Virginia has one of the lowest unemployment rates east of the Mississippi. It also has almost as many jobs as it did before the recession began. Our working-age population — the number of people available to work — is growing faster than in most other states. And the number of people now working in Virginia is close to what it was in December 2007, the official start of the recession.
With all that good news, why does it feel as though the state is in the midst of a jobless recovery? Here’s what Virginia’s unemployment rate doesn’t tell you.
As of September, Virginia had roughly 325,000 fewer jobs than it needed to keep with up the growth in its working-age population. The state would need 9 percent more jobs than it has to fill that gap. The United States as a whole has a 7-percent gap.
Virginia has not only a worse jobs gap than the country at large, but the state is in a worse position than at the depth of the recession, which ended June 2009.
The bottom line: The pace at which we are growing our work force is outstripping the pace at which we are growing jobs. On average, Virginia’s jobs hole just gets deeper every month. At this rate, Virginia won’t return to pre-recession employment rates.
A closer look reveals the jobs recovery has been far slower than is typical after a recession. It’s taken almost six years to return to close to pre-recession employment levels, while after the prior three recessions Virginia jobs rebounded within three years. Industries that once offered decent middle-class opportunities for people without advanced degrees were particularly hard-hit in this past recession. In the construction field in Virginia, 60,000 fewer jobs exist, including 12,000 fewer in Richmond. Manufacturing employment is down by 42,000 jobs, including 11,000 in the Richmond area.
Many of the unemployed have been out of work for long periods of time. Compared with before the recession, there are four times more Virginians who have been unemployed for more than six months. Being out of work that long makes finding a new job more difficult and can lead to even the most determined of people giving up.
If we look at what people who are fortunate enough to have a job are paid, there’s more bad news. In 2012, hourly wages for Virginia workers at every wage level were below their all-time peaks after adjusting for inflation. The lowest-wage workers have been hardest hit. Those earning less than $8.18 an hour have seen a 10-percent drop in real wages since their 2004 peak. The losses among high-wage earners have been less dramatic, but no wage group has been left unscathed.
Faced with this tough situation, many Virginians are giving up on their search for work or delaying their entry into the job market. Fewer than half of young Virginians have jobs, a drop of 10 percent since the 1990s. We have the same problem in the Richmond area as in the rest of the state. It’s true there are some unfilled job openings in the area, a sign the economy is beginning to recover. But the higher-than-normal number of unemployed and discouraged workers means employers are being far pickier about who they hire.
The balance is still unfavorable to area workers seeking jobs. Overall, the Richmond area had about 10,000 fewer jobs in 2012 than before the recession began. That’s a 1.6-percent drop in jobs at a time when the working-age population has grown by 7 percent. Richmond would have needed 53,600 more jobs in 2012 to match the demand created by the growth of the working-age population.
Meanwhile, the safety net for unemployed workers and their families is fraying. Less than a third of unemployed workers in Virginia receive unemployment compensation, one of the lowest rates in the country. Food stamp assistance was reduced Nov. 1 for more than one in 10 Virginians. That cut will pull $99 million out of Virginia’s economy during the next year.
More cuts may be coming next year. Virginia is turning down federal money that would pay for access to Medicaid for low-income adults starting Jan. 1. Temporary Assistance for Needy Families — the cash assistance program for very low-income families — now serves a smaller share of Virginia’s poor children than in the past.
While national, state and local lawmakers are eager to put the recession behind us, we can’t lose sight of how many people remain out of work and struggle to support their families. Getting to a true recovery is going to take a long time and a lot of investment. A critical first step to boost the economy would be accepting federal funds to expand Medicaid, which would support about 23,000 jobs and which the governor-elect, Terry McAuliffe, has said he’s willing to do. The measure also has bipartisan support in the General Assembly. For working families that are struggling to make ends meet while wages stagnate, making Virginia’s earned income tax credit refundable is an important step. And in the longer term, restoring our investment in primary, secondary and higher education is critical for ensuring our next generation of workers and entrepreneurs is ready to meet future challenges. It would be nice to say the recession is behind us, but the truth is that for too many Virginians, recovery is just a rumor. S
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Laura Goren is a policy analyst with the Commonwealth Institute for Fiscal Analysis, an independent fiscal and economic policy organization based in Richmond. She can be reached by email at laura@thecommonwealthinstitute.org.
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