Category Archives: Unemployment

Universal Recognition Will Help Stem Virginia’s Migration Woes

by Conor Norris and Edward Timmons

From pristine beaches to rolling hills and picturesque mountains, Virginia has a lot to attract residents. Combine that with a strong economy and Northern Virginia’s close ties with Washington, D.C., Virginia should be an attractive destination.

But surprisingly, that’s not the case. Despite strong economic performance and a high quality of life, more people are leaving Virginia than moving into the commonwealth. There may not be one silver bullet to reverse this trend, but the legislature just took an important step helping people move to Virginia by recognizing out-of-state professional licenses.

In 2021, Virginia experienced net out-migration. Many of us are puzzled by this trend, blaming some combination of housing prices, remote work, taxes, and weather for enticing people to leave Virginia. Unnecessary barriers for those considering a move into Virginia are also a contributing factor.

If you work in a licensed profession and wanted to move to Virginia in the past, it wasn’t easy to start working in your new home. First, you would have to reapply for a license, paying fees and waiting months for the application process. Sometimes, you would even have to go through training or education again and retake exams, no matter how long you’ve been working, adding time and money to an already expensive process.

The hassle created by the need to reapply for licensure had a real effect on people’s decision to move. Economists estimate that occupational licensing reduces migration by seven percent. Anyone who has moved knows it’s a costly and time-consuming process. Making it difficult to start working is enough to push some people over the edge and prevent them from moving entirely.
Continue reading

Pass Me the Napkin, Please. I Need to Write an Appeal.

Carrie Roth, VEC Commissioner. Photo credit: Richmond Times-Dispatch

by Dick Hall-Sizemore

The Youngkin administration has come up with a new way to deal with the backlog of appeals filed with the Virginia Employment Commission (VEC): reduce the amount of time claimants and employers have to file an appeal to the agency’s decision.

As reported by the Richmond Times-Dispatch, a House subcommittee has acted favorably on HB 1639, introduced by Del. Wendell Walker, R-Lynchburg, at the request of the administration. The bill would give claimants and employers 15 days instead of 30 to appeal decisions on claims for unemployment insurances, as well as to ask for a review of an initial appeal ruling.

The administration and the bill’s proponents contend that the bill would make the process more efficient. “The impetus behind this is to make sure we give them a very timely final decision in an expedited fashion,” VEC Commissioner Carrie Roth told the subcommittee.

In reply to Democrats’ concerns that people who might want to appeal could be “disenfranchised,” Roth replied that filing an appeal is not difficult. Apparently inspired by Arthur Laffer, she said, ““You can write it on a napkin and we will accept that appeal.”

Appeals filed on napkins would certainly enable the VEC to speed up the process of reviewing appeals.

Virginia Job Growth Trails U.S. Averages

Click for larger view.

by A. Fletcher Mangum

A. Fletcher Mangum

Virginia’s employment growth has been underperforming the national economy for quite some time. As shown in Figure 1, soon after the recovery from the Great Recession began in earnest in 2011 Virginia’s year-over-year growth in total employment uncharacteristically fell behind the national economy and even briefly went negative in 2014.

Then in early 2020, just as in the rest of the country, economic conditions in Virginia changed drastically when the governors’ lockdowns of economic activity were imposed in response to the pandemic. Between March and April of that year nearly 20 million jobs were lost nationally (or approximately one out of every eight jobs in the country), while in Virginia the employment loss was 428,000 jobs (or approximately one out of every nine jobs in the state). Virginia was not as badly hit as the nation as a whole because of its heavy dependence on federal employment and contracting (which were not significantly impacted by the lockdowns) and disproportionate employment in the Professional and Business Services sector (where people were better able to work remotely).

However, history is now repeating itself as Virginia once again falls behind the nation in the recovery and that trend is getting worse. In April of this year, when year-over-year employment growth turned the corner and moved into positive territory nationally, Virginia trailed the pack and continues to do so. In April Virginia ranked 41st among the states in year-over-year total employment growth, gained ground to hit 32nd in May and 30th in June , and then fell back to 39th in July and all the way to 47th in August. Continue reading

Businesses Taxed For Somebody Else’s Layoffs?

Labor Force Participation Rates, March 2021. Source: VEC  Click for larger view. It represents the percentage of population of working age employed or seeking a job.

by Steve Haner

So many Virginia employers faltered or failed during 2020, the remaining companies may be charged a special tax of $95 on each of their own employees in 2022. It will cover the unemployment benefits paid to workers somebody else laid off, the highest so called “pool tax” ever imposed, more than double the amount collected following the previous recession in 2012.

