Vermont Economic Overview

INTRODUCTION  Winter Sports Draw Tourists to Vermont After Wyoming, the mostly rural state of Vermont is the least populated state. Per-capita income is $37,500, a bit lower than the national average. Vermont continues to have a better-educated and older workforce compared to the rest of the country (22 percent of employees are at least 55 years old). The state’s economy is based on manufacturing, tourism, health care, and the public sector, while agriculture is declining in importance. The gross state product is $23 billion. ECONOMIC HISTORY Tiny settlements were first established in Vermont in the 1700s, but it was not until after the Revolutionary War that small farming communities developed. These were self-supporting and based on agriculture and lake fishing. Sheep herding was also an important part of Vermont’s economy at this stage. The establishment of shipping routes to Canada and to other New England states in 1790 increased trade in crops such as potatoes, grains, and beef. Economic highlights of the 1800s were the introduction of the railroad and the rise of the marble quarrying industry, both of which led to major population growth in the state. Marble, slate, and granite were mined in large quantities, and sheep were gradually supplanted by dairy cattle. Lumber mills and paper mills were established, and the maple syrup industry started as well. By the 1860s, wool mills employed more than 2,000 workers, and manufacturing continued to increase throughout the 1900s. By 1929, tourism was an important part of the economy, and wealthy people from other states bought second homes in Vermont, where they would live part of the year. At the beginning of the 1930s, the dairy industry in Vermont had brought wealth to farmers—almost 66 percent of all farms in the state had a car, a higher percentage than any other state in New England. During the Great Depression, Vermont residents benefitted from the fact that a third of the population lived on food-producing farms. Some 75 percent of Vermont’s milk production was sold in the Boston market. As in the rest of America, World War II brought an end to the Depression in Vermont, with a need for its industries to produce materials for the war. Part of President Franklin Roosevelt’s New Deal included providing jobs for men from the Civilian Conservation Corps to fell trees for the construction of ski trails in Vermont, stimulating a ski industry that grew throughout the 1950s and 1960s. Vermont’s high-tech sector emerged in the 1970s and 1980s with the presence of computer giant IBM. Today Vermont is working to grow its film, tourism, and technology sectors. AGRICULTURE Most of Vermont’s 7,000 farms are dairy producers, as the state supplies about half the milk consumed in New England. Agriculture generates more than $670 million a year, with milk and dairy products accounting for around $494 million, followed by cattle and other livestock at $80 million, and crops such as hay at $99 million. The agriculture, forestry, fishing, and hunting industries provide employment for around 8,400 people. BANKING AND FINANCE The National Bank of Middlebury There are 14 FDIC banks in Vermont, employee roughly 1,500 workers and claiming $5.4 billion of assets. Including other banks, total assets are $9 billion. There are 30 credit unions in the state serving 282,000 people (nearly half the population), which have total assets of $2.2 billion. According to the Bureau of Labor statistics, 81,500 people work in the financial services sector. COMMUNICATIONS Vermont has 28 newspapers, seven television stations, and 87 radio stations. Verizon is the largest phone company, providing 85 percent of telecommunications service in Vermont. Nine local companies provide the remainder of service, with VTel, the largest of the local companies, providing DSL service to 99 percent of customers. Vermont’s information industry employs some 6,000 people. CONSTRUCTION There are 13,000 construction workers in Vermont, a drop of 3,900 since 2008 due to the worldwide economic crisis. Construction contributes $1.25 billion to the gross state product. Average annual pay for these workers is $38,000, and although this is nine percent more than the average private sector wage, it is less than the national average for construction workers of $44,500. EDUCATION Vermont College of Fine Arts in Montpelier Vermont has 391 primary and secondary public schools, serving about 97,000 students, and more than 40 private schools. Educational services amount to $478 million, funded by local property taxes, and more than 9,000 residents work in education. There are some 30 institutions of higher education in Vermont, with a total enrollment of around 40,000 students. Five colleges make up the Vermont State Colleges system, with a total of 13,000 students. The University of Vermont has around 11,000 students, 1,200 staff members, and an endowment of $350 million. Norwich University, founded in 1819, is the oldest private military college in the country, and has 3,000 students, 100-plus faculty members, and an endowment of $175.8 million. ENERGY Almost three quarters of Vermont’s electricity (71 percent) is obtained from nuclear power from the Vermont Yankee power plant. Hydroelectric power from small plants on the Connecticut River and Lake Champlain provide 20 percent, and renewable energy (wind, wood, and wood waste) comprises the remaining nine percent. Vermont’s total consumption of energy is the lowest in the country, as it is one of the least populated states and its mild summers do not demand the same amount of air conditioning as hotter states. In addition, Vermont Yankee sells power to the utility companies in the state at approximately four cents per kilowatt hour, which is around half the average in the rest of the country. ENTERTAINMENT Arts, entertainment, and recreation in Vermont generate around $194 million annually. Approximately 4,000 employees work in the