by Frank Muraca
Last year I responded to a post on Bacon’s Rebellion that raised alarms that Virginia’s economy was “tanking.” I argued that there shouldn’t be concern over the idea that Virginia was on a death spiral while the rest of the nation was facing relative stability. But that doesn’t mean there aren’t concerns with the direction of the state’s economy.
New data shows some sub-par trends in the Commonwealth’s labor market. Numbers released by the Richmond Federal Reserve indicate that Virginia’s year-over-year change hit zero percent in March. In other words, Virginia stopped adding jobs in March. And if the trend continues, we’ll begin losing jobs in the near future.
Graph by the Richmond Federal Reserve.
What’s odd is that the unemployment rate continues to fall over this time period.
Graph by the Richmond Federal Reserve.
So, how can employment be shrinking but also the unemployment rate? One idea is that as the length of unemployment increases, people become discouraged, stop looking for jobs and drop out of the labor force. Data from as recent as 2012 shows that the average duration of unemployment among those who receive benefits rose steeply between late 2011 and early 2012.
Graph by Rui Pereira, College of William & Mary.
This trend is not unique to Virginia. A number of economists and journalists have noted that lower unemployment rates aren’t being matched by growing employment. Bonus: Here’s an interesting chart with updated industry numbers in Virginia.
Chart by the Richmond Federal Reserve.
Government makes up largest share of employment at 18.9 percent, closely followed by professional and business services and trade.
