In July, the federal Bureau of Labor Statistics announced that the U.S. consumer price inflation rate rose to 5.4 percent, practically matching the previous month’s 13-year high.
The signs of inflation in Vermont are everywhere, from gas prices hovering around $3 to a significant increase in a bill at local restaurants, who struggle to find workers to stay open and are paying more to the ones that they are lucky to find, to food prices at supermarkets, used cars, lumber, housing and practically everything else.
The rise of prices significantly complicates the lives of over 11 percent of Vermonters who live below the poverty line and to whom any significant rise in food prices or rent prompts them to make sometimes hard choice: one or the other.
Although modest and being presented as a nutritious adjustment, the Biden administration in October of this year will increase the average monthly food stamps benefits by $36 from $121 per person to $157. The increase might look insignificant to many middle-class families, but to 70,000 Vermonters who are the recipient of the food stamps, any increase helps to offset the rise in prices.
According to the the bureau’s June numbers, Vermont’s civilian labor force stood at about 315,000, with 306,000 employed, 9,600 unemployed, with an effective unemployment rate of 3.1, among the lowest in the country.
The continuation of the out-of-state influx of people moving to Vermont, whether escaping large urban areas or relocating to work from home, is only adding to pressure on housing availability and prices. Vermont Business Magazine points out that “Vermont has the third highest increase in real home value in the nation.”
With the lowest unemployment rate in the country and a housing shortage, Vermont businesses face a dual dilemma of where to get the employees from and where to house them. The scarcity of workers in Vermont will make businesses increase wages to attract new employees, inevitably passing the cost to the customers in a form of higher prices.
Close to 8 percent of Vermont’s labor force, or 29,000 people, work in the leisure and tourism industry, which adds significant revenue to the state’s treasury. During 2020 and first half of 2021, Vermont was practically shut down to tourists. The pent-up demand from Americans for Vermont foliage and skiing will create a massive logistical headache for local hotels and resorts. The travel and tourism industry will face a shortage of labor and an increase in wages, while dealing with the broken supply chain from China and paying much more to upgrade appliances, equipment and anything else needed to welcome visitors.
Then there is a Vermont’s construction industry. The construction industry, according to the Bureau of Labor Statistics, employs 14,000 people in the state of Vermont. It is the only industry in Vermont that did not have any significant unemployment fluctuation during the pandemic and continued to enjoy robust demand. Vermont homeowners are competing with the Vermont based businesses for plumbers, electricians, HVAC and general contractors. It is not unusual for customers to wait weeks and months for an electrician, small or large repairs, or new construction. If it was not for Vermont’s state policy not to require general contractors to be licensed, contractors would be unable to serve the needs of Vermonters and out-of-state second homeowners, driving wages literally through the roof. Some out-of-state newcomers are bringing their own general contractors from as far as Florida and the Midwest to do home repairs or new construction.
Vermont, with one of the smallest populations in the nation and a significant amount of people living below the poverty line, will need to find a way to deal with rising inflation, the so-called unofficial tax on the poor, and any residents whose incomes cannot be easily adjusted upward to follow the rate of inflation.
The pandemic is delivering to the Green Mountain state pent-up, out-of-state re-settlers and tourists who want all Vermont has to offer. Businesses and politicians should not miss this opportunity, while dealing with the inflationary pressure, to turn an increase in demand for Vermont into a long-lasting economic benefit for all Vermonters.