entertainment industry. Similar to many states, Vermont’s film office offers incentives to attract production companies to film in the state. Eighteen films were shot in Vermont in the year 2000 alone. INSURANCE There are 550 captive insurance companies in Vermont, which ranks third in the world for number of captive insurance firms, after Bermuda and the Cayman Islands. Captive insurance companies in Vermont write premiums of around $11 billion, of which $22 million worth of premium taxes goes to the state. Employees in the captive insurance sector earn an average of $52,000 annually. The property-casualty sector employs around 800 people, with a total annual payroll of $48 million. State premium taxes from this sector total $57 million annually, and the property-casualty insurers pay out some $172 million to cover car owners’ losses, $77 million to cover homeowners’ losses, and $303 million to cover business owners’ losses. Around 89 percent of Vermont’s citizens have health insurance, and 57 percent of employers offer coverage to their workers. MANUFACTURING Home of Ben and Jerry's Ice Cream Vermont’s manufacturing sector employs 17 percent of the workforce and contributes the most to the economy after services. Some $2.2 billion worth of computer components, machine tools, and other goods are produced annually by more than 1,500 companies.The electronics sector employs the most workers, followed by food products and industrial equipment manufacturing. IBM is the largest manufacturer, providing 25 percent of the manufacturing jobs in the state and having an impact of $1 billion on Vermont’s economy. Two Ben & Jerry’s ice cream factories are located in the state. MINING AND EXTRACTION Vermont ranks first in the country in the production of slate, and is home to more than 180 mining operations. The average miner’s wage is $48,000, for a total annual payroll of $60 million. A total of $100 million worth of minerals, metals, and fuel products is mined in the state. Dimension stone quarrying accounts for $3.5 million of the total annual payroll, while crushed and broken limestone accounts for $10.6 million of the total annual payroll. The more than century-old Rock of Ages quarry, with annual sales of $85 million, is the largest granite quarry in the country and offers tours and even the opportunity to bowl in an outdoor granite bowling alley. NONPROFIT More than 6,800 nonprofit organizations operate in Vermont. A little less than half are charitable organizations, more than 1,000 are educational organizations, almost 400 are religious organizations, and the remainder are organizations such as social welfare organizations, recreational clubs, or organizations of war veterans. The total assets reported by the organizations are nearly $10 billion, and total income is $7 billion. The average asset amount reported is $3.4 million, and the average income is $2.4 million. RETAIL Vermont’s 8,000 retailers provide jobs for around more than 40,000 employees. Total retail sales add some $2 billion to the gross state product. Roughly 90 automobile dealerships operate in the state at a total annual payroll of some $1.21 million. Sales for all dealerships are around $1.3 billion annually. As in many states, Walmart is a significant presence, employing around 760 workers and spending more than $19 million annually for merchandise and services from more than 75 suppliers in Vermont. Walmart pays $7.1 million in state sales taxes annually, and pays more than $1.9 million in state corporate tax. TECHNOLOGY Vermont’s high-tech exports totaled $3 billion in 2006, and some $36 million was spent that same year to improve the state government’s IT Infrastructure. Around 250 software companies do business in Vermont, with an average annual salary of $60,000 and a total payroll of around $38 million. The state’s biotechnology sector comprises more than 150 companies and supports around 2,000 direct and another 3,000 indirect jobs. Estimated annual sales are more than $115 million. The Vermont Technical College and University of Vermont offer biotechnology programs, and the University of Vermont receives $80 million annually in federal grants for biological and medical research. TRANSPORTATION There are 14,413 miles (23,200 km) of roads in Vermont, and three interstate highways. The state transportation budget of $430 million receives around half of its funding from the federal government, with road upkeep funded by local property taxes. Most (77 percent) of the $16.2 billion worth of goods transported annually from sites in Vermont is carried by trucks on the state’s highways. There are 16 airports in Vermont, the largest being the Burlington International Airport, which is the Burlington Air National Guard Base and an Army aviation support facility of the Vermont Army National Guard. The airport has an average of 250 aircraft operations a day. Lake Willoughby in Westmore TRAVEL AND TOURISM More than 14 million tourists enjoy Vermont’s beautiful scenery, ski slopes, and small-town character annually, and direct spending by visitors for services and goods totals $1.6 billion. Tourism supports around 37,500 jobs (12 percent of the workforce) and brings in $207 million in taxes and fees to the state annually. Aside from skiing, ice skating, snow boarding, and snowmobiling, popular attractions are tours of the Ben & Jerry’s ice cream factory, breweries, wineries, pewter workshops, and the world’s largest marble museum. SPECIAL INDUSTRIES Tapping a Maple Tree Vermont ranks first in the country in the production of maple syrup, supplying 920,000 gallons (3.5 million liters) yearly. The industry provides seasonal jobs to around 4,000 workers in the manufacturing, packaging, and retailing of maple syrup, worth $105 million. The governor’s tree-tapping ceremony, the Vermont Maple Festival, Vermont Maple Queens, and sugarhouses throughout the state are indications of how seriously the state of Vermont treats this traditional industry.