The total unemployment insurance tax (average) may reach $360 per employee in 2022: A base tax of $249, the pool tax of $95 and a special “fund builder” tax of $16. That is more than 50% higher than the previous peak tax in 2012.

The figures emerged this morning as the Virginia Unemployment Commission staff briefed a legislative oversight panel on the financial health of the state’s beleaguered Unemployment Insurance program, swamped by a record number of claims in the COVID-19 recession and hampered by administrative failures in dealing with claims that needed extra attention.

For details, here is the UI Status Report presented today, following the usual format. VEC also provided more information on Virginia’s employment history over time, by region, industry, and locality.  Continue reading

State Tax Harvest Under Northam Expands Again

by Steve Haner

With the release today of the April 2021 Virginia state revenue report, a correction in an earlier post becomes necessary. Overall general fund state tax collections are not up 26% so far compared to four years ago, they are up almost 30 percent. Corporate income tax collections are not up 68%, but 86% over the same period four years ago.

Your correspondent regrets the error and admits jumping the gun after the March report knowing things would become more dramatic soon. Since the essence of good communication is repetition, expect another update in a month. And as has been the case for a while now, expect Governor Ralph Northam to seek to distract the voters from what is really going on. Continue reading

Unemployment of Blacks Exceed that of Whites at Every Level of Educational Attainment

by Dick Hall-Sizemore

Here is another salvo in the culture wars that have been reflected on this blog. An article in a newspaper today begins with this sentence: “From advanced-degree holders to high-school dropouts, Black workers have substantially higher unemployment rates at every level of educational attainment than white workers….”

And which woke newspaper with a critical race theory bias ran this article? Why, the Wall Street Journal, of course!

The article goes on to say that the disparity between Blacks and whites increased this year during the pandemic. (Black unemployment levels exceed those of Hispanics at every educational level, as well.) Finally, not only are Blacks more likely than whites to be unemployed, they are more likely to be underemployed. “Black employees with full-time jobs also earn less than similarly educated white workers.”  The article quotes one economist as saying, “Frequently, Black workers need to send additional signals about their qualifications to get the same job. That’s why you’ll see a Black person with a master’s degree in a job that only requires a bachelor’s.”

The article suggests several reasons for these discrepancies:

  • “Black Americans more frequently attend lower-quality elementary and high schools in racially segregated neighborhoods, which may leave them less prepared to succeed in college or at their first jobs.”
  • “Black workers also can lack access to better, more stable jobs because they may not have the network of contacts to know about them.”
  • “They may face challenges like lack of access to transportation or child care.”
  • Finally, the economists interviewed in the article suggest that old fashioned discrimination plays a part. “There are negative penalties in the labor market associated with gender and race that can’t be explained by anything else,” they contend.

Assembly Protected Utilities, Not Other Businesses

First published this morning (with some slight differences) by the Thomas Jefferson Institute for Public Policy.

By Steve Haner

Now that the Virginia General Assembly’s “Cops and COVID” special session is all but finished, will it be easier or harder for the state’s struggling economy to recover in 2021? It will be harder, probably, except for the utilities.

The initial reason Governor Ralph Northam recalled legislators starting August 18 was to review the state budget for COVID recession-related changes. Then a series of confrontations between police and Black Americans added law enforcement and criminal punishment to the agenda.

But the legislators reached far beyond those issues in the 270 pieces of legislation introduced, of which 56 have now passed (many of them duplicates).  The Assembly recessed October 16, but did not adjourn, and that will delay the effective date of the various new laws until perhaps March 1.

What did the legislature do for or to the business climate in Virginia? Continue reading

VEC: 1.5 Million Unemployment Claims In 2020

Virginia and US employment fluctuations since 2004, showing the dip in 2009-10 and plummet in the last four months. Source VEC. Click for larger view.

By Steve Haner

By the end of this amazing year, almost 1.5 million Virginians may have filed claims for unemployment insurance payments, leaving the state’s once-record unemployment trust fund balance of $1.5 billion reduced to $750 million in the red, legislators were told this morning.

