Report: Virginia unemployment recovery slightly above average
(The Center Square) – Virginia’s unemployment is slightly above average compared to other states, according to a report published by the financial website WalletHub.
The commonwealth ranked 20 out of 51 for its recovery when compared to the 49 other states and the District of Columbia. Although its unemployment rate has consistently remained below the national average, it has yet to come down to pre-pandemic levels.
Virginia’s unemployment rate was 4.2% in July 2021, which is more than a 51% increase from July 2019 numbers. This July’s rate is also a more than a 60% increase from the state’s unemployment rate in 2020. Unemployment claims, not seasonally adjusted, increased by more than 75% in July 2021 when compared to July 2019.
The commonwealth’s unemployment rate saw large drops when the state started to ease COVID-19 restrictions and vaccines became more readily available. The rate was nearly cut in half between July 2020 and July 2021. However, the unemployment decrease started to stagnate in recent months as employers have had difficulty finding workers, dropping only 0.2 percentage points over the past two months.
Some business groups had complained that the additional $300 in pandemic unemployment provided through the federal government was disincentivizing people to work and encouraging them to continue to stay home and collect benefits. The federal government will cease these additional benefits in early September. Although some states stopped providing them the higher benefits before the federal program expired, Virginia maintained payments through the entirety of the program.
“Virginia is the state with the 20th best unemployment rate recovery,” Wallethub Analyst Jill Gonzalez told The Center Square. “Its unemployment rate is 4.2%, 17th lowest in the nation, and over one percentage point lower than the national average of 5.4%. Plus, there were over 45% fewer unemployed people in July 2021 versus July 2020.”
Half of the state’s score was based on its unemployment rate compared to other states and the other half of the score was based on changes to unemployment rates and unemployment claims.
The top ranking states were Nebraska, Utah, Idaho, South Dakota and Alabama. The lowest ranking states were Hawaii, Nevada, California, New York and Colorado.
Virginia’s General Assembly allocated hundreds of millions of dollars to help businesses in a budget revision that managed federal COVID-19 relief through the American Rescue Plan. It included $250 million for the Rebuild VA economic recovery fund, $50 million for travel and hospitality and $53 million for the Industrial Revitalization Fund and Virginia Main Street program.
The General Assembly also allocated $862 million to the states Unemployment Insurance Trust Fund, which became dilapidated during the pandemic. The program is primarily funded through payroll taxes from businesses. Although this funding will prevent an immediate tax hike, some businesses have cautioned that it is not enough to fully replenish the fund and prevent future tax hikes.
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