Scratching the Surface - Commonwealth Institute...This report, Scratching the Surface: The State of Working Virginia in the Great Recession, examines trends in employment, wages, labor

Scratching the SurfaceThe State of Working Virginia in the Great Recession

The Commonwealth Institute

November 2009

Authors: Michael Cassidy, Sara Okos, John McInerney

The Commonwealth InstituteThe Commonwealth Institute for Fiscal Analysis provides credible, independent and accessible information and analyses of state public policies with particular attention to the impacts on low- and moderate-income persons. Our products inform state economic, fiscal, and budget policy debates and contribute to sound decisions that improve the well-being of individuals, communities and Virginia as a whole.

AcknowledgmentsThanks to our talented summer intern, Aaron Hugeback, from the College of William & Mary for his hard work in compiling and editing the stories from Virginia publications that are included in the “Scratching the Surface” sidebars throughout this report.

Thanks also to Kai Filion of the Economic Policy Institute (EPI) for providing technical assistance for this report.

Support The Commonwealth InstituteThe Commonwealth Institute is supported by generous grants from the Public Welfare Foundation, The Annie E. Casey Foundation, The Moriah Fund, The Meyer Foundation, and The Bernard and Audre Rapoport Foundation. The work of this report could not have been completed without their support. We thank them for their support but acknowledge that the findings and conclusions presented in this report are those of the authors alone, and do not necessarily reflect the opinions of the foundations.

To learn more about how you or your organization can support The Commonwealth Institute, please visit our Web site, www.thecommonwealthinstitute.org or call us at 804-643-2474, ext. 112.


The Commonwealth Institute 1

Table of Contents

Executive Summary 2

Chapter 1: Introduction and Overview 5

Chapter 2: Virginia’s Employment Landscape and Labor Force 8

Chapter 3: Wages and Income 16

Chapter 4: Benefits and the Safety Net 20

Chapter 5: Regional Diversity 25 •Blacksburg-Christiansburg-RadfordMSA

•Charlottesville MSA

•DanvilleMSA

•HarrisonburgMSA

•Kingsport-BristolMSA

•LynchburgMSA

•RichmondMSA

•RoanokeMSA

•VirginiaBeach-Norfolk-NewportNewsMSA

•Washington-Arlington-Alexandria MSA

•Winchester MSA

Chapter 6: Conclusions 38

The Commonwealth Institute2

The first year of the Great Recession has tested many Virginia workers. Substantial job losses have wiped out the gains of the recent economic expansion. Unemployment has soared. Wage declines continued for most workers. A weak safety net in the state has meant that a fraction of unemployed workers are actually covered by the unemployment insurance system. Continued deterioration in workers’ health insurance coverage has been coupled with the fact that Virginia workers pay the greatest share of insurance premiums in the country.

These discouraging trends stem from just the first year (2008) of what has become aprolongedrecession.Despitethesestronglynegativetrends,Virginiaworkerscontinue to be among the most productive in the United States, and more Virginia workers are engaged in the labor market than ever.

This report, Scratching the Surface: The State of Working Virginia in the Great Recession, examines trends in employment, wages, labor force demographics and employee benefits. It documents the many successes and challenges of Virginians in the current economy.

Virginians Hit Hard By Job Losses •Virginiahaslostmorethan125,000jobssincethestartoftheGreatRecession.

Duringtheexpansionperiodpriortothistime,thestateadded276,600jobs.

•Whileittookthestatesixyearstorealizethisgain,ithastakenonly22monthsfor Virginia to see one in three of these jobs disappear. That’s a job growth rate of about 3,700 jobs per month during the expansion, and an average rate of job lossofmorethan5,700jobsamonthduringtherecession.

•ThegrowthinVirginia’sunemploymentratesincethestartoftherecessionhasbeen two to three times that of the ’81 and ’01 recessions.

Executive Summary

Scratching the Surface


A Hardworking Labor Force•Virginia’sincreaseinlaborforce

participation between 2007 and 2008 was larger than that of any other state. Roughly 70 percent of Virginia’s working age population was either employed or actively seeking employment in 2008.

