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Business Groups: Unemployment Bill Would Worsen Labor Shortage


  • Vermont Tent Co
Anticipating that workers will be in short supply this summer,  Vermont Tent Company CEO Michael Lubas is making some changes.

Lubas has raised pay about 25 percent this year; starting wages are $15 to $20 per hour. Although he prefers to have a full-time workforce, he’s also offering flexible, part-time hours. His company's summertime business typically involves weddings and special events.

In the past, “we didn’t hire a lot of part-time people unless we had to,” said Lubas. “Now we’re open to hiring almost anybody if they are good employees. We’ll take them if they want to work two days a week, or part-time every day. The bottom line is, we’re just looking for good employees who will show up when they are supposed to.”

Vermont employers were talking about a worker shortage long before the COVID-19 pandemic upended the economy. But a year after it began, the pandemic is still having a big impact on employment. While the state Department of Labor usually has 6,000 to 8,000 people receiving benefits at its busiest period, in winter, this past January 35,000 people were receiving benefits, according to the department.

A bill expected to come before the Vermont Senate this week could make the worker shortage worse by raising unemployment benefits, say business groups.

The measure, approved by the Senate Economic Development Committee, would increase weekly unemployment insurance benefits by about 20 percent and would add $50 per week for people who have dependents.

Added to the additional $300 weekly benefit included in the latest federal relief package, “this increase would cause many workers to make significantly more on unemployment than they would returning to work,” said the Vermont Chamber of Commerce, which on Tuesday urged members to contact their representatives.

“This is the time for the Legislature to support economic recovery, not add barriers," the chamber said in an email to members. 

The department reported a low Vermont unemployment rate of 3.2 percent in January. While that rate has been used for years as an indicator of the strength of the economy, it has lost its efficacy in the pandemic because it’s based on an assessment of how many people are looking for work. Last year, many people without jobs weren't looking.

Women’s advocates have said many women have left the workforce because they can’t find childcare. And many others in Vermont have chosen to stay home from work because they have health concerns, said Mat Barewicz, an economist for the department.

Whatever the reasons, it’s clear that a lot of people are out of work. Employers reported in January they had 30,000 fewer jobs filled than at the same time the year before. That number has held steady for months.

Lake Champlain Chamber president Cathy Davis said a grocery store chain recently reported it had 400 unfilled jobs in northwestern Vermont. She added that a southern Vermont manufacturer called her Monday to tell her job applications were coming in from New Hampshire but not from Vermont.

“My sense is that New Hampshire has reopened a little bit more than Vermont, and so maybe that is helping people return to normal,” said Davis. She said she didn’t know why. “We’ve weathered this very well as a state and kept people safe, but I do think that that maybe we’re in a different situation than other places in terms of our willingness to go back to working in person.”

Lubas noted that Vermont doesn’t currently require unemployment insurance recipients to look for work in order to continue receiving benefits.

“The unemployment benefits have almost been extended indefinitely,” he said.

The Department of Labor data released Monday is three months old. The department plans to release updates later in the month, Barewicz said. He added that small measures, such as making school hours more consistent, would help more parents return to the workforce.

He expects hiring to increase this spring as it does every year as work in areas such as construction and landscaping becomes available.

“This is a big transition period,” he said of the numbers released Monday. “The data is obviously just catching up.”

As for Lubas, he’s printing out flyers to hang around the University of Vermont as he looks for the 30 to 40 seasonal workers he’ll need this summer. In years past, the company has also benefitted from hiring about a dozen foreign students under the J1 visa program; Lubas decided not to use them this summer because of COVID-19 restrictions.

“The hiring challenges for my business for the past two to three years are really the biggest thing that has been holding us back from growing,” he said. “There are a lot of people who don’t like the blue-collar, outdoor tent work. It’s hard. It’s a combination of things, not just the pandemic.”

Co-sponsor Sen. Michael Sirotkin (D-Chittenden) said the bill helps businesses more than workers by protecting them against a sharp rise in their unemployment taxes.

"I honestly believe the business community's opposition to helping out their laid-off workers is misplaced," he said Wednesday in an email. Businesses "refuse to see their laid-off worker get even a small enhanced benefit coming out of the pandemic."

The Senate measure  would also freeze the tax rate that business owners pay to replenish the state’s unemployment trust fund, spreading that rate increase over the next few years. Patti Komline, a lobbyist for several business groups, said that freeze will help businesses.

But “the hospitality sector is going to have a labor shortage when they finally open,” said Komline, noting Gov. Phil Scott on Tuesday predicted the state could be nearly back to normal around July 4.

“Paying people significantly more not to work sets up a challenging situation for businesses that are reopening,” Komline said.