F OR YEARS after the global financial crisis of 2007-09, America’s wage growth was frozen. Earnings have recently been rising at a faster rate. The latest figures point to year-on-year growth of around 3% in nominal terms. But not all states have shared the gains. On both a per-hour and per-week basis, Vermont has seen the weakest wage growth of any state in the past decade, despite a rapid rise in the minimum wage and low unemployment. Real wages remain lower than they were when the last recession ended (see chart). What has Vermont got wrong that much of the rest of America has got right?

Weak earnings growth is in part the product of a relatively weak economy. In the past decade Vermont’s GDP has grown at two-thirds the rate of America’s. Critics point to a mountain of red tape and regulation. The state comes close to the bottom of various indices of “economic freedom” produced by libertarian think-tanks. These may be rough and ready but, when it comes to the regulation of land, small-government types may have a point.

A recent working paper from the Bank of England shows that in many parts of America building houses has become more difficult since the mid-2000s. Tough zoning laws may partly be to blame. The paper’s results suggest that it is now about as hard to build in Burlington, the biggest city in Vermont, as in San Francisco. Constraining Burlington’s growth weighs on the economy. People find it hard to move there because it is too expensive, so they are stuck in less productive jobs elsewhere.