(I’m posting this from the Josiah Bartlett Center for Public Policy’s weekly email newsletter, which you can get for free each Friday by signing up here: https://www.jbartlett.org/about-us/email-sign-up)
Moonlighting in Vermont
For a century, Vermont and New Hampshire were politically very similar. Vermont was even more solidly Republican than New Hampshire. The Granite State elected four Democratic governors from the 1850s through the 1950s. Vermont elected zero. Then diverging demographic, philosophical and political forces shifted each state’s politics.
(By the way, Philip Hoff, the first Democratic governor of Vermont since the 1850s, died in April.)
New Hampshire by the 1950s was developing a stridently anti-tax ethos that has since hardened into part of the state’s culture. Vermont, by contrast, experienced the real-life equivalent of a zombie apocalypse. It was taken over by hippies.
(Iconic examples: New Yorker Bernie Sanders moved to Vermont in 1968 to live with a hippie commune. A decade later, Ben & Jerry followed.)
How’d that work out for Vermont? State leaders are so desperate to recruit fresh brains…err, talent that they’ve resorted to paying people to move there.
Last week, Gov. Phil Scott signed a bill to offer $10,000 to anyone who will move to the People’s Republic and work remotely. The Green Mountain State has become the greenback state.
(As an aside, $10,000 is not nearly enough to justify moving to Vermont. It won’t even buy you a well-kept 1970s VW camper van there, for goodness sake.)
States have tried many methods to lure new residents. When Granite Staters fled farms for mill towns and cities at the end of the 19th century, the state paid for advertisements in Europe to entice people to settle the depopulated rural areas. (That made some sense, given the dramatic drop in the cost of relocating during the 19th century.)
In an age of unprecedented ease of mobility, Vermont’s offer of such a large direct cash payment for relocation reeks of desperation, incense and bad economics.
Vermont officials say they need to take bold action to attract a bigger workforce. As Gov. Scott said when announcing a different initiative to convince tourists to relocate, the state has lost about 16,000 workers since 2009.
This program is intended to pay for 100 relocations in three years. That would have a very small impact on the state’s economy. Even if it works (about 800 people have inquired already), there’s a huge and obvious flaw in the plan. If the state wants more workers to fill its job vacancies, recruiting people who are going to keep working for out-of-state businessesis not exactly the most brilliant strategy.
Vermont has a lot of structural problems that make it economically less attractive than many other states. The Tax Foundation’s business tax climate index puts New Hampshire in the top 10, Vermont the bottom five. Vermont collects $1,133 per person in individual state and local income taxes, per the Tax Foundation. New Hampshire’s total? $72.
There are lots of ways to make a place more attractive for relocation and business investment. Reducing regulations that drive up home prices or make it harder to start a business or get a job are proven methods. Some infrastructure investments also work.
Paying people to relocate — while they continue working for out-of-state employers — is an admission that the state has no interest in making the structural changes that could turn it into a more attractive location for long-term investment.