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IBM Layoffs Hit Local Communities

It is not clear yet how many people are being laid off at the IBM plant in Essex Junction.

Essex Town Manager Pat Scheidel says he doesn’t have any official word on the number of layoffs, but he says he’s been told by a reliable source that 450 jobs will be cut.  Scheidel says his community is keenly aware of the role IBM plays in the local economy and there’s always anxiety when layoffs are announced.

“I would say there’s a real hypersensitivity,” he says. “Everybody takes a deep breath and they’re slow to exhale.”

The property taxes IBM pays to the town of Essex amount to 3.6% of general fund – the largest single source of revenue. In the village of Essex Junction, where the plant is located, IBM accounts for 10% of the property taxes collected.  

At one point the company also paid an inventory and machinery and equipment tax, but that has been gradually phased out. 

Scheidel says the company’s tax payments are significant, but number of employees at IBM doesn’t affect the amount. 

He says the impact of layoffs hits the community in a different way.   The money earned by IBM employees is spent locally on goods, services and property taxes.  He says it’s been calculated that  one high paying IBM job essentially helps create 2 ½ outside jobs.

“If you were to multiply 450 jobs for example, that may be lost at IBM times 2.5, you really get 1200 or 1300 jobs that are adversely impacted by one layoff,” Scheidel explains. "That’s what really hurts because those people, particularly the service related jobs are the ones who are paying the taxes from the residential property tax standpoint, so we are joined at the wallet.”

State officials say they don’t yet know how many layoffs are occurring in Essex Junction.

Companies are required to report layoffs of 25 or more, but if IBM has given employees 30 days notice, it has another month to inform the state.

The company declined to comment on the job cuts.

Steve has been with VPR since 1994, first serving as host of VPR’s public affairs program and then as a reporter, based in Central Vermont. Many VPR listeners recognize Steve for his special reports from Iran, providing a glimpse of this country that is usually hidden from the rest of the world. Prior to working with VPR, Steve served as program director for WNCS for 17 years, and also worked as news director for WCVR in Randolph. A graduate of Northern Arizona University, Steve also worked for stations in Phoenix and Tucson before moving to Vermont in 1972. Steve has been honored multiple times with national and regional Edward R. Murrow Awards for his VPR reporting, including a 2011 win for best documentary for his report, Afghanistan's Other War.
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