Minimum wage increase starting January 2026 to $14.42
Vermont DOL announces unemployment insurance Taxable Wage Base for 2026
by Timothy McQuiston, Vermont Business Magazine Vermont weekly unemployment claims for the week ending October 4, 2025, increased by a marginal amount and remain at a low level. New claims were 262, up claims from the week before and up 49 from last year at this time. Claims were 186 two weeks ago. Claims, which tend to be lowest in the summer, were 181 at the end of September 2024.
Meanwhile, the government shutdown, federal layoffs and new export controls by China on "rare-earth" materials, and a subsequent threat from the White to impose 100% tariffs on China, led the stock market to plunge on Friday. See below.
In Vermont for the weekly labor UI claims report, manufacturing accounted for 16% of the total, down 8 points from the previous week. Manufacturing overall has become a smaller part of the Vermont economy over the last 25 years and that trend appears to be continuing. The Service industry, which typically accounts for the most claims, last week reported 52% from the previous week, up 10 points. Construction was 7%, down 4 points.
For the week, Vermont total unemployment insurance claims were 2,057 (up 14 for the week and up 257 from this time last year).
The Vermont Unemployment Trust Fund is well capitalized. As of the most recent data, there was $310.5 million in the Trust Fund (as claims are paid out on one side, employers are contributing to the fund on the other). The pre-pandemic Trust Fund balance on March 1, 2020, was $506.2 million.
In the week ending October 4, the US DOL did not report labor information because of the government shutdown, now in its second week.
Reuters, citing private reports, wrote that: "The number of Americans filing new applications for unemployment benefits increased again last week, economists estimated on Thursday, hinting at some early layoffs of contractors related to the U.S. government shutdown.
"Initial claims for state unemployment benefits rose to a seasonally adjusted 235,000 for the week ending October 4 from 224,000 the prior week, economists at JPMorgan and Goldman Sachs calculated. They made assumptions for Hawaii and Massachusetts, whose data was unavailable.
"Citigroup estimated 234,000 claims last week."
The federal government announced today (October 10, 2025) that it would go ahead with layoffs of federal workers. Already some air travel has been affected by the shutdown, as it affects staffing of air traffic controllers.
Meanwhile, the US August Labor Report from the US DOL indicated that employment is waning. This comes after a poor July report and another revised lowering of the June numbers. See National Employment Trends below.
Markets
Meanwhile, the stock market cratered on Friday after reaching several new record highs the last several weeks. The markets had largely shaken off ongoing concerns over the government shutdown, inflation and a weakening labor market. But fell today because of threat by China to wall-off its reserves of "rare-earth" materials vital to the growing AI and electric car markets.
On Thursday in South Burlington, Thomas Feltmate, Director & Senior Economist at TD Economics (TD Bank), said that the artificial intelligence (AI) industry, while representing only 4% of the US economy, drove half the US economic growth this year. AI is involved in a spectrum of growing industries, including semiconductors and data hubs, which are reliant on these rare earth materials. Feltman was the keynote speaker at the VermontBiz2Biz EXPO hosted by VermontBiz Magazine.
President Trump responded to the move by China by, among other things, threatening a 100% tariff on goods from China.
The S&P, Dow and NASDAQ plunged unexpectedly on Friday, losing a month's worth of gains. The S&P was down 2.71%; the Dow was down 1.9% and the tech-heavy NASDAQ was down a whopping 3.56%.
Meanwhile, it appears the Fed's concern over a rise in inflation is outweighed by a weakening economy, which led them to cut interest rates by 25 basis points September 17, 2025. Economists anticipate that the Fed will respond to the overall economic news by cutting rates twice more this year by another 25 basis points each. The most recent inflation report showed an increase of 2.9%, higher than the Fed's goal of 2%, but stable.
The US unemployment rate for August was up one-tenth to 4.3%. The Vermont labor situation also weakened, despite the rate drop, but incomes have also stagnated.
The Fed raised rates starting in 2022 in order to stifle spiking inflation, but at a time when federal stimulus funds and a general economic recovery was also occurring. Now, they must decide on whether to risk more inflation by cutting rates at a time of a weakening economy, which could lead to stagflation. They appear to be siding on shoring up the economy and employment over inflation. This would flip their script from just three years ago.
Wall Street has lobbied for a rate cut as it should stimulate economic activity and lower costs for businesses and consumers. It also makes stocks a more appealing investment vehicle if interest rates are low for other types of investments tied to high interest rates, like certificates of deposit (CDs) and money markets. As those rates fall, the "wall of cash" might come washing back to equities, or not.
