Art Woolf, longtime economics professor at the University of Vermont, recently wrote about Vermont’s GDP being the lowest in the nation – even lower than a state with a smaller population than Vermont:
The best summary statistic we have to describe a state or nation’s economy is gross domestic product, the total dollar value of all goods and services produced within its borders. Vermont’s GDP — $30.4 billion in 2015 — pales in comparison to the U.S. total of $17,800 billion. That’s usually referenced as $17.8 trillion, but it’s hard enough for me to conceptualize a billion dollars, much less a trillion, and comparing Vermont’s GDP to the nation is best done using the same units of measure. We could also say that Vermont’s GDP is $0.0304 trillion, but that’s even harder to conceptualize. At any rate, Vermont’s GDP is the smallest of any state in the nation, below even Wyoming, the only state with fewer people than Vermont. At the other end of the list, California leads the nation with a GDP of $2.5 trillion.
As we’ve noted before, Vermont has been at the very tail end of economic growth as compared to the other 49 states (or 56 if you’re Obama, who really kills it at math).
But worse, even when comparing a barely anemic growth rate in GDP in Vermont to New Hampshire’s more robust rate, there is much more compelling economic evidence that the state is trending downward. In a very critical category: Income.
Vermont’s median household income has never been higher than New Hampshire’s, at least going as far back as 2000 (earliest year of the FRED data). New Hampshire’s population is roughly twice that of Vermont’s, but on the median household income basis, that population factor is accounted for.
Why? Why are Vermont incomes lower, and even trend negative starting in 2013? If those trends are negative in 2013, why would Vermont’s sitting governor, Peter Shumlin, declare Vermont to be a “great” place for jobs in 2014? How “great” can it be if incomes are going down?
Worse, the trend in Vermont is increasing spending and employee hiring in the public sector, while NH has been trimming the number of employees in the public sector. Vermont’s answer to stagnation is to hire more employees; New Hampshire’s seems to be the opposite.
In fact, between the peak of government employees for both states in the January 2010 timeframe (above), until January 2016, here’s how NH and VT compare:
Incomes do not go up when state spending increases to hire more people. The dollars spent on state employees come from the private sector, and the higher the private sector is taxed, the slower the economy will grow. So how does VT and NH compare, in total taxes? Vermont is ranked 12th in total taxes; New Hampshire is ranked 49th.
In other words, if you’re looking for growth prospects, higher incomes, and opportunity for yourself and your family, Vermont might not be the state you’re looking for.