At Lake Champlain Chocolates, owners take turns stacking boxes in the warehouse. At Burlington Bagel Bakery, a sign in the window advertises wages starting at $25 an hour. Central Vermont Medical Center is training administrative employees to become nurses. Cabot Creamery is bringing in workers from out of state to package its signature blocks of Cheddar cheese.
The root of the staffing problem is simple: Vermont’s population is aging rapidly. More than a fifth of Vermonters are age 65 or older, and more than 35 percent are over age 54, the age at which Americans typically begin exiting the workforce. No state has a smaller proportion of its residents in their prime working years.
Vermont offers a preliminary glimpse of where the rest of the country could be headed. The baby boom population is aging out of the workforce, and subsequent generations are not large enough to completely replace them. Immigration plummeted during the pandemic, and while it has since recovered, it is unclear how long it will last, given the lack of broad political support for increased immigration. Birth rates are falling.
“All of this points in the direction of a prolonged labor shortage,” said David Autor, an economist at the Massachusetts Institute of Technology who has studied long-term labor force trends.
Vermont’s unemployment rate was 1.9 percent in September, one of the lowest in the country, and the workforce remains thousands smaller than before the pandemic. Employers are fighting the worker shortage, offering wage increases, signing bonuses and child care subsidies, plus incentives like free ski passes. When those tactics fail, many limit business hours and reduce product offerings.
A rural state (Burlington, with a population of less than 45,000, is the smallest “largest city” in the country), Vermont has for decades seen young people leave in search of better opportunities. And while other states have helped bolster their workforces through immigration, Vermont’s foreign-born population remains small.
But demographics are at the root of the problem.
“We knew where we were going; maybe we got there a little faster than we expected,” said Michael Harrington, the state’s labor commissioner. “There are simply not enough Vermonters to meet the needs of our state and our employers in the future.”
There were similar shortages across the country in 2021 and 2022, as demand (for both goods and workers) surged after pandemic shutdowns. The overall labor market has become more balanced as demand has cooled and Americans have returned to the workforce. But economists and demographers say shortages will emerge again as the population ages.
“It seems to be happening slowly enough that we don’t see it as a crisis,” said Diana Elliott, vice president of U.S. programs at the Population Reference Bureau, a nonprofit research organization. “It’s happening in slow motion.”
The long-term labor shortage will be different from the acute shortages of the pandemic era. Companies will find ways to adapt, whether by paying workers more or adapting their operations to require less of them. Those who cannot adapt will lose ground to those who can.
“There will just be a new equilibrium,” said Jacob Vigdor, an economist at the University of Washington, adding that companies that based their operations on the availability of relatively cheap labor may struggle.
“You may find that that business model no longer works for you,” he said. “There are going to be interruptions. “There will be winners and losers.”
Higher salaries, more opportunities
The winners are the workers. When workers are scarce, employers have an incentive to broaden their searches (considering people with less formal education or disabilities) and provide existing employees with advancement opportunities.
At Central Vermont Medical Center, like rural hospitals across the country, the pandemic exacerbated existing nursing shortages. An aging population means that demand for healthcare will only grow.
That’s why the medical center has partnered with two local universities on a program that allows hospital employees to train as nurses while working full time. The hospital built a classroom and simulation lab on site, and loaned its nurses to serve as teachers. Students spend 12 of their paid work hours each week studying, and if they remain as nurses for three years after completing the program, their student debt is forgiven.
The program has graduated 27 licensed practical nurses and eight registered nurses as of 2021; some previously had administrative jobs. The hospital is expanding training to roles such as respiratory technicians and phlebotomists.
Other companies are finding their own ways to accommodate workers. Lake Champlain Chocolates, a high-end chocolate maker outside Burlington, has revamped its production schedule to reduce its reliance on seasonal aid. It has also begun bringing former employees out of retirement, hiring them part-time during the holiday season.
“We’ve adapted,” said Allyson Myers, the company’s chief marketing officer. “Pre-pandemic we would never have said, oh, come and work in the compliance department one day a week or two days a week. “We would not have offered that option.”
