Chamber leader denies Shumlin’s rosy jobs outlook, warns of death spiral

By Bruce Parker | Vermont Watchdog

Despite Vermont Gov. Shumlin’s rosy economic outlook, the leader of the Central Vermont Chamber of Commerce warns of a possible death spiral due to skyrocketing taxes and regulations.

“If you look at job creation, there hasn’t been any,” said George Malek, president of the chamber located in the town of Berlin. “The workforce is leaving along with the jobs.”

Malek told Vermont Watchdog in an interview that the chamber’s more than 300 members are being hurt like never before by taxes and regulations.

“I’m hearing our members scream from every direction. Run down the list of what’s pending in the Legislature at the moment — more new taxes, more mandates and more payroll for the people you’ve got. You wind up working (fewer) people so you can pay the ones you still have.”

Malek’s comments come as the Vermont Department of Labor on Friday announced a three-tenths of one percent drop in the unemployment rate in March. Unemployment now stands at 3.4 percent, far lower than the national average of 6.7 percent.

Despite the plight of real local businesses as described by Malek, the governor claims the Green Mountain State is on the road to recovery.

This week Shumlin called Vermont a technology leader that “has brought booming businesses, millions of dollars of development … and a cascading effect of jobs within our communities.” His Twitter account boasted “good news about VT’s economy,” and “VT’s unemployment rate is now 3.4 percent, lowest since ’05 and (second) lowest in U.S.”

Malek said not only is the state not booming, it is depopulating as people and businesses flee.

“We’re losing people. And when I say it’s going to go on for the next 10 years, it’s going to go on for the next 10 years because we haven’t been drawing people in for a long time,” he said.

Vermont shed 5,973 people between 2003 and 2012, according to migration data, significant in a state of only 600,000 people. Family sizes are shrinking as well, resulting in fewer workers to support the current retirement generation, Malek said.

“Even if people weren’t fleeing, Vermont’s labor force would still shrink, because there are more people reaching retirement age than there are reaching working age. When you combine that with people leaving, you got a hell of a mess,” Malek said.

The situation will spiral out of control if lawmakers don’t reverse course soon, Malek warned.

“A death spiral can hit the state of Vermont and its budget. If people can’t afford what we’re charging, they leave, and then there’s less money. Then they have to charge the ones who are left more, and then more leave, and the cycle repeats.”

When asked if low unemployment might still be seen as a bright spot for Vermont, Malek said low unemployment is misleading, as the total number of jobs available in Vermont is down near the lows hit during the 2009 recession.

A graph from the Vermont Department of Labor shows that while jobs recovered slightly after the recession of 2009, they are diving again. Vermont had 336,000 jobs in 2013, compared to the low of 334,900 reached in 2009. The state has shed 5,300 jobs over the past seven years.

Malek said an exodus of people and businesses is noticeable to his members, but not to lawmakers.

“We’re seeing it happening on the ground. Unfortunately, we’re seeing little if any recognition of it in the Legislature.”

Statehouse proposals such as single-payer health insurance, paid sick leave and the minimum wage put even more pressure on chamber members to cut jobs.

When asked what Vermont’s increasing economic burden means for business owners and entrepreneurs, Malek said it drives them out of the economy.

“They say, ‘If I can’t make money in this business, I will close it down. I don’t need this aggravation and there’s no reason for me to screw around with all this.’ And they close.”

Contact Bruce Parker @bparker@watchdog.org