Lower interest rates should also lower mortgage rates. These rates are not directly tied to the Fed rates and have come down more slowly than expected. There is also hope that if interest rates fall rents may also fall as overhead cost pressure declines on landlords and housing development and competition increases. Mortgage rates already have fallen.
Meanwhile, the average 30-year fixed mortgage rate fell again slightly to 6.28%, after it peaked at 7.08% in May, as refinancing surged.
Unemployment rate drops one-tenth to 2.5%, Labor Force falls
The seasonally adjusted statewide unemployment rate for August was 2.5 percent. This reflects a decrease of one-tenth of one percentage point from the prior month’s revised estimate. Vermont has the second lowest rate in the nation, tied with North Dakota. South Dakota is lowest at 1.9% and California is highest at 5%.
The Labor Market, which is the denominator in these equations, fell by over 900, which offset a similar decline in the number of employed. The Labor Force decline keeps the unemployment rate low but also shows a weakness in the economy. Total Unemployment also fell, but by a slight amount. The civilian labor force participation rate was 64.6 percent in August, a decrease of one-tenth of one percentage point from the prior month’s revised estimate.
Public Assets Insitute reported today that not only has the labor situation weakened, despite the rate drop, but incomes have also stagnated.
“Over the past seven months, an estimated 5,000 Vermonters have left the labor force, in part due to retirements. While demographic shifts present real challenges, this is also an opportunity to continue connecting Vermonters with good jobs, training, and career pathways,” said Kendal Smith, Vermont Department of Labor Commissioner. “Vermont’s economy depends on a strong and engaged workforce—which means we all have a role to play in building it. There are many ways to retain talent and draw more people to Vermont, including housing solutions, education transformation, service opportunities, and everyday training and job support.”
The comparable United States rate in August was 4.3 percent, an increase of one-tenth of one percentage point from the revised July estimate. The seasonally adjusted Vermont data for August show the Vermont civilian labor force decreased by 910 from the prior month’s revised estimate (see Table 1). The number of employed persons decreased by 838 and the number of unemployed persons decreased by 72. No changes were statistically significant in the seasonally adjusted series.
The August unemployment rates for Vermont’s 14 counties ranged from 2.4 percent in Addison and Chittenden Counties to 3.6 percent in Essex County
National Employment Trends August 2025
- Nonfarm Payrolls: Increased by just 22,000 jobs in August, continuing a trend of minimal growth since April.
- Unemployment Rate: Rose slightly to 4.3% (its highest level since 2021), up from 4.2% in July.
- Long-Term Unemployment: Held steady at 1.9 million, now accounting for 25.7% of all unemployed individuals.
- Labor Force Participation: Remained unchanged at 62.3%, continuing a gradual decline over the past year.
- Employment-Population Ratio: Also unchanged at 59.6%.
Sector Highlights
Gains:
- Health Care: Added 31,000 jobs, below the 12-month average of 42,000.
- Growth seen in ambulatory services, nursing/residential care, and hospitals.
- Social Assistance: Up by 16,000 jobs, mainly in individual and family services.
Losses:
- Federal Government: Down 15,000 jobs in August; 97,000 lost since January.
- Mining, Quarrying, Oil & Gas: Declined by 6,000 jobs.
- Wholesale Trade: Dropped 12,000 jobs; down 32,000 since May.
- Manufacturing: Fell by 12,000 jobs, with transportation equipment hit hardest due to strike activity.
Wages and Hours
- Average Hourly Earnings: Rose by $0.10 to $36.53 (+3.7% year-over-year).
- Average Weekly Hours: Held steady at 34.2 hours.
- Manufacturing Overtime: Unchanged at 2.9 hours.
Revisions to Previous Months
- June: Revised down from +14,000 to -13,000.
- July: Revised up from +73,000 to +79,000.
- Net Effect: Employment for June and July combined is 21,000 lower than previously reported.
Demographic Breakdown
- Unemployment Rates by Group:
- Adult Men: 4.1%
- Adult Women: 3.8%
- Teenagers: 13.9%
- Whites: 3.7%
- Blacks: 7.5%
- Asians: 3.6%
- Hispanics: 5.3%
- New Entrants: Fell by 199,000 to 786,000.
- Discouraged Workers: Steady at 514,000.
Alternative Measures of Labor Underutilization
- U-6 (Broadest Measure): Rose to 8.1%, includes unemployed, marginally attached workers, and those working part-time for economic reasons.
Upcoming Releases
- September Employment Report: Scheduled for release on October 3, 2025.
- Preliminary Benchmark Revision: To be published September 9, 2025, aligning survey data with unemployment insurance records.
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