Vermonter.com

Very informative article in the Sunday Burlington Free Press (10/21/2007):

UNH study: Income disparity grows fastest in New England
By Dan McLean
Vermont’s wealthiest households have seen their incomes grow faster than anywhere else in New England — helping to drive income inequality in Vermont and throughout the region, according to a University of New Hampshire study.

Although the region does not suffer from widespread poverty, the gap between rich and poor has grown more quickly in New England than in any other region in the United States from 1989 to 2004, according to “Changes in Income Distribution in New England,” a study conducted by UNH’s Carsey Institute.

Vermont, although not listed among the states with the highest inequality levels, had the second largest disparity change in the country, following Connecticut, the study said. Vermont moved from No. 47 to No. 31 in income disparity during the 15-year period.

“It surprised me,” Ross Gittell, the study’s author and a professor at UNH’s Whittemore School of Business and Economics, said of Vermont’s growing inequality. “I think there has been a takeoff at the top, and a hollowing of the middle class.”

Retirement is also a factor. Many retirees, who have made their money elsewhere, retire to Vermont with a healthy stock portfolio, he said.

Manufacturing jobs throughout New England have been replaced with higher paying jobs that require higher education levels and advanced skills, the study said; the declining number of unionized work forces is also fueling the gap in wealth.

The shifts are more noticeable in New England, the study said, because the region is well-educated, creating a high-tech work force. It’s also a relatively expensive place to conduct business, pushing low-skilled jobs elsewhere.

In Vermont, the top 20 percent of households saw their inflation-adjusted incomes, or real incomes, jump by 25.6 percent — the highest percent in the region — to $141,565; a household can include more than one earner.

Vermont’s typical wages are slightly below the U.S. level. In May 2006, the median wage for a Vermonter was $29,510 annually — meaning half earned more and half earned less, according to Labor Department data. The U.S. median wage was slightly higher at $30,388 a year.

Some of Vermont’s top earners have moved to the state for quality-of-life reasons, but continue to work at high-paying jobs — that helps drive the state’s income inequality, Gittell said.

Condon agreed, saying some recent Vermont residents “won their wealth in the rat race” and now work part-time from their homes in Vermont.

State labor data support the study’s conclusions about Vermont’s changing types of jobs.

Vermont’s manufacturing jobs dwindled by 17 percent — about 7,500 jobs — in the decade following 1996. In 2006, there were 36,243 manufacturing jobs in the state, according to Labor Department data.

“The companies are taking those jobs where they can pay them less: to other regions of the country and to other parts of the world,” Condon said.

A need to remedy?

Increasing income equality and the eroding of the middle class has serious side effects, Gittell said.

The complete article can be found here.