Then there’s the easiest way to attract workers: pay them more. Lake Champlain has increased starting wages for its factory and retail workers by 20 to 35 percent over the past two years.
Charles Goodhart, a British economist, said an aging population would tend to lead to less inequality, although at the cost of higher prices.
“As the available supply of workers will decrease, relative to demand, workers will demand and obtain higher wages,” Goodhart, who in 2020 published a book on the economic consequences of aging societies, wrote in an email.
Robots and housing
When Walmart approached Cabot Creamery to increase distribution of its Greek yogurt, Jason Martin hesitated: He wasn’t sure he could find enough workers to meet the additional demand.
Mr. Martin is senior vice president of operations for Agri-Mark, the agricultural cooperative that owns Cabot Creamery, the nationally distributed brand that employs nearly 700 people in Vermont. When company management talks about adding a product or expanding production, he said, labor is almost always the first issue.
“When I present products to our board, deep down I always think, ‘I’m going to need to find the people,’” Mr. Martin said.
The labor challenge is evident at Cabot Creamery’s packaging plant in the company’s namesake city. Blocks of cheese weighing about 700 pounds are fed into machines that cut them, for one product, into cracker-sized slices. Employees then, wearing gloves and hair nets, place the slices into plastic bags, which are sealed and packaged together. Many of the workers are in their 50s and 60s and have been at Cabot for decades.
Cabot is more than an hour from Burlington, in a rural area where cell phone coverage is spotty and many roads are unpaved. The county has only about 700 unemployed people, according to the state Department of Labor, and while the company has raised wages and offers generous benefits (a recent marketing campaign cites benefits that include a defined benefit pension plan, reimbursement tuition and, of course, free benefits). cheese: hiring remains difficult.
Adding to the challenge is Vermont’s housing shortage. Cabot has contracted with a local university to use vacant dormitories to house temporary workers brought in from other states and (on guest worker visas) from other countries.
It is also investing in automation, not only to require fewer workers but also to make jobs less burdensome for its older employee base. The new equipment will automatically package the cheese slices.
For economists, investments like Cabot’s are good news: a sign that companies are finding ways to make the people they have more productive.
But ultimately, many economists say, Vermont – and the country as a whole – will simply need more workers. Some could come from the existing population, through companies’ efforts to tap new sources of labor and government efforts to address larger problems like the opioid crisis, which has sidelined hundreds of thousands of working-age Americans.
Not all economists believe that demographic aging is likely to cause a nationwide labor shortage.
The ranks of people in their prime working years were stagnant for years before the pandemic, but labor was often plentiful, said Adam Ozimek, chief economist at the Economic Innovation Group, a bipartisan public policy organization. Greater immigration, he added, would increase both demand and supply.
Still, many economists argue that immigrants will be an important part of the solution, especially in fields, such as elder care, that are growing rapidly and are difficult to automate.
“We need to start seeing immigrants as a strategic resource, incredibly valuable parts of the economy,” said Ron Hetrick, senior labor economist at Lightcast, a labor market data firm.
Kevin Chu has spent the last few months traveling around Vermont speaking to local business groups, elected officials, nonprofits, and virtually anyone else who would listen. His message: Vermont needs more people.
Mr. Chu is the executive director of the Vermont Futures Project, a nonprofit organization, backed by the Vermont Chamber of Commerce, that sees the worker shortage as an imminent, long-term threat to the state’s economy.
Chu grew up in Vermont after her parents emigrated from China in the mid-1980s, part of a wave of immigrants (many of them refugees) who came to the state during that period. He remembers attending Burlington High School at a time when he waved the flags of his students’ home countries, dozens in all.
“I feel like I got a glimpse of what Vermont could be,” he said.
Mr. Chu’s message has resonated with business leaders and state officials, but it has been harder to convince the population as a whole. A recent poll found that a plurality, but not a majority, of Vermonters supported increasing the population.
The Futures Project has set a goal of increasing the population to 802,000 people by 2035, from less than 650,000 today. That would also help lower Vermont’s median age to 40, from 42.7.
The state has a long way to go: Vermont added just 92 people between 2021 and 2022.