Vt. economic growth lags behind nation
By Josh O’Gorman
VERMONT PRESS BUREAU | June 19,2014
A new federal report shows Vermont’s economy grew at a slower rate than the rest of the nation in 2012.
The report from the Office of Advocacy for the U.S. Small Business Administration shows Vermont’s gross state product increased by 1.2 percent in 2012, compared with the nation-wide average of 2.5 percent.
“I would say we’re not growing quickly,” said Darcy Carter, SBA director in Vermont. “We’re growing at a pretty slow rate, and that’s the way it’s been the last few years.”
The report also shows that private-sector employment rose by 0.7 percent in 2013, compared with growth of 2.1 percent for the country as a whole.
Slow growth among small businesses — defined by the SBA as businesses with fewer than 500 employees — is particularly troubling for Vermont, which has more small businesses per capita than the national average.
According to the report, approximately 157,000 — or 59 percent — of workers in the state are employed by small businesses, compared with the national average of 49 percent.
Two out of three new jobs are created by small businesses, the SBA says.
Still, there are some positive numbers for small-business owners and employees. During the third quarter of 2013, income from businesses owned by a sole proprietor increased by 7.6 percent, compared with the year before, to $2.3 billion.
Success of small business hinges on a number of factors, including community support. Hiata DeFeo, owner of Bridgeside Books in Waterbury, opened her shop five years ago this July with an SBA loan.
“Waterbury is a great community and is very supportive of small businesses,” DeFeo said. “We are fortunate that we have such a variety and so much to choose from.”
With two part-time employees, Bridgeside Books is among 23 percent of businesses in the state that employ less than 20 people. This group makes up the largest percentage of small businesses in the state, with 20 percent having 20-99 employees and 16 percent having 100-499 workers.
Businesses with 500 or more employees make up 41 percent of the state’s workforce.
Jamie Stewart, executive director of the Rutland Economic Development Corp., said small businesses in the state face a host of challenges, from transportation to energy and health care costs.
“These things are impacting our ability to grow, but Vermont is not alone in this,” Stewart said.
He noted the high ratio of small businesses in Vermont is an indication of the entrepreneurial spirit of the state.
“There are strengths and weakness in any market and in any region in the country, but Vermont has always been good for small businesses because it fits into our way of life,” Stewart said.
When looking at small-business longevity, Vermont is doing no better or worse than the national average. According to the report, 36 percent of business that opened in 2002 were still in business in 2012, compared with the national average of 34 percent.
When looking at businesses that opened in 2007 — prior to the recession — 47 percent were still operating in 2012, compared with the national average of 46 percent. During the second quarter of last year, 1,122 new small businesses opened, while 1,075 closed during the same time period.