to work because they can’t afford not to, there remains the sunny possibility that others … will do so because they find fulfillment in their jobs.”⁸

Better educated, at least nationally
Vermont traditionally has a better-educated workforce than most states. Since 1999, it has been among the top 10 states in the percentage of college graduates in the workforce.⁹ For the last six years, a third of Vermont’s workforce has held at least a bachelor’s degree (Figure 4).

While the education level of Vermont’s 25-to-34-year-olds is good by U.S. standards, the U.S. lags internationally, according to the College Board Advocacy and Policy Center.¹⁰ By the Center’s measure, Vermont would rank eighth internationally, behind Korea, Canada, the Russian Federation, Japan, New Zealand, Norway, and Ireland. Other countries, especially developing countries, are making investments to raise the education level of their younger workers.

To make the U.S. more competitive economically, President Obama has set a national goal of a 60 percent college graduation rate by 2020. The College Board center has a somewhat less ambitious—some would say more realistic—goal of 55 percent of 25-to-34-year-olds attaining associates’ degrees or higher by 2025. Forty-four percent of Vermonters from 25 to 34 had reached that educational level in 2009.

Wages and income

One bright spot in 2010 appeared to be the narrowing wage gap between men and women in Vermont. The gap in real median wages did close—from a male advantage of 16 percent in 2009 to 12 percent in 2010. But the spot wasn’t really so bright. Women’s wages did not rise; they just fell less than men’s. The real median wage for women dropped 0.5 percent in 2010, to $15.27 an hour, while the real median wage for men fell nearly 5 percent, to $17.37 an hour.

The median wage is right in the middle of the wage scale—half of the workers in the group make more than the median and half make less. But it wasn’t just this middle wage that fell in 2010. Wages at nearly all wage levels declined that year. Only those at the top saw their real wages rise (Figure 5).

While this latest drop can be attributed to the recent global economic collapse, typical Vermonters have experienced income stagnation in recent decades. The same has happened in households across the country, fueling the income inequality that ignited the Occupy movement.

Vermont saw strong growth in household income in the 1980s (Figure 6). Real median household income—that is, after adjusting for inflation—rose almost 23 percent between 1980 and 1990, which was the sixth-highest rise in the country. But that was the only decade in the last four that Vermont saw such growth of median household income.

Income disparity and poverty

In the last 20 years—1990 to 2010—inflation-adjusted median income rose less than 2 percent. That was 2 percent for the entire period—not 2 percent per year. Meanwhile, over the same 20 years, the combined real personal income of all Vermonters increased 63.6 percent, and the overall state economy grew 56 percent (Figure 7). In other words, Vermont’s income grew—but most Vermonters’ didn’t.

While the richest Vermonters gained a bigger share of the economic pie, more than 70,000 Vermonters lived at or below the poverty level in 2010.¹¹ Vermont’s poverty rate had been steadily dropping over the past several decades, but it was up again in 2010 (Figure 8). More than 15,000 Vermonters drifted into poverty over the last decade.

Historical patterns
Historically, Vermont’s pattern of relative income equality mirrors what has happened nationally, according to research by Sam Houston State University economist Mark W. Frank. Frank used IRS data going back to 1916 to calculate the share of income going to the top 10 percent and the top 1 percent of taxpayers in each state.¹²

A wide gap between rich and poor persisted through the 1920s, but after the Great Depression the disparity began to decrease. For almost 50 years, from 1930 until the late 1970s, the gap steadily narrowed. During that time, union membership rose, taxes on the wealthy increased, and new banking regulations curbed the kind of financial speculation that contributed to the Crash of 1929 and the Depression.

For the last 30 years, however, the gap between the rich and everyone else has widened again. In the late 1920s, 14 percent of Vermont’s income went to the top 1 percent of taxpayers. That share reached a low of 6 percent in 1981, before income disparity began to grow again. By 2005, the latest year for which we have Vermont-specific data, the share of income received by the top 1 percent of Vermont taxpayers had climbed to 19 percent—more than tripling in 24 years (Figure 9). Meanwhile, the share of income for the bottom 99 percent shrank from 94 percent in 1981 to 81 percent in 2005.

A Vermont that works for everybody

The first step to moving Vermont in a new direction is acknowledging the problems we face—and face what those problems say about us.

Governor Shumlin identified an important part of the problem when he described the fears of many middle-class Vermonters who don’t see their lives getting better. The commitment to rebuild the middle class is a good place to start, but Vermont’s problems go beyond the middle class. Income disparity is growing. Do we want to be a state where a few continue to amass greater wealth while tens of thousands live in poverty? Continued rhetoric about the benefit to all of making Vermont more attractive to the wealthy—the approach that got us to this place—will not suffice. To reduce poverty and income inequality, the state needs to make real investments that benefit all Vermonters.

Such investments will also enhance Vermont’s economic position. For instance, if Vermont wants to be competitive in the nation and the world, it will need to invest more in higher education, while maintaining its investment in pre-K through grade 12.¹³Indeed, our per-pupil education spending is already high relative to other states. But other states, and the U.S. as a whole, lag behind much of the developed world. Simply aiming to top the list in the U.S. will not make Vermont a world-class educator.

Aiming for increased total wealth or a “better economy” is not enough. The goal should be a state that works for all Vermonters. Our political leaders can take steps right now to move toward that goal.

Adopt policies explicitly aimed at improving the lives of all Vermonters.
For example, if the Legislature wants to rebuild the middle class, then rebuilding the middle class should be a policy objective, and major legislation should be judged against that goal. When the governor presents his budget or a committee proposes new tax changes or economic development plans, the proposals should be measured by how much they will help or hurt the middle class.

