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Virginia Employment Commission Report to
House Commerce and Labor Committee Dolores Esser, Commissioner Virginia Employment Commission January 14, 2010
2
Virginia’s Unemployment Rates 2007 - 2009 (year to date)
Perce
nt of
Labo
r For
ce
This year unemployment rates have averaged about 75 percent higher than the year-ago rates.
June’s rate of 7.3 percent was the highest rate since March 1983’s 7.3 percent.
Note: Not Seasonally Adjusted
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2007 2008 2009
3
UI Initial Claims 2007 - 2009 (year to date)
Total initial claims through November 2009 are up 53.7% from 2008 because of more motor vehicle, furniture, textiles, building-related, and finance layoffs. For the same period, initial claims are up 90.5% from 2007.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2007 2008 2009
4
Average Duration and Exhaustion Rate (Regular UI only)
Recession Average Duration Exhaustion Rate
73-75 15.4 weeks 42.9%
81-82 11.5 weeks 31.3%
90-91 14.0 weeks 35.9%
2001 14.4 weeks 41.8%
07-09 15.9 weeks 53.0%
5
2009 Maximum Weekly Benefit Fourth Circuit
$359 $380
$494
$326 $378
$424 $396
$0
$100
$200
$300
$400
$500
$600
DC MD NC SC VA WV US Avg.
6
2009 Maximum Weekly Benefit Replacement Rate Fourth Circuit
27%
42%
65%
48% 42%
64%
46%
0%
10%
20%
30%
40%
50%
60%
70%
DC MD NC SC VA WV US Avg.
7
Trust Fund Data—Standard Forecast (Millions of Dollars)
Projected Actual *Includes $62.8 million Incentive Distribution from Federal government.
2009 2010 January 1 Balance $546.7 —$126.7
Tax Revenue $325.7 $548.8 Interest Revenue $13.4 $0.0
Benefits $1,075.6 $908.8 December 31 Balance —$126.7* —$486.7 Solvency Level (6/30) 24.4% —16.5%
8
Standard Forecast—1981-1982 Recession Scenario
Loans would total about $1.15 billion. Total interest payments from 2011 to 2013 would be about $29.8
million. Interest can not be paid from the trust fund or federal administrative
grants. In 2011 employers would lose 0.3 percentage point of the FUTA
credit and pay an additional $87 million in FUTA taxes or an additional $21 per employee.
In 2012, employers would lose 0.6 percentage point of the FUTA credit and pay an additional $178 million in FUTA taxes, or an additional $42 per employee.
9
June 30 Balances (millions) and Solvency Level 1997 - 2015
When solvency drops below 50%, Fund Builder Tax is triggered the following year.
2010–2015 projected
123% 114% 107% 101% 100%
84%
46% 39%
54%
71% 70% 64%
24%
34%
56%
68%
-16% -21%
0%
-$400
-$200
$0
$200
$400
$600
$800
$1,000
$1,200
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
10
Average Tax per Employee 1997 – 2015 (Virginia only)
The increases from 2003 through 2015 are the result of higher benefit schedules and the recessions.
2009 – 2015 projected. 2004, 2005, and 2010-2014 Fund Builder Tax in effect.
$74 $50 $48 $49 $49 $51
$82
$140 $162 $155
$121 $99 $95
$162
$210 $237 $233
$203
$148
$0 $20 $40 $60 $80
$100 $120 $140 $160 $180 $200 $220 $240 $260 $280
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
11
Average Tax per Employee Fourth Circuit – Year Ending 3/31/09
$185 $163
$338
$145 $94
$331
$261
$0 $50
$100 $150 $200 $250 $300 $350 $400
DC MD NC SC VA WV US Avg.
Cost
per
Em
ploy
ee
12
Impact of Trust Fund Insolvency
Triggers fund builder tax (0.2%) through CY 2014. Social Security offset (50%) reinstated through CY 2014. Potential interest payments on federal loans
(estimated $29.8million). Partial loss of FUTA tax credit (0.3%) in 2011 due to
federal loan balances in consecutive years. ($77 FUTA tax per employee)
Partial loss of FUTA tax credit (0.6%) in 2012 due to federal loan balances in consecutive years. ($98 FUTA tax per employee)
13
2009
Initial claims 529,651
Claims disqualified on separation 47,204
Deputy decisions 163,310
First level appeals 32,191
Commission appeals 4,945
14
2009
Trust Fund payments $1,075,000,000
Federal Additional Compensation 120,800,000
TIER I 362,800,000
TIER II 101,004,000
TIER III 6,650,000
Extended Benefits 33,800,000
TOTAL $1,700,054,000
15
Current Recession Compared to Historical Recessions
73-75 Recession 81-82 Recession 90-91 Recession 2001 Recession 07-09 Recession
Highest Monthly Unemployment Rate 7.6% 8.4% 7.1% 4.5% 7.4%
Highest Annual Unemployment Rate 6.4% 7.4% 6.2% 4.2% 6.7%
Highest Annual Number Unemployed 147,000 196,591 206,341 156,557 280,883
Highest Annual Number Employed 2,135,000 2,482,021 3,146,997 3,588,079 3,960,011
Highest Annual Benefits Paid $138.2 million $245.1 million $328.0 million $755.3 million* $1,122.1 million
Average Weekly Benefit Amount $58 $100 $145 $297* $278
Average Weekly Wage $156 $274 $431 $703 $900
Exhaustion Rate 42.9% 31.3% 35.9% 41.8% 53.0%**
Average Duration 15.4 weeks 11.5 weeks 14.0 weeks 14.4 weeks 15.9 weeks**
Lowest Solvency Level in Effect N/A*** +5%*** +60% +35%*** —20%***
* Benefits increased 37.3% September 2001-January 5, 2003 ** Highest values so far. *** 50% tax table used; fund-builder tax added. Current solvency method first used in 1981
16
Borrowing to Pay Unemployment Insurance Benefits
Alabama $155 September 2009
Arkansas $235 March 2009
California $6,132 January 2009
Connecticut $202 December 2009
Florida $1,014 August 2009
Georgia $94 December 2009
Idaho $114 June 2009
Illinois $1,223 July 2009
Indiana $1,516 November 2008
Kentucky $578 January 2009
Michigan $3,200 December 2007
Minnesota $311 July 2009
Missouri $475 February 2009
Nevada $0 October 2009
New Jersey $987 March 2009
Outstanding loans (in millions) from the Federal Unemployment Account. Balances as of January 6, 2010, and date of first federal loan are:
17
Borrowing to Pay Unemployment Insurance Benefits (continued)
New York $2,237 January 2009
North Carolina $1,654 February 2009
Ohio $1,768 January 2009
Pennsylvania $1,955 March 2009
Rhode Island $133 March 2009
South Carolina $705 December 2008
South Dakota $9 September 2009
Texas $1,383 July 2009
Virginia $137 October 2009
Virgin Islands $8 September 2009
Wisconsin $950 February 2009
Total $27,319
Outstanding loans (in millions) from the Federal Unemployment Account. Balances as January 6, 2010, and date of first federal loan are:
Colorado, Kansas, Massachusetts, and New Hampshire are authorized to borrow in January.
18
For additional information, please contact:
Dee Esser, Commissioner (804) 786-3001 [email protected]
Coleman Walsh, Chief Administrative Law Judge (804) 786-7263 [email protected]
Virginia Employment Commission Report to
House Commerce and Labor Committee Dolores Esser, Commissioner Virginia Employment Commission January 14, 2010