That $2.25 billion swing is due to $2.6 billion spent out of the state fund, to cover basic unemployment benefits. To date, the federal government has supplemented that with another $6.3 billion paid to Virginian under special COVID-19 related benefits, which do not come out of the state trust account.  Continue reading

Construction: Virginia’s Quiet, Strong Man

Scene from Micron’s $3 billion construction project in Manassas. Photo credit: Inside NoVa

By Peter Galuszka

For all the complaints about the COVID-19 pandemic in Virginia – the shut-down restaurants and (temporarily) closed beaches – one industry has been working steadily and quietly all along – the state’s construction sector.

Builders haven’t missed much of a beat since the “state at home” orders started going out a couple of months ago.

In Pentagon City, works still progresses on the two, 22-story towers for Amazon’s new eastern headquarters. In suburban Chesterfield County near Richmond, workers toil adding new drain pipes and four-laning once- rural roads. Four-story apartments overlooking Swift Creek Reservoir are taking shape for the over-55 crowd.

At a loud and garish protest next to the State Capitol against Gov. Ralph Norham’s work-stoppage plans last month, Mark Carter, a contractor from Hanover County, made his views known. “We‘re still working,” he told me. “I’m not for Trump and I’m not a Democrat. People need to work.”

In Virginia, some are. After all, New York state and Boston stopped construction work due to the pandemic. Continue reading

“The Dog Ate My Homework” Does Not Work for VEC

By Dick Hall-Sizemore

The Virginia Employment Commission has been inundated with unemployment insurance claims. Virginians seeking to file claims have been frustrated at not being able to get through to the agency with their questions and by delays in receiving payments.

All of this was the subject of a meeting and presentation to a Senate Committee on Tuesday as reported by the Daily Press. As has been speculated by Steve Haner in his comments on this blog, the Unemployment Trust Fund is in the hole. According to a presentation by the VEC to the Senate Committee, the trust fund balance has gone from $1.5 billion at the beginning of FY 2020 to a projected -$500 million.

None of that is too surprising. What did intrigue me, however, was an excuse often made by agencies — antiquated technology. A VEC spokeswoman explained that it was put into place in 1985.  As far as the VEC is concerned, that excuse will not suffice.

The 2004 Appropriation Act provided VEC almost $21 million to “upgrade obsolete information technology systems.” Two years later, the 2006 Appropriation Act included language authorizing VEC to utilize $51 million in federal funds “to upgrade obsolete information technology systems.” That identical language was included in every Appropriation Act since then. In a 2020 budget decision package submitted to the Department of Planning and Budget, VEC said that the upgrade “is scheduled to be completed prior to the end of fiscal year ending June 30, 2021” and offered to return $3.2 million of the appropriation.

There may be good reasons why it has taken VEC more than 15 years to upgrade its information technology systems. At the very least, VEC owes the General Assembly an explanation. Going further, JLARC should investigate this delay. Unemployed Virginians deserve better than a shrug and the modern version of “the dog ate my homework.”

WTJU Podcast: COVID-19 and the Economy

By Peter Galuszka

Here’s is the twice-monthly podcast produced by WTJU, the official radio station of the University of Virginia. With me on this podcast  are Nathan Moore, the station general manager, and Sarah Vogelsong, who covers, labor, energy and environmental issues across the state for the Virginia Mercury, a fairly new and highly regarded non-profit news outlet. Our topic is how Virginia is handling the economic fallout from the COVID-19 pandemic.

Why Northam Is Such An Important Governor

By Peter Galuszka

This is a bit like throwing chum at a school of sharks, but here is my latest in Style Weekly.

I wrote an assessment of Gov. Ralph Northam that is overall, quite positive. My take goes against much of the sentiment of other contributors on this blog.

They are entitled to their views but, to be honest, I find some of the essays shrill and not really fact based. If Northam wants to delay elective surgeries at hospitals for a week or so, some want to empanel a grand jury.

An acute care health facility in Henrico County becomes one of the most notorious hot spots for coronavirus deaths and it is immediately Northam’s fault even though the care center has had serious problems that long predated the governor’s term in office.

He’s a trained physician who served as an Army doctor in combat during the Iraq War yet he is vilified as being incompetent and incapable of understanding the COVID-19 pandemic.

It’s like the constant repetition of the “Sins of Hillary” on Breitbart and Fox News about emails and Benghazi.

Like him or not, Northam is bound to be one of the most consequential governors in Virginia history given the gigantic problem of the pandemic. He’s not a showboat salesman like Terry McAuliffe nor a smarmy, small-time crook like Robert F. McDonnell.

