Labor Department Links Free Trade to Vermont Job Losses

From Seven Days
VERMONT — One of the pillars of the Douglas administration’s economic development strategy turns out to be made of cardboard. Rather than generating abundant opportunities for Vermont workers, the state’s plunge into the global marketplace is resulting in extensive loss of livelihoods.

Free-trade agreements cost Vermont nearly 1700 jobs in the past three years, the state Labor Department reported last week. And there’s more: The business sectors that account for nearly all of Vermont’s exports suffered a combined loss of about 9000 jobs between 2000 and 2005. That means one of every five Vermonters employed by export-oriented companies was thrown out of work as the state got pounded by the forces of globalization.

These figures were requested by the Vermont Commission on International Trade and State Sovereignty — three months ago. The Douglas administration delayed release of the damning data until the state legislature had adjourned in order to avert a political firestorm, suggests Dan Brush, a trade union leader who serves on the commission.

Chittenden County State Sen. Ginny Lyons, the commission’s co-chair, says she’s “astounded” by the findings. “We’ve heard so much from the business community that international trade is going to save Vermont’s economy,” Lyons observes. “But we’re seeing the opposite.”

The data on trade-related job losses indicates that Gov. James Douglas’ planned prospecting trip to China next month will be “a waste of time and resources,” Brush declares. He finds it “outrageous,” he adds, that the Vermont Chamber of Commerce has been operating a trade-development office in Shanghai for the past three years.

“It’d be a lot better if we worked on establishing a strong creative economy in Vermont instead of spending money on international trips when it’s proven that international trade is very whimsical,” Brush continues.

Other players and analysts are skeptical of the Labor Department’s numbers.

Chris Barbieri, director of the state chamber’s Shanghai office, says Vermont has no choice but to participate in the global economy. “That train left the station some years ago,” Barbieri remarks. “And I’m glad we were on it when it left.”

Barbieri says that in maintaining a trade-promotion office in China, Vermont companies are making a modest investment — much less than $200,000 a year — that could yield big dividends. But the head of the chamber’s Asia division says he has no statistics on job gains in Vermont attributable to his networking efforts in Shanghai.

“I don’t make the sale,” explains Barbieri, who lived in China for most of the past three years but now spends three-quarters of his time in Vermont. “We set up the environment so others can make the sale. And private businesses don’t usually reveal how well they do in overseas markets.”

Short-term job losses should not lead to “absolute conclusions” about Vermont’s export opportunities, Barbieri adds. “You’ve got to look at it over the long haul in assessing exports and jobs.”

Today, the paychecks of about 78,000 Vermont workers are drawn to at least a small degree on their companies’ involvement in foreign trade, Barbieri says. He acknowledges, however, that a single company — IBM — accounts for roughly 80 percent of Vermont’s export-linked economic activity.

Doug Hoffer, an economic consultant who conducts studies for the Peace and Justice Center, agrees that international trade does provide good jobs for some Vermonters. Legislator Lyons holds that view as well, noting that Douglas’ efforts to capitalize on China’s growing investments in environmental-engineering technology “could prove very lucrative for a few Vermonters.” But, she points out, Vermont firms that land clean-up contracts in China will most likely hire Chinese workers, producing few or no employment opportunities back home.

Hoffer says he’s not surprised by the data on job losses, because the increased mobility of capital allows corporations to fatten revenues and trim expenditures by shifting production to low-wage countries. Despite all the attendant risks and shortcomings, “I’m not suggesting that Vermont companies shouldn’t trade,” Hoffer says. But he warns that the state “should be prepared for the downs as well as the ups of the global market, and there’s a lot of downs.”

Vermont officials and business leaders should respond to these dynamics with eyes wide open, Hoffer advises. “This state accounts for 0.2 percent of the U.S. economy, and every other state is trying to do the same thing we are by looking for trade opportunities in huge markets like China. Imagining we’re somehow positioned to do a lot in China is just ludicrous.”

Hoffer emphasizes that the Douglas administration must also “stop giving away our sovereignty. The free-trade agreements that the governor has made Vermont a party to are making it harder to use tools to develop our own economy.”

Lyons points out that free-trade agreements such as NAFTA make Vermont potentially vulnerable to rulings that would prevent it from favoring local companies when making state purchasing decisions. “All it would take is an objection from another nation saying we’re giving preferential treatment to a Vermont company. We’d then have to open up to purchasing from companies in other countries,” she says.

“That hasn’t happened yet,” Lyons adds, “and it may never happen.”

But to better safeguard Vermont’s economic assets, Lyons wants the legislature to have an equal say to the governor in deciding whether the state should enter into free-trade agreements. The commission she co-chairs will most likely push for such a sharing of responsibility, Lyons indicates.

Vermont export industry jobs down

Vermont export industry jobs down
Bob Kinzel
MONTPELIER, VT (2007-05-21)

(Host) According to a new report, there's been a significant loss of jobs in Vermont's export industries over the last 5 years.

Members of the Vermont Commission on International Trade expressed surprise and dismay at the details of the report.

VPR's Bob Kinzel reports:

(Kinzel) The Commission asked the Vermont Department of Labor to compile a report that evaluates the general condition of Vermont's export industry. The panel also wanted to study the impact that free trade agreements have had on businesses in the state.

The news is not good. Between 2000 and 2005, companies that make up the state's exporting market lost 20% of their jobs. This amounts to roughly 9,000 positions.

Initially during this time period, the value of products exported from Vermont fell sharply and then eventually rebounded to previous levels.

