Posts Tagged ‘Herb Kessel’

It’s Only Money

Friday, November 13th, 2009

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).

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Report Card

Wednesday, August 12th, 2009

It’s the midsummer lull, and it seems that half of Vermont is on vacation.

Must be the half that the News Guy was trying to reach to put the finishing touches on a few good stories in process.

They will be found, those people, and those stories will be written. For today, though, how about taking another look at the “Vermont Transitions” Study completed late last year by the Center for Social Science Research at St. Michaels University for the Council on the Future of Vermont.

Because we’re concentrating on the public schools this “back-to-school” month , we’ll check in on the education chapter, written by the report’s two main writers of the report, Professors Vince Bolduc and Herb Kessel.

This chapter, like the others, is calm and even-handed. So it comes close to being a walk on the bland side. But this saves it from being blinded by ideology. It is analytical, not opinionated. It diagnoses, but does not prescribe.

That’s OK. There is no shortage of Vermonters telling the rest of us – often in loud tones – what ought to be done about the public schools. Bolduc and Kessel don’t do that. They tell us what’s happening, a prerequisite for deciding what ought to be done.

No one who has been paying attention will be surprised to learn that one of the things that has been happening is that there are fewer kids in Vermont schools than there were a decade ago. In 2000 there were more than 105,000 pupils in the state’s public schools; by 2008 there were fewer than 95,000.

(This differs somewhat from the most recent “Fact Sheet” of the Department of Education, which shows a public school population of 95,572.).

The decline will not last forever . The report says the student population will “decline over the next ten years,” meaning nine more (their data are about a year old). According to other projections, the elementary school population will bottom out and start to grow after 2018, and the number of high schoolers will start to rise a few years later.

Still, the report notes, school enrollment will “not hit its previous peak for 20 years.”

Less well-known is just where the declines are taking place. The “enrollment changes are spread disproportionately across the state,” the report says. Basically, there are just as many kids in Chittenden County as there were a decade ago. It’s in the smaller towns and rural areas where the school population has fallen.

This is at least broadly consistent with trends among the general population, growing in Chittenden County, shrinking slightly in Southern Vermont. Populations are holding steady or growing a bit in the northern rural counties, but apparently the people moving into those areas, many of them retirees, are less likely to have children in school.

Another surprise might be the pace of the growth in minority students. While still few in number, minority students are no longer an inconsequential percentage of the total. In 1990, they made up only 1.8 percent of the state’s public school pupils; in 2008, they were 6.10 percent.

Here, too, the concentration is in Chittenden County, and many of these students come from homes where English is not spoken. Burlington and Winooski alone, the report notes, “have seen a 60 per cent increase in the number of English as a Second Language students in 2000. In the Burlington schools, there are students with 47 different languages as their primary dialect, and in Winooski one quarter of the students are ‘English language learners.’”

People may argue about whether this diversity is exciting or disturbing. Either way, it is expensive, and one reason why it is hard to cut costs even as the student population drops.

“At first glance, it might appear that falling enrollments would ease financial pressures, but that is not the case,” the report says. “For political contractual, and/or economic reasons, it is difficult to reduce or reassign personnel to where the need is greatest.”

The result is that Vermont has the lowest student-teacher ratio and the sixth highest per pupil cost in the country.

This is not because the teachers earn a lot of money, the report says. “In 2005, Vermont teacher salaries were ranked 21st in the nation and 4th in New England,” it finds. “Between 1993 and 2003, the growth in Vermont salaries was only 22 percent…45h lowest in the nation.”

Nor is that high per pupil cost simply (or perhaps even primarily) the result of too many teachers. As the report points out, “the most notable change in Vermont’s K-12 educational system is the growth in the number of personnel,” as total employment grew by 22.2 percent between 1996 and 2006, even as student enrollments fell by 6.7 percent.

But most of those “personnel” were not teachers. The number of aides grew sharply, in part because of a large increase in the number of special education students, many of whom are assigned their own individual aide. Special education costs grew by a far higher rate than did the cost of regular education between 1995 and 2001.

That growth rate has since calmed down, the report said. And according to the Education Department, the number of elementary school teachers has started to decline, although slowly. As the pupil population continues to go down, so will the teaching staff.

This does not necessarily mean total costs will drop. As Bolduc and Kassel note, reducing school expenses is harder than cutting costs in a typical business.

“(I)n the private sector, increased costs can often be offset by productivity increases,” they say. But in schools, better productivity is not always desirable. “Adding students to a classroom is one way to reduce costs, but the results may not be educationally sound,” the report says.

.As do most assessments, this one indicates that Vermont schools seem to be doing a relatively good job. The drop-out rate in Vermont is lower than the national average, and has declined since the mid-1990s. Test scores are generally above average, though the authors do point out that Vermont parents tend to be more educated than their peers elsewhere. So the kids might score well on aptitude tests such as the SATs even if the schools were mediocre.

But in several nationwide tests taken since this report was published, Vermont students scored well above the national average on achievement tests as well as on aptitude tests. To the extent that standardized tests are valid measurements, Vermont schools seem to be pretty good.

Maybe even worth all that money, though Bolduc and Kessel never say that. Like good reporters, they just write the news.