Anyway, here’s the piece.

COVID Casualty: Unemployment Insurance System

The rise and fall of Virginia’s unemployment insurance tax, per worker, in response to the 2008-2009 recession. The COVID-19 recession, just starting, is likely to set new records for amount of tax and the length of time those elevated taxes are imposed. This chart includes the average (not maximum) base tax, an additional $16 fund builder tax, and a pool tax imposed on everybody who pays to compensate for employers who default. Source: Virginia Employment Commission.

By Steve Haner

This first appeared in today’s Richmond Times-Dispatch and has also been distributed by the Thomas Jefferson Institute for Public Policy.  

America’s and Virginia’s unemployment insurance program – born of the Great Depression and the Social Security Act of 1935 – may be another casualty of the COVID-19 pandemic. The virus has mutated unemployment insurance into a form not financially sustainable.

Each state has its own unemployment insurance trust fund, financed by taxes on employers and steadily growing in good times. The last time the Virginia Employment Commission publicly reported on our fund’s status, almost a year ago, it projected a balance of $1.3 billion by the end of 2019.  Continue reading

Virginia Unemployment Fund Gains In Good Times

2018 labor force participation rates. Source: VEC. Click for larger view.

Laissez les bon temps roulez. Virginia’s strong employment climate is adding a financial spare tire to Virginia’s unemployment trust fund, now above 83 percent solvency by one actuarial measure and exceeding a federal recommended minimum balance on another measure.

The annual unemployment fund status update for a legislative oversight commission Wednesday lasted about 30 minutes, with the chairman, Del. Lee Ware, R-Powhatan, noting it was far shorter and less dramatic than some previous meetings in tight times, adding “it’s a good drama not to have.” The presentation is here.

The projected $1.45 billion fund balance for next December 31 will be another record, said Virginia Employment Commissioner Ellen Marie Hess. The figures used are not adjusted for inflation, however, and the state has been at higher solvency levels in previous periods of prosperity. The funds are just sitting there earning interest and awaiting the next recession, which history deems inevitable.  Continue reading

Trailing Spouse Benefit Proving of Minimal Impact

Results of the first 40 months paying unemployment benefits to military spouses leaving Virginia jobs due to family transfer. Source: VEC

Virginia’s unemployment insurance (UI) trust fund continues to show improved balances despite dropping tax rates, reflecting a strengthening economy.   The most recent semi-annual report, released at a legislative meeting yesterday, projects half as many initial claims during 2018 as there were five years ago: 134,000 this year versus the earlier 276,000.

It the trend holds that would be a 45-year low, the Daily Press reported, quoting Virginia Employment Commissioner Ellen Marie Hess.

The trust fund balance probably peaked at $1.35 billion June 30, with slight declines expected in coming months.  With the lower unemployment and higher workforce participation rates, the system is working as designed.   More than 68 percent of the almost 215,000 Virginia employers paying into the fund pay at the lowest possible tax rate, which works out to $88 per employee.

The tax rates go up with a history of layoffs or other successful claims and are higher on new employers or employers based outside of Virginia.  In general Virginia has some of the lowest taxes in the region, in part because it also has less generous payments.

The various charts track many other signs of economic improvement:  More employers registered with the system, fewer of them paying elevated taxes due to past layoffs, lower general unemployment rates, and a labor force participation rate (66.2 percent) higher than the national average.

The report also tracks the impact of a controversial recent change in the system, allowing unemployment benefit payments to the spouses of military personnel who get reassigned outside Virginia.  Prior to 2015 that was considered a voluntary termination, not a layoff, and thus not eligible for benefits.

Over the first 40 months 766 people have claimed benefits costing about $2.3 million.

Business groups, including the Virginia Chamber of Commerce, opposed giving this benefit to so-called “trailing spouses” because of fear it would be a major drain on the fund.  The employer ultimately responsible for the move, the Department of Defense, pays zero into the state UI fund, but taxes are collected from whatever employer had the departing spouse on the payroll.

So far, the number of claimants has been so small there has been no measurable effect on the fund balance or tax rates. The military spouse benefit was passed with a sunset clause and has two more years to run before the General Assembly must end or extend it.  It was advocated as another way to demonstrate Virginia’s commitment to the military, for economic as much as patriotic reasons.

Having the benefit may give Virginia some positive points should there ever be another round of base closures, but if there is and Virginia is on the losing end, the number of claims under this provision would spike.