In addition, nearly 1,700 workers lost their jobs specifically because their companies shifted the positions overseas under one of the country's free trade agreements.

Chittenden senator Ginny Lyons is a co-chair of the Commission. She's surprised by the loss of jobs in the electronics, manufacturing, paper products and transportation equipment fields. Vermont's food products industry also lost 6% of its jobs during this time period.

(Lyons) "What's surprising to me is that the very areas that we thought we were leading and gaining in are the areas we're losing. And many of these are related to free trade agreements. What the commission would like to do would be to understand what's happening and perhaps turn this around so that we can actually see an increase in jobs in the state of Vermont rather than shipping them off to other parts of the world."

(Kinzel) Chris Barbieri is an international trade specialist at the Vermont Chamber of Commerce.

He says he still believes that free trade will benefit the state economy in the long term.

(Barbieri) "To see some decline in jobs - I think that's not necessarily an unusual thing. But I think over the long run we're going to see a positive result for Vermont in terms of the exports and the markets that are going to become open to us."

(Kinzel) Next month, Governor Jim Douglas will lead a trade mission to China to promote Vermont's environmental technologies. Barbieri has high hopes for this effort:

(Barbieri) "China has a huge environmental disaster as most folks know. It doesn't matter whether it's water, whether it's air or whether it's solid waste. They've got a lot of environmental problems and Vermont has an opportunity to be part of that solution. The central government and provincial governments are spending enormous amounts of money on clean up and this clean up is going to take decades before it's completed."

(Kinzel) The Commission on International Trade also plans to review a variety of federal and state programs that are available to displaced workers. The panel wants to be certain that these programs are meeting the needs of Vermonters who have lost their jobs in the export sector.

For VPR News I'm Bob Kinzel in Montpelier.

© Copyright 2007, VPR

Truth of health care is very inconvenient

Truth of health care is very inconvenient

Several weeks ago an important report commissioned by the Vermont Health Care Commission was quietly posted on the Legislative Council Web site. No fanfare, no press conferences, no attention given. Media ignored it. The committee that ordered it ignored it. The Legislature ignored it. The administration ignored it. The report's findings tumbled into the political abyss.

And yet the report contains a message that affects every one of us. What it says ought to be engraved in the thinking of every legislator and every administration member. We can hope the powers that be take it to heart. They ought to. They paid for it.

The subject of the report is health care reform. More precisely, financing health care. It says that unless we find a way to control the overall costs of health care there is no way we can keep paying for it at the current rate of increase.

You could say we already knew that. The same point has been made many times before. But not in this way. The report brings science, logic and analysis to the subject. It drives the point home in a fair-minded way.

The report by Kavet, Rockler & Associates is called "Health Care Financing Analysis."

Tom Kavet is a Vermonter, and Nic Rockler is from the Boston area. They are economists. Last year's Legislature ordered (in Act 71) a review of the economic implications associated with a range of health care reforms that might arise now or later.

All health care reforms have to be paid for, so Kavet and Rockler looked at the ways it might be done: income taxes, payroll taxes and consumption taxes (the current Catamount reform leans heavily on cigarette taxes).

Here is a money quote from the report:

"Without a significant change in the way health care costs are managed, the growth in health care spending has and is likely to continue to exceed past and projected growth rates from any major tax revenue source. As a result, without policy intervention to control costs, tax rates would need to be frequently raised or new tax sources tapped in order to meet likely future expenditure growth."

Here is another:

"Unless such cost control can be achieved, no available revenue source will be able to keep pace with the projected growth in (health care) program expenditures."

The report also makes the common-sense suggestion that a consensus on policy must form a basis from which to tackle this problem in a meaningful way. So far the Douglas administration and the Legislature have fallen short of any consensus that blends policy with practical measures that would address the problem of financing health care in Vermont.

An example of an approach that's not meaningful is last year's premature declaration of victory by some legislators and the administration over the Catamount Health Plan. Catamount has already raised the overall costs of health care, and any promises of savings will be offset by future cost increases. Catamount deserves one cheer for intent (more insurance for some of the people who have none), but its role in cost-control policy is next to nil.

The Kavet-Rockler report ordered by the Legislature, and apparently dust-binned by it, carries a very disturbing "inconvenient truth." That is that overall costs, not more insurance coverage or re-tuned delivery systems, is the problem. According to Kavet-Rockler, it is a problem that we can count on outpacing any of our reform efforts unless they target a "significant change in the way health care costs are managed."

They point out that what goes for Vermont goes for the nation. The United States pays a lot more for health care than other nations, without better results, which the report says suggests "that expenditure cost control could be achieved without necessarily sacrificing the quality of health care services provided."

The Kavet-Rockler report is the first product commissioned by our Legislature that makes the case that controlling the rising cost of health care needs to be at the center of Vermont's health care policy initiative.

Cornelius Hogan, Dr. Deborah Richter and Terry Doran are authors of "At the Crossroads: The Future of Health Care in Vermont."

Public Assets Institute Monitoring Eco Devo Commission

The Commission on the Future of Economic Development was created by statute (10VSA§1) in Act 184 of 2006. The Commission is responsible for Vermont's long-term economic development planning (previously the responsibility of the Vermont Economic Progress Council). It is charged with producing an economic development plan every five years using "a planning process that is open and inclusive, with broad-based public engagement..." The first five-year plan is due to be presented to the legislature by September 15, 2007.

The Public Assets Institute is monitoring the work of the Commission to ensure that the planning process is open and inclusive, and draws from a broad spectrum of ideas and interests. See the Institute's web page about the Commission at:

http://www.publicassets.org/indexcfed.php