Economic insecurity on the rise in Vermont
Overall, Vermont has faired better than many other states in this latest economic downturn. The state’s unemployment rate, for example, was 4.6 percent in May compared to the national rate of 8.2 percent.
That doesn’t mean, however, that the Green Mountain State has been completely immune to the effects of the Great Recession. A new report finds that one in five Vermont residents experienced large economic losses in 2010, with an estimated 98,000 individuals seeing their available household income decline by 25 percent or more.
The report, Economic Insecurity Across the American States, was released by Rockefeller Foundation & Yale University professor Jacob Hacker. Using the Economic Security Index (ESI), the study reveals that Vermont has a slightly lower rate of economic insecurity than the country as a whole, ranking 30th among states in terms of the average level of ESI from 2008-2010. Still, the ESI was 19.3 in Vermont in 2010, which corresponds to nearly one in five individuals experiencing large economic losses.
The report found that Mississippi, Arkansas, Alabama, Florida, and Georgia have the highest levels of insecurity, while New Hampshire, Wisconsin, Connecticut, Washington, and Minnesota were ranked as the most economically secure.
"The Great Recession was both broad and deep. No part of the nation was spared," Hacker said in a statement. "While Vermont experienced somewhat lower levels of insecurity than the country as a whole, that does not mean it did well. Even after the official end of the recession, nearly one in five residents experienced large economic losses in 2010, and economic insecurity is substantially greater in Vermont today than it was a generation ago."
The report goes beyond the current downturn, however, to show a disturbing trend that has been occurring for more than two decades and has simply accelerated over the last few years. Hacker reports that the ESI for Vermont rose by 23 percent between 1986 and 2010, reflecting a broader national decline in economic security over the last generation. In 2010, roughly 98,000 individuals in Vermont experienced a 25-percent drop or greater, compared with 59,000 in 1986, reflecting a rise in insecurity and a larger state population.
He notes that while nearly every state experienced record insecurity from 2008 to 2010, all states experienced a significant rise in insecurity between 1986 and 2010. This trend began long before the recent downturn, as every state had higher average insecurity between 1997 and 2007 than between 1986 and 1996.
In other words, American households were becoming more vulnerable to large losses in income even before the Great Recession.
This all points to the ongoing erosion of the middle class. Theories abound as to why the middle class is disappearing, but two key contributors stand out in our view -- the loss of good-paying manufacturing jobs and the growing income inequality in this country.
In 1970, roughly 25 percent of American workers were in manufacturing, compared to 10 percent today. Meanwhile, more than 40 percent of American workers today are employed in service jobs, which are often very low paying. The earnings of middle-income Americans barely budged from the mid-1970s through the end of the 20th century, and actually fell 7 percent during the first decade of the 21st century, according to a report from CNN Money.
But that money hasn’t disappeared altogether; it’s merely been redistributed. The Business Insider reports that in 1950, the ratio of the average executive pay to the average worker’s pay was 30 to 1. Since 2000, that ratio has exploded to between 300 and 500 to one.
"The truth is that the middle class in America is dying, and once it is gone it will be difficult to rebuild," the Business Insider concludes.
A sobering thought indeed.
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