•AnincreasingshareofVirginiansage55andolderisparticipatinginthelaborforce.In2008,44.5percentof Virginians in this age group were working or seeking work — compared to just 39.4 percent nationally.

•Theaveragevalueofthegoodsandservices produced by a Virginia worker was about $66,000 in 2008, which is $2,600 higher than the national estimate of real output per worker. Only eight other states produced more economic output per worker than Virginia in 2008.

Declining Wages for Many Workers•Virginia’smedianhourlywageplaces

it as the 12th highest in the nation. Throughout the wage distribution, Virginia workers earn more than their regional and national counterparts. However, since 2001, Virginia wage earners who are below the median have actually lost ground in terms of real wages.


Gender Disparities •Intermsofemployment,women

are faring relatively better than men in the current recession. The gender unemployment gap favored women more in 2008 than it has in any year since 1992. Only 10 other states observed a larger gap between the underemployment rates of men and women in 2008.

•Thegenderpaygap(81centstothedollar) is higher in Virginia than in the South Atlantic region and the nation — across all income levels. The gap is most extreme at the 90th percentile where Virginia’s gap is the eighth highest in the nation, at 76 cents to the dollar.

Benefits Not Reaching All Workers•In2008,Virginia’sworkersonceagain

paid more out-of-pocket for insurance premiums than in any other state. The total premium cost for individual health care coverage was 24 percent. Workers with family coverage paid more than 31 percent of the total premium cost, well above the national average.

•Virginiansinsmallbusinesseswithfewer than 20 employees, unlike workers in larger firms that can access COBRA coverage, are unable to keep their employer-provided insurance coverage if they leave or lose their job.FortystatesandtheDistrictof Columbia have continuation of coverage (“mini-COBR”) laws that allow workers in small businesses to pay the full cost of their employer-provided health insurance for a period of time after leaving their job. Virginia does not have a permanent “mini-COBRA” law.

•AlthoughVirginia’sunemploymentrate remains relatively low compared to other states, only four other states extended unemployment insurance benefits to a smaller share of their unemployed workers in 2008.


When it comes to the economy, Virginians have reason to boast: Throughout this decade, the Commonwealth has experienced above-average rates of growth; its workers remain some of the most productive in the country; and in 2009, Virginia was named Forbes’ “Best State for Business,” the fourth consecutive year that the Commonwealth has held this title. Yet, not all Virginians benefit from these successes. And as the national economy shifted into recession at the end of 2007, not even the strengths of Virginia’s labor market could prevent the severe slowdown that has amplified many of the challenges already facing the state’s workforce.

This report explores the state of Virginia’s economy from the perspective of its workers and documents how they are faring amidst the massive economic downturn now referred to as the “Great Recession.” By examining the most recent national, state, and regional data available, this report highlights who works in Virginia, where they work, how much they make, and the benefits they receive.

Unlike most analyses of Virginia’s economy, this report goes beyond the top-level indicators that are frequently used to evaluate the state’s economic health. Instead, it focuses on the measures that matter to the individuals and families who make up the state’s thriving labor force. By shedding light on both the aspects of Virginia’s economy that make it strong and those that keep it from reaching its potential, this report aims to inform the public policy debate so that the Commonwealth can continue to move forward — toward prosperity for all.

The Tip of the IcebergThis report looks at the ways the recession is impacting Virginia’s industries, communities, and workers. However, it is important to note that many of the indicators included in this report were only available through 2008. Thus, the report only captures the first year of the Great Recession and only a small portion of the full deterioration in Virginia’s economy to date. Since 2008, many key economic indicators worsened.

Fortunately, some data, such as total employment and the unemployment rate, are reported monthly and currently available through September 2009. By looking at trends in this more current data, it is possible to estimate how much deterioration is actually captured in the 2008 numbers on income and wages, employee benefits, and the responsiveness of the safety net that is analyzed in the following chapters of this report.

