by Timothy McQuiston, Vermont Business Magazine Weekly unemployment claims increased for the week ending February 8, 2025, but remain under 400 as activity has leveled off. New claims were 370, up 22 claims from the week before and are 21 fewer from last year. The holiday season brings wild swings in claims as temporary workers are hired and then laid off. The stability of the last few weeks should last until the end of the ski season. Claims, which tend to be lowest in the summer, were 181 at the end of September 2024.
For the month of December the US jobs report beat expectations, while the US unemployment rate fell one-tenth to 4.1% for December and another tenth in January 2025 to 4.0%. The US rate always precedes the state rates by at least a couple of weeks. The Vermont unemployment rate in December held at 2.4%, which is the second lowest in the nation. However, in order to rectify the annual data, the state January rate will not be released until March 17.
As a reminder, the Vermont Department of Labor has announced an increase to the state’s minimum wage, which began January 1, 2025. The State’s minimum wage will increase from $13.67 to $14.01 per hour - an increase of $0.34.
This annual adjustment also impacts the minimum wage for tipped employees. The “Basic Tipped Wage Rate” for service, or “tipped employees,” equals 50% of the full minimum wage. On January 1, 2025, the tipped minimum wage will increase from $6.84 to $7.01 per hour.
The State’s tipped minimum wage law allows employers to pay a lower hourly rate, as long as the employee receives tips equal to, or greater to than, the standard minimum wage during a given shift. In cases where the employee does not receive enough in tips during a workweek to equal the standard minimum wage per hour, the employer is required to pay the difference in order to ensure the tipped wage employee is compensated at the non-tipped minimum wage amount.
In Vermont for the weekly report, the Service industry accounted for the most claims last week with 35%, down 6 points. Construction was at 32%, up 1 point. Manufacturing accounted for 17% of claims, up 8 points.
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For the week, total unemployment insurance claims were 4,025 for the week (down 58 for the week and down 172 from this time last year).
Reuters is reporting that employment is stable, as layoffs have been modest, and the overall labor market remains strong.
According to the US Department of Labor, initial jobless claims in the US fell by 7,000 from the previous week to 213,000 on the first week of February, below market expectations of 215,000. In the meantime, recurring claims fell by 36,000 to 1,850,000 in the last week of January, firmly below market expectations of 1,880,000, to extend the drop from the over three-year high touched earlier in the month. The data continued to show robustness in the US labor market, in line with the Federal Reserve’s rhetoric that there is no rush to continue cutting interest rates. In the meantime, the four-week moving average for initial claims, which removes weekly volatility, fell by 1,000 to 216,000. On a non-seasonally adjusted basis, the initial claim count fell by 10,095 to 231,006, amid sharp declines in Pennsylvania (-2,975) and New York (-2,919).
Reuters said last week: "Labor market resilience is the driving force behind the economic expansion and has given the Federal Reserve room to pause interest rate cuts while policymakers assess the impact of the fiscal, trade and immigration policies of President Donald Trump's administration, which economists view as inflationary."
The Fed left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range in January, having reduced it by 100 basis points since September, when it embarked on its policy easing cycle. The Fed hiked rates by 5.25 percentage points in 2022 and 2023 to tame inflation.
In December Public Assets Institute reported, Vermont's personal income was up 6 percent in 2023, which is the fastest median rate increase in the nation. PI grew by 3 percent in the US and only four states saw income drop: Alabama, Minnesota, North Dakoka and Iowa.
Meanwhile, PAI recently released its State of Working Vermont 2024 report, which concluded that: "More than half of single adults in Vermont, with kids or without, cannot afford to meet their basic needs. Even many two-earner households fall short. Meanwhile, the wealthiest Vermonters have over $1 million left annually after covering their needs.
"The state budget reflects our priorities. Healthcare and pre-K-through-12 public education each account for about a third of the total state budget. But the other policies and programs that help make Vermont affordable—like cash assistance, food programs, childcare subsidies, and housing support—together account for only 10 percent. That means reasonable, targeted investments in these areas can make a big, immediate difference to Vermonters struggling to afford their basic needs.
"Our laws enshrine the promises we’ve made to each other: that everyone has quality healthcare, housing, dignified work, education, food, social security, and a healthy environment. We have the resources to deliver on these promises and make Vermont a state that is both affordable and equitable for everyone who lives here."
"The November jobs report shows an expected rebound in hiring and no major surprises,” said Eric Merlis, managing director and co-head of global markets at Citizens. “The slight uptick in the unemployment rate and dip in the participation rate should convince the Fed to continue its gradual easing path at the December meeting.”
Meanwhile the Vermont Unemployment Trust Fund is well capitalized. As of the most recent data, there was $306 million in the Trust Fund, down about $1 million (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.
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