A Vermont worker who earns more than he or she would doing the same job in another state probably doesn’t earn much money.

But a Vermonter who earns less – perhaps quite a bit less – than he or she would plying the same trade elsewhere could be an affluent professional person.

That’s because low-wage jobs in Vermont pay better than they do nationwide, while high-income jobs pay less.

According to a report done for the Legislative Commission on the Future of Economic Development by economists Tom Kavet and Jeff Carr, “lower paying occupations in Vermont, such as those in the food preparation and serving business, have wages about 15% above the U.S. average… Many professional and more skilled labor occupations, such as doctors, lawyers, computer and technology professionals and educators, however, receive wages well below…the average U.S. wage.”

Not that doctors, lawyers, and professors are earning less than waiters and janitors. They’re earning a lot more, even in Vermont. It’s just that they could earn more elsewhere.

So why don’t they go elsewhere? And for that matter, why do those waiters and cooks earn more here than they would someplace else?

Kavet said the answer to that second question is easy: Vermont has a higher minimum wage than either most states or the Federal Government. The minimum wage in Vermont is $8.06 an hour, 81 cents above the $7.25 federal minimum and six cents higher than the minimum in Massachusetts. Unlike the federal or most other state minimum wages, Vermont’s is indexed according to the U.S. Consumer Price Index, meaning it goes up with prices. (This year, prices went down, so the minimum wage will stay the same through 2010. Under Vermont law, the minimum does not go down).

The higher minimum does not raise pay only for those earning it. Workers who rate a slightly higher wage (such as someone who is doing the same job as the minimum-earner, but has been with the company longer), will receive $8.25 an hour or so in Vermont, not the $7.50 or so they would get in most states, and so up the next few notches in the wages structure.

OK, that’s pretty simple. But why do the upper-income professionals earn less than they would elsewhere?

Maybe they’re not much good, minor league professional doctors and lawyers who couldn’t cut in the Big Leagues of Boston or Philadelphia?

Considering the national rep of Fletcher Allen Health Care, Dartmouth Hitchcock (some operations in Vermont), and other medical centers, that doesn’t seem like a good answer.

Far more likely is the one Kavet offers: Some people just want to live in Vermont, and they are willing to earn less money in order to have more…well, more of several possibilities: quiet, safety, places to ski or hike or bike or such, being surrounded by beauty (or at least not being surrounded by the ugliness of shopping malls, office parks, and highway interchanges); an old-fashioned sense of community.

In this pigeon-hole-happy society, it’s probably important to declare who is not being described here. These (somewhat) less-greedy professionals are not part of the “Live simply so that others may simply live” crowd (and have you noticed how many of them are pulling in so much dough from their ‘live simply’ books that they can afford McMansions and Hummers and a few have probably got them?). Or like that guy in New York (not worth looking up the name) so intent on reducing his footprint on the natural world that he went a year without using toilet paper and then wrote a book about it.

No, these are people who live rather comfortably. According the Kavet and Carr’s research, a general practitioner physician in Vermont earns only about 80 per cent of what he or she could earn elsewhere. But that’s 80 percent of almost $180,000 (in 2008), or $144,000.

Not a bad living, even if the physician doesn’t have (as many do) a professional spouse whose income brings the household total well above $200,000.

Nor are these “marpies,” (middle aged rural professionals) University of Vermont political science professor Garrison Nelson’s term for the “back-to-the-landers” who flocked to Vermont a few decades ago and stayed in the state, if not necessarily on the land. Today’s “underpaid” professional in Vermont are younger and more practical.

What, then, to call them? Let’s see: they’re professionals who prefer quality of life to big bucks. But PEPQUILBs doesn’t sound right. What about, Vermonters eschewing extreme wealth?

But VEEW is no good, either. So for now, let’s just call them “Quallies,” though if you can think of a better handle, submit it. This could be your ticket to fame and fortune.

Now, at first glance, the very existence of “quallies” would seem to violate a basic law of economics. By and large, economists say, people respond to incentives, which usually means money.

But not always. St. Michael’s College economics professor Herb Kessel noted that when people voluntarily accept lower salaries in return for what they consider better lives, they are acting in a manner “very consistent with economic theory.” In this case, it is the theory of “compensating wage differentials.” Some workers, for instance, are willing to do jobs even if they have dangerous or unpleasant “attributes” (coal mining) if the pay is high enough.

But “the attribute can be a positive or negative one,” Kessel said, making it sensible for people to accept lower salaries in return for other, non-economic, benefits.

It isn’t that people don’t know they could earn money elsewhere, or that most of them regret their decision to move to Vermont despite the lower pay scale. St. Michael’s sociology professor Vince Bolduc, Kessel’s partner in preparing the “Pulse of Vermont” studies for the Vermont Business Roundtable, said one question they asked respondents was whether people who had taken a pay cut to move to the state would do it again.

“A majority said yes,” Bolduc said.

That could help explain why Vermont has more professionals per person than the country in general, even though they make less money here. With 1,800 physicians, for instance, Vermont has a doctor for every 350 people. That’s not enough, but it’s better than the nationwide rate of a physician for every 375 people.

No one seems to know for certain whether there are more “quallies” per person in Vermont than in most other states. Kessel said he thought so, but had “no hard figures” to prove it.

But it would be consistent with some other “hard figures,” such as the disproportionately high percentage of Vermonters who work in the arts (not necessarily as their main source of income), write for a living, have a college degrees, or are self-employed (though that last category could mean that lots of folks can’t find a paying job).

Finally (for today; this subject is worth revisiting) might awareness of a disproportionate number of “Quallies” be reason enough to change state policy? After all, they would seem to be an economic resource. They may have less money than they would if they worked in Pennsylvania or Colorado, but they have more than most folks. They use it to hire workers, buy goods cars and clothing, eat in restaurants. It would seem to be in the state’s interest to try to hang on to the ones who are here and attract a few more.

This requires, said Professor Kessel, maintaining “a rich, dynamic, cultural environment,” in addition to maintaining environmental standards. Vermont has relatively strict environmental regulations, one reason some business leaders complain about the state’s “business climate.” But considering who lives in Vermont, Kessel said, “environmental protection becomes part of business development.”

Then there’s the possibility that what is often considered “economic development” might be counter-productive here.. A new shopping mall anchored by a bog box stores, for instance, is often considered beneficial to a local economy. But “Quallies” may not like the mall because it: (1) is ugly; and (2) could destroy the economic viability of the nearby town or village center, quite likely one of the reasons they came to and stay in Vermont.

Then again, not everyone is a “Quallie.”

And there really has to be a better word for them. Submit your suggestion. Entries will be posted here, and readers may vote for their favorites.

Oh, as to the donations requested last week (click here for details): They are coming in steadily (that’s the good news) but slowly (that’s not).

To repeat: If you think this web site is worth keeping around, look up near the top right corner under “pages, click “donate,” and do your best.

Tags: Herb Kessel, Jeff Carr, Tom Kavet, Vince Bolduc

This entry was posted on Friday, November 13th, 2009 at 12:15 am and is filed under Business & Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.