Vermont employment index

Vermont Business Magazine, Apr 01, 1997 by Savitt, Ronald

The last Norrell/Vermont Business Magazine index of employment trends (Vermont Employment Index-VEI) predicted a large increase in employment for the first quarter of 1997. The projection was for an increase of 8.9 percent over the base quarter (Q2'94). The actual difference was 8.1 percent. Though the difference of 0.8 was greater than in the previous forecast, the VEI remains highly accurate in describing changes in Vermont's employment patterns. Second quarter numbers predict a sharp decline in employment, coincident with seasonal employment reductions.

The VEI is a partnership of Norrell Services, Vermont Business Magazine, Harwood Moses Chambers and the School of Business Administration at The University of Vermont. The Index measures the percentage change in employment among a sample of Vermont firms. Much like the consumer price index, a base quarter, here the second quarter of 1994 is used as the base point for comparison.

The survey comes from 80 firms doing business in Vermont. Excluded are employment figures for state and local governments, public schools, and the postal service. The current sample includes 56 firms or a 66 percent response, up from 58 percent last quarter. This quarter's respondents include: 1) retailers (16.1 percent); 2) manufacturers and wholesalers (25.0 percent); 3) construction firms (7.1 percent); 4) healthcare organizations (5.4 percent); 5) recreational firms including the hospitality and ski industries (10.7 percent); 6) financial and insurance companies (10.7 percent); 7) utilities (1.8 percent); and 8) others (3.6 percent). The size of these firms, in terms of full time employees, ranged from 18 to 7,000 with the median number 225 employees. Although the sample varies from quarter to quarter in terms of individual firm response patterns, the general features of this sample with regard to firm size and industry are similar to past quarters.

The survey which is conducted by telephone and typically completed by the firm's human resource manager collects information about the company's current full time employment level as well as hiring expectations for the next quarter. Regarding the latter, questions about the intended number of hires and the intended number of layoffs as well as wage rates are asked.

Figure One shows both actual employment trends and forecast VEI values over the seven quarters since the start of the survey.(All figures omitted) In addition, the employment forecast for the second quarter of 1997 is presented. As shown, the VEI for Q2'97 is expected to show a 2.2 percent increase when compared to the base quarter. The movement, however, is downward, placing Q2'97 at approximately the same point as the projection for Q3'96. Given the increase in accuracy in the technique, the decline has a great chance of being accurate.

The substantial decrease is basically explained by the seasonal layoffs in the ski industry. With the increasing importance of this industry to the Vermont economy seasonal patterns of this type are to be expected. The other area where declines are expected is health care, where the major entities in the industry are going through major restructuring.

With regard to the overall employment outlook, there are mixed intentions. In Figure Two, we can see that 44 percent of the firms plan to increase employment in contrast to 39 percent in the previous survey. However, 13 percent in contrast to 2 percent in the previous study were going to reduce their employment in the quarter. Finally, 43 percent indicated that they were going to stay the same in contrast to the 59 percent last time.

What makes this quarter's projections show that the median number of expected hires is 13 (70 for the past quarter) and the median number of intended reductions is 110 employees in contrast to 4 in the last study.

As shown in Figure Three, the recreation sector closely followed by health care and media represent those areas that show the highest losses. Alternatively, the greatest gains will be in construction and higher education. In the former, these represent the effects of the seasonal nature of that industry. The expected increase in higher education does not represent high salary positions, rather it represents lower level administrative and custodial employees. The representation of media firms in this sample is too small to make judgments.

Customer Service ranks first as the area in which employers are intending to hire, that is followed by Laborer, Professional and General office/clerical categories. This planned hiring data by various job categories is presented in Figure Four.

While there is significant increase in several categories, the wage rates that accompany these positions are slipping. The highest wage categories are expected for management and professional positions, somewhere between $30,000 and $40,000, though it must be noted that these are lower than those offered in the last quarter. The lowest wage categories are in Laborer, General office/clerical and Customer Service groups. These are all under $20,000. This is similar to last year.