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 11, 2025, increased by a small amount for the third week. New claims were 300, up 38 claims from the week before and up 83 from last year at this time. Claims were 186 three 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 House to impose 100% tariffs on China, which led to a stock market plunge last Friday, were mostly shrugged off by the stock market this week, though a bank credit problem could be the next big issue. See below.
In Vermont for the weekly labor UI claims report, manufacturing accounted for 11% of the total, down 5 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 57% from the previous week, up 5 points. Construction was 9%, up 2 points.
For the week, Vermont total unemployment insurance claims were 2,145 (up 88 for the week and up 378 from this time last year).
The Vermont Unemployment Trust Fund is well capitalized. As of the most recent data, there was $309.8 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 reported this week that, "The number of Americans filing new applications for jobless benefits fell last week, economists at JPMorgan and Goldman Sachs estimated on Thursday, but lackluster hiring has left many on unemployment rolls.
Initial claims for state unemployment benefits dropped to a seasonally adjusted 217,000 for the week ending October 11 from 235,000 the prior week, they calculated, on estimates from JPMorgan and Goldman Sachs.
The federal government announced 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. With the federal shutdown, new labor reports have been suspended.
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, a weakening labor market, Chinese tariff threats and fears over bank credit. Shares were up solidly on Friday after and up-and-down week. The Dow, S&P and NASDAQ ultimately finished the week up slightly from where it started. The S&P was up about 350 points to 6,664.01, the Dow was up about 200 points to 46,190.61 and NASDAQ was up about 120 points to 22,679.975. Retail trading has driven much of the recent investing to push the markets higher.
TD Bank Senior Economist Thomas Feltmate was the keynote speaker at the 2025 Vermont Business Growth Awards, presented by VermontBiz Magazine and TD Bank on October 9.
Feltmate discussed the national, regional and Vermont economies. He described the national economy in generally “positive” terms, as growth has returned to relatively healthy.
More locally, Feltman said: “The New England economy has cooled in 2025 as a combination of reduced tourist inflows, federal research funding cuts, and trade uncertainty has weighed on the region. We expect real GDP growth to ease to 1.5% this year amid this backdrop. Job and labor force growth have remained stagnant, allowing the unemployment rate to plateau at its highest level since mid-2016 outside of the pandemic. We expect the unemployment rate to average 4.1% this year, but reduced immigration could keep labor markets tighter than expected. As the economy eases this year, we expect home price growth to decelerate to 4.4% but remain above the national average as supply conditions remain constrained.”
Feltman said that the 2025 US economy is back to a relatively healthy 2% growth after starting the year in decline. This growth is less than 2024 and should grow slightly more in 2026.
He said there are uncertainties in the economy. This is seen in the flipping of the Federal Reserve Bank’s concern from inflation to employment and its decision to cut interest rates. Cutting interest is sugar to inflation but should help bolster the overall economy and theoretically improve a lagging labor market.
In Vermont, the softening of the labor market is masked by the second lowest unemployment rate in the nation. The Vermont labor market has declined, which then keeps the rate low even as employment falls (the LM is the denominator in the equation).
Feltman also noted that the growing tech economy fueled by investments in artificial intelligence (AI) and industries benefitting from it (data centers, energy, semiconductors) represent half the growth in the economy this year, despite being relatively small still, as it has doubled in size from 0.4% of the economy to 0.8%.
The outcome of tariffs and the threats of tariffs continue to cause uncertainty not only in the markets, but with consumer confidence, as both small business confidence and consumer activity in the first half of year have both suffered.
President Trump responded to the move by China by, among other things, threatening a 100% tariff on goods from China.
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 6.27%, 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 recently 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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