In recent years, we have seen proposals to reduce eligibility for paying school taxes based on income, an option available to most resident homeowners under Vermont’s school funding law. Such a change would increase taxes on middle-income Vermonters and lower taxes for second-home owners and for those in the highest income brackets. It would not advance the objective of strengthening the middle class, and it would not serve to narrow the gap between rich and poor—another policy goal Vermont should adopt.

Develop easily understood indicators that show whether Vermont is moving toward its new goals.
The Agency of Human Services used to collect data and publicize a set of indicators that measured Vermonters’ wellbeing. The indicators included things like school graduation and dropout rates, teen pregnancy, college enrollment, drinking and drug use, poverty, and employment. The administration and Legislature should resurrect those Human Services indicators and develop others for other areas of state government.

For example, the Department of Economic Development could use median household income as one of the indicators of whether its economic development efforts are working. Instead of focusing on the amount of tax credits awarded to businesses, the department should be looking at whether all Vermonters are sharing in the state’s economic growth.

Part of the stated mission of the Department of Economic Development is “to enhance Vermonters’ quality of life through expanded economic opportunity.” We need indicators that clearly show whether Vermonters’ quality of life is improving, and then measure the department’s initiatives in terms of contributions toward that goal.

The Legislature tried to move toward this results-based approach with the Challenges for Change program in 2010. The program was supposed to save money while maintaining or even improving the delivery of public services through greater efficiency. But Challenges for Change became a pretext for more budget cuts, and, rightly, was abandoned.

Create tools and restore the capacity to measure the effectiveness of public programs and services.
One problem Challenges for Challenge revealed was that recent budget cuts and staff reductions have diminished state government’s ability to collect and analyze information about its own performance. We need to rebuild that capacity, which means the governor’s administration and the Legislature need to invest more money to improve the government’s efficiency and effectiveness before it can ultimately save some money.

Vermont also needs better tools to measure effectiveness: what works and what doesn’t—or which programs or services produce the best results for the dollars spent.

The Legislature is exploring a new system that could help. Results First, developed by the Pew Center for the States, measures the return on investment—that is, the cost effectiveness—of public programs by calculating the benefits of things like reduced crime or higher graduation rates and comparing them to program costs. The state also is investing in a computer upgrade that is supposed to make it easier to track each program’s costs.

The spirit of Irene

In late August, after the period covered by this report, Tropical Storm Irene hammered Vermont. Responding to the worse disaster to hit the state since the 1927 flood, Vermont showed a unity of purpose and commitment to do what needed to be done that was refreshing in this era of political and cultural polarization. Unlike this summer’s floods, though, our current economic problems didn’t just happen. They are the result of policies adopted over the last 30 years. We can choose different policies that will move us in a better direction. We can hold onto that post-Irene spirit and rebuild the hopes that many Vermonters have lost over the last 30 years.

© 2011 by Public Assets Institute

This research was funded in part by the Annie E. Casey Foundation. We thank it for its support but acknowledge that the findings presented in this report are those of the Public Assets Institute and do not necessarily reflect the opinions of the foundation.

1. Rankings in this report exclude the District of Columbia.
2. Vermont’s unemployment rate is typically below the national average.
3. Vermont Public Radio, “Governor-elect Vows To Focus On Creating Jobs,” Nov. 3, 2011, http://www.vpr.net/flash/audio_player/audio_player.php?id=32209
4.  Jobs and employment figures for specific months in this report are seasonally adjusted; annual averages are not seasonally adjusted.
5. Vermont Department of Labor, Alternative Unemployment Rates, U-6, http://www.vtlmi.info/unempaltrate.cfm
6. Detailed descriptions of industries in the North American Industry Classification System (NAICS) can be found at the U.S. Bureau of Labor Statistics, http://www.bls.gov/iag/
7. Paul Cillo and Doug Hoffer, “State of Working Vermont 2007,” Fall 2007, Figure 5, http://publicassets.org/wp-content/uploads/2008/05/pai-ib0701.pdf
8. Edward L. Glaeser, “Goodbye, Golden Years,” New York Times, Nov. 19, 2011, http://www.wehaitians.com/goodbye,%20golden%20years.html
9. Ranking does not include District of Columbia, which always has a higher percentage of college graduates than any of the states.
10. A study by the College Board Advocacy and Policy Center ranks the U.S. 11th among 24 countries in the education level of 25-to-34-year-olds. See “The College Completion Agenda,” http://completionagenda.collegeboard.org/
11. Research shows a link between the rich getting richer and the poor getting poorer. See Public Assets blog, “A Bigger Pie Doesn’t Mean a Bigger Slice for All,” http://publicassets.org/blog/a-bigger-pie-doesn%E2%80%99t-mean-a-bigger-slice-for-all/; and Jeffrey Thompson and Elias Light, “Searching for the Supposed Benefits of Higher Inequality: Impacts of Rising Top Shares on the Standard of Living of Low- and Moderate-Income Families,” April 2011, http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_251-300/WP258.pdf
12. Mark W. Frank, “U.S. State-Level Income Inequality Data,” Department of Economics and International Business, Sam Houston State University, http://www.shsu.edu/~eco_mwf/inequality.html
13. For research on long-term economic benefits of education, including early childhood education, see the work of Timothy Bartik, W.E. Upjohn Institute for Employment Research, http://www.upjohninstitute.org/Research/EducationandTraining/K12

– Pressure on the property tax
– Toward more effective government
– People first
– Weigh in on health care reform
– The rich get richer, the poor colder

Continue reading December 2011 Update