Vermont’s unemployment rate held at 2.6% in August, but the headline masks a continued contraction in the pool of people working or looking for work. The state’s seasonally adjusted labor force fell by 167 people from July and by 10,138 from August 2025, according to the Vermont Department of Labor’s September 18 report.
The year-over-year change matters because the unemployment rate only measures unemployed people who are actively seeking work as a share of the labor force. A falling rate can therefore coexist with fewer workers. Federal figures show Vermont’s labor force declined from 348,063 in August 2025 to 337,925 this August. Employment fell by 9,257 people over the same period, while the number counted as unemployed dropped by 387. The U.S. Bureau of Labor Statistics reported Vermont’s 2.6% rate was well below the national 4.1% rate and the third lowest among states.
Payroll data point in the same direction, although the changes were not statistically significant. Vermont had an estimated 310,600 nonfarm jobs in August, down 400 from July and 1,100 from a year earlier. The state report said accommodation and food services added 300 jobs during the month, while state government lost 600 and local government lost 400.
The labor-force participation rate held at 62.1%, meaning the share of working-age residents who were employed or actively seeking work did not change during August. The monthly stability does not erase the larger annual decline in the number of participants.
Labor Commissioner Kendal Smith said Vermont had 1.6 open jobs for every unemployed resident and tied the shrinking labor force to retirements. That makes the August report less a sign of broad layoffs than a warning about the state’s available-worker base. Employers may still struggle to fill positions even when job growth is modest, while job seekers retain leverage in parts of the market.
The statewide rate also conceals local variation. Unadjusted county rates ranged from 2.3% in Addison and Chittenden counties to 3.3% in Bennington County. Vermont’s unadjusted statewide rate was 2.5%, unchanged from July and one-tenth of a percentage point below August 2025.
For residents looking for work, the state’s practical response is a series of recruiting and preparation events. The official Vermont JobLink calendar lists hiring events in Milton on September 22 and 23, a St. Johnsbury hiring event on September 23, and the Workforce in Motion Summit in Essex Junction on September 29. It also lists online résumé, interview and re-employment workshops through the end of the month.
The next state jobs report, covering September, is scheduled for October 20 at 10 a.m. The central number to watch will not be unemployment alone: another decline in the labor force would reinforce the demographic pressure highlighted by state officials, while stabilization would suggest August’s monthly dip was temporary.
