Vermonters pinched even before pandemic hit, study finds

Public Assets Institute annual economic report uses data to paint a picture of financial stress

BRATTLEBORO — The COVID-19 global pandemic hit many Vermont households hard and without warning. The public health crisis spurred an economic crisis when people lost their jobs and businesses closed.

Despite billions in federal assistance that have helped many households and businesses weather the pandemic storm, for many in the state, this economic crisis represented a continuation of struggle that started before COVID-19 highlighted the gaps in the state's economy and social safety nets.

People of color and women have been disproportionately impacted by the health and economic crisis caused by the pandemic.

But as the pandemic continues into the new year, analysts at the Montpelier-based Public Assets Institute stress that more investment is needed by the state and federal governments.

The organization contends that this investment - and policy that supports Vermonters - is needed not only during the COVID-19 crisis but into the future.

“The state needs to invest in the public good - child care, education, housing, and other essentials - to secure the long-term economic well-being of Vermonters,” wrote PAI staff in a Dec. 28 press release.

Last month, the PAI released its 2020 State of Working Vermont report. The annual study looks at Vermont's economy and what it means for the people trying to live within it.

“When the COVID-19 recession hit, many Vermonters had still not recovered from the previous recession,” states the report. “The fate of Vermonters during the COIVD-19 pandemic reflects both wise and unwise government policy.”

PAI produces the report in conjunction with the Economic Policy Institute in Washington, D.C. Using its most recent data, from 2019, the analysis compiles information from multiple federal and state agencies. This year's report also included firsthand accounts from Vermonters sharing their experiences of the pandemic.

Despite some good news, inequality grows

In PAI's view, the state's economic inequality increased in 2019.

Data showed bright spots, such as an increase in gross domestic product and higher wages. But it also showed, in a mirroring of national trends, that these strong economic trends benefited households at the top of the income spectrum, bypassing the majority of Vermont families.

“Vermont's economy expanded, but too many Vermonters haven't seen the benefits of this growth,” PAI staff wrote in the news release.

“Wages increased, but more for high-wage workers than for those earning less. Child poverty hit its lowest point in 16 years, but remained at nearly 10 percent.

“Inequality grew: Half of all 2019 income in the state went to the top 20 percent of Vermonters.”

According to PAI, in February 2020, COVID-19 ended the longest recovery period on record following the 2008 Great Recession. But the think tank blames state and federal policy decisions for muting this economic relief. According to the study, Vermont's lowest income households had less income in 2019 than they did in 2007.

Real median income - the level of wages earned by people at the middle of the income scale - in 2019 was on par with 2007 levels. Meanwhile, the state's poverty rate “showed no improvement.”

In PAI's opinion, the negative economic conditions going into the pandemic reflect 30 years of policy that has favored tax cuts for the wealthy, has lacked public investment, and has provided lukewarm government support to workers over their rights to organize.

As a result, before the pandemic, most households were experiencing stagnant wages and increased costs of living.

At the state level, according to PAI's report, the government responded quicker than most states to ward off the pandemic's effects.

Simultaneously, however, “decades of underfunding” in infrastructure and technology still left Vermonters vulnerable, the report notes, like uneven broadband service that has challenged some students' ability to access remote learning.

When the pandemic put more than 100,000 Vermonters out of work, the increase in unemployment claims swamped the state's outdated technology and delayed relief, said PAI's report.

Instead, in the organization's analysis, “better policy” such as a state-mandated living wage and more investment in affordable housing could have meant fewer people subsisting paycheck to paycheck prior to the pandemic.

The report claims that similar policies, such as the Affordable Care Act, have helped the country recover from the Great Recession. New policies that support Vermonters, public investment, and a focus on equity will help Vermont recover from the pandemic as well, said PAI.

“Policymakers deserve a lot of credit for their handling of the pandemic,” Paul Cillo, founder and president of PAI, said in the news release. “But we need to think beyond this crisis. After decades of policies that disproportionately harm people of color and those on the lower rungs of the economic ladder, the state needs to shift its focus not just to people's basic needs but also to racial and social equity.”

Of the $4.8 billion in federal pandemic aid Vermont received:

• $2 billion, which went to businesses and employers through loans, grants, and the paycheck protection program (PPP).

• $1.5 billion which served as direct payments to people in the form of unemployment benefits, federal stimulus payments, food, and hazard pay.

• $1.3 billion, which went to expanding public services such as health care, housing, education, child care, and food programs.

Other findings included the following:

• COVID-19 disproportionately impacted Vermonters of color and women.

• Approximately 136,000 Vermonters lost work between January and November with most of those losses happening in March and April.

• Lamoille County had the biggest drop in employment, at 8.1 percent; Orange County, the least, at 3.7 percent. Windham County's employment dropped 5.4 percent.

• As of November, approximately 31,000 Vermonters were receiving federal or state expanded or extended unemployment benefits.

Direct impacts

The report also included Vermonters' firsthand accounts. Students and staff with the Center for Research on Vermont in the College of Arts and Sciences at the University of Vermont helped gather the accounts through a survey and interviews.

PAI noted that, for many who shared their experience, the government assistance they received during the pandemic provided “a breather” for their finances, physical health, and mental health.

One respondent, identified as Peggy, said, “COVID hit very close to home when our landlord died of it. And now we are in limbo.”

According to Peggy, her building is being sold, and she expects an unaffordable rent increase. She said her family's future is uncertain and “doesn't look good at this point in time.”

“The people that are really hurting are the ones that were barely getting by before - low-income people on disability and Social Security,” she added.

Hannah, a nurse practitioner in Windham County, shared that she and her wife rely on outside caregivers to help care for their older son. COVID-19 has made this scenario feel risky. At the same time, the family's options are limited.

“So he's 13, he's developmentally disabled, and he doesn't understand, and he's vulnerable. I'm probably less worried about his health, because I think we will do what we need to do to take care of him, but I guess it's all related, right? Like, I'm worried about his health and I'm worried about how my wife and I are going to work and take care of him,” Hannah said.

Andrew, a recent college graduate, shared that he couldn't find work after graduating and moved home.

“My savings got depleted quite a bit. I ended up moving back home to Brandon instead of staying up in Burlington like my initial plan. Whether the economy will be good enough to find a job this spring - that's a big worry,” he said.

Eugene, a computer manufacturing tool operator/programmer and craftsman in Brandon, shared that he still has a job but that his work week was reduced to 32 hours. He wondered if the manufacturing company he works for will survive the pandemic.

“[The company] has reduced its work force by two-thirds, so COVID has hit us pretty hard,” he said.

As the Legislature prepares to enter a new biennium, the PAI report calls for policies that will support lower income and middle income households.

In the report, the PAI staff write, “COVID-19 delivers a lesson: Government plays a critical role not just in responding to crisis but in helping people sustain health, security, and dignity in ordinary times.”

“To redress the inequalities that history and our own decisions have created, we need to invest in the public good rather than serve narrow interests and commit to policies that equitably share prosperity and advance racial and social justice.”

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