DFR Completes Legislative Report Analyzing the Economic Impact of Worker Relocation Incentive Programs
Montpelier, VT – Today the Department of Financial Regulation (DFR) submitted a report examining Vermont’s various worker relocation incentive programs to the Legislature in accordance with Act 51 of 2021.
In 2018, Vermont established a first-in-the-nation Remote Worker Relocation Program that reimbursed certain moving expenses up to $10,000 for individuals who moved and worked remotely in Vermont. That program was followed by a 2019 program focusing on attracting new workers for existing job openings in Vermont and a 2021 program combining elements of both programs.
DFR was tasked by the Vermont Legislature to examine “the effectiveness of incentive programs to attract new remote workers in meeting the demographic challenges and workforce shortages that exist in Vermont.” DFR contracted with Philadelphia-based consulting firm, PFM Group Consulting LLC, to conduct an economic analysis of the programs.
To derive the programs’ true economic impact, the consultant first had to navigate a fundamental challenge: how many of the programs’ participants would have relocated to Vermont absent the incentives? The consultant approached this limitation by surveying program participants to gauge how impactful the incentives were on their decision to relocate to Vermont and then discounted the economic impact based on the survey results. Using this approach, the consultant estimated the following impacts:
- Economic Impact Estimates: The consultant estimated the 140 participants in the 2018 Program helped spur the creation of 52 new indirect jobs, $2.5 million in wages and $7.6 million in annual economic impact in Vermont. Further, the consultant estimated the 167 participants in the 2019 Program induced the creation of 63 new jobs, $3.1 million in wages and $9.5 million in annual economic impact.
- Direct Tax Revenue Estimates: The consultant also estimated the 2018 and 2019 Programs created roughly $419,001 and roughly $527,089 in annual state tax revenue, respectively. Considering the appropriations for the 2018 and 2019 Programs ($500,000 and $670,000 respectively), the consultant estimated both programs paid for themselves within two years of implementation.
Considering these impacts together, the consultant estimates that every tax dollar spent on 2018 program resulted in $93.88 in economic activity and every tax dollar spent on the 2019 program resulted in $66.26 in economic activity. The 2021 program was not included in the analysis due to its recent implementation.
The report also provides several recommendations to improve the programs and the consultant also highlighted Vermont’s need to tackle affordable housing, childcare availability, and access to high-speed internet to attract new workers to our state.
At least 52 other worker relocation programs have been established by states and municipalities over the last three years, but this is only the second study examining the effectiveness of such programs. The first examined the remote worker program established in Tulsa, Oklahoma, which was completed last month. That report found similar challenges definitively quantifying the impact of the worker relocation incentive, but concluded the program likely benefited the Tulsa economy.