Duringtherecession(December2007toSeptember2009),Virginia’sunemploymentrate increased by 3.4 percentage points. But roughly three-quarters of this increase in unemployment occurred between 2008 and September 2009. This means that despite being the most recent measures available, the 2008 data used in this report only reflects about one-quarter of the total deterioration in Virginia’s employment picture. This relationship is illustrated in Figure 1.1.

Scratching the Surface When Matthew lost his job in September of 2008, he wasn’t worried. The 49-year-old office worker from Alexandria had never had trouble finding work. He sent out resumes and signed up with temporary agencies. He spoke with the Washington Post in June of this year, as he was still jobless.

Matthew’s struggles finding a new job reflect a surging problem. In May, a record 27 percent of jobless individuals nationwide had searched for work forsixmonthsorlonger.Long-termunemployment is a serious danger, as job seekers deplete their savings, fall behind on bills and may even face foreclosure.

First Matthew’s severance ran out, and then the proceeds from cashing out his retirement savings ran out too. He filed for unemployment benefits, which expired in May. Wracked with stress from being unemployed and depleting his retirement, Matthew tried to look on the bright side, “I keep trying to tell myself this is my only moment [away from work].”

Source: The Washington Post, June 6, 2009

Chapter 1

Introduction and Overview


Furthermore, there is evidence that even the rising unemployment rate fails to capture the full effect of the recession on Virginia’s workers. Since the start of the recession, there has been a sharp rise in the number of workers who are classified as “discouraged.” The term “discouraged worker” is used to describe individuals age 16 and older who are unemployed, but are no longer actively seeking employment because they believe there are no suitable jobs available. Estimates of the number of discouraged workers are important because they represent unemployed individuals who are not counted in the calculation of the unemployment rate — only those unemployed workers who are actively seeking employment are included. To the extent that an economy contains a large number of discouraged workers, the unemployment rate will underestimate the percentage of workers without jobs. Figure 1.2 illustrates the rising number of American workers who have become so frustrated with finding employment that they have given up an active job search. The number of discouraged workers in the economy has more than doubled since the start of the recession.

Putting it All in PerspectiveThe job losses experienced by Virginians are another indication of the devastating effect the recession is having on the state. Between the start of the recession in December2007andthispastSeptember,Virginialostmorethan125,000jobs,which is 3 percent of the state’s total pre-recession employment. This contrasts to the period of economic expansion prior to the start of the Great Recession, when Virginia added 276,600 jobs.

While it took the state six years to realize this gain, it has taken only 22 months for Virginia to see one in three of these jobs disappear. That’s a job growth rate of just about 3,700 jobs per month during the good times, and an average rate of job loss ofmorethan5,700jobsamonthduringthe bad times (see Figure 1.3). Assuming the recession ended in the summer of 2009, as some economists have argued, and assuming that Virginia can grow


jobs at the same rate as it did during the most recent expansion, it will take the Commonwealth two to three years to get employment back to pre-recession levels.

Year One of the Recession: Still Outperforming the NationWhile a slowing rate of growth is a defining characteristic of a recession, Virginia’s rate of economic expansion still declined by less than the nation during the first year of the Great Recession. As shown in Figure 1.4, Virginia’s growth in real gross domestic product, an indicator of the state’s level of productivity, outpaced that of the nation between 2007 and 2008. Though 24 other states fared slightly better, Virginia’s total economic output grew by roughly 1.3 percent, which compares to .73 percent nationally.

In addition to above-average levels of overall economic growth during the first year of the recession, Virginia boasts one of the most productive workforces in the nation. The most recent data reveals that only eight other states produced more economic output per worker than Virginia in2008.AsshowninFigure1.5,theaverage value of the goods and services produced by a Virginia worker was about $66,000 in 2008, which is $2,600 higher than the national estimate of real output per worker.

Despitetheirenhancedproductivity,Virginia’s workers have not seen proportional gains in their wages. In an economy where prosperity is shared broadly among all those that contribute to its growth and success, trends in compensation and productivity should move in tandem. Yet Figure 1.6 shows that in 2008 productivity grew about 13 times as fast as median wages in Virginia. This suggests that during the first year of the Great Recession, Virginia’s workers worked harder and for relatively less in wages.

All Virginia workers have not seen wage gains.


Virginia enjoyed above-average job growth for the first half of this decade. In 2006 and 2007, however, the Commonwealth’s rate of job growth remained positive, but slowed to fall slightly below that of the nation. While both the nation and Virginia shifted from job growth to job loss in 2008, Virginia’s rate of loss was slightly smaller than that of the United States. As shown in Figure 2.1, while US job growth fell to -.39 percent in 2008, in Virginia, it fell to just -.1 percent.

Few Sectors Escape LossesSince the start of the recession, most sectors of Virginia’s economy, like the nation, have seen a decline in employment. Three sectors, however, have actually continued to expand despite the massive downturn. These sectors of Virginia’s economy are 1) education and health services, 2) natural resources and mining, and 3) government (see Figure 2.2).

The fastest growing of these three sectors, education and health services, represents about 10 percent of total employment in Virginia. Unfortunately, the second

Chapter 2

Virginia’s Employment Landscape and Labor Force

Scratching the Surface Claudia had few opportunities after she was laid off by the city of Portsmouth last year, she told the Virginian-Pilot in March.Despitefederalexperienceandan advanced degree, part-time work as a substitute teacher has been her best option.

More and more people are considering substitute teaching as a plan B during the economic downturn despite the fact that substitutes do not receive benefits. ApplicationsinNorfolkhavealmostdoubled in a year while the substitute pool in Chesapeake increased from around950peoplelastyeartoabout1,400 this spring.

For Claudia, working with children is much different than working with adults. When it gets rough, she said she reminds herself that classes come in 90-minute blocks; you can endure anything for 90 minutes. “Fifteen more minutes,” she said. “We can make it.”

Source: The Virginian-Pilot, March 6, 2009


fastest expanding, natural resources and mining, makes up just one quarter of one percent of Virginia’s total employment. This means that only 1 in 400 Virginia jobs is part of this growing sector. Finally, the government sector is the largest of Virginia’s growth areas. While expanding the slowest of the three, roughly 1 in every 7 Virginia jobs is a government job.

Total growth in these sectors since the start oftherecessioninDecemberof2007isapproximately29,500jobs.Figure2.3putsin perspective the relative concentration of Virginia jobs in these growing sectors.

The labor force participation rate expresses the share of a state’s working age population that is active in the labor force. In 2008, just thirteen states had a higher labor force participation rate than Virginia where roughly 70 percent of Virginia’s population was either employed or unemployed and actively seeking employment. As illustrated in Figure 2.4, Virginia’s labor force participation rate is four percentage points higher than the national labor force participation rate.

The downturn in the economy has likely pushed some individuals into working (or looking for work) that had not found work as necessary when the economy was stronger. Between 2007 and 2008 about half of all states experienced an increase in labor force participation- and Virginia’s increase was larger than that of any other state. Figure 2.4 shows this uptick in Virginia’s labor force participation from 68.7 percent in 2007 to 70 percent in 2008.

Virginia’s recent jump in the labor force participation rate spurs questions as to what segments of the population are responsible forthisincrease.AsshowninFigure2.5,between 2007 and 2008, the labor force participation rate rose for almost every demographic in Virginia- those Virginians with less than a high school education were the only exception. The increases are


For every single demographic included, Virginia’s labor force participation rate exceeds that of both the South Atlantic region and the United States. The difference in participation rates between men and women is also smaller in Virginia, andtherateatwhichindividuals55andolder participate is notably higher than regionally and nationally.

As illustrated in Figure 2.6, Virginia’s higher labor force participation rate for

highest for women, the 16-24 age group, and Virginians with at least some college education. This suggests that many of the new entrants or re-entrants to the labor market during the recession may be mothers who might have been used to staying at home with children, and students or young adults who were not previously working. While we are not entirely sure who the state’s new workers are, these across-the-board increases in labor force participation are evidence of the strain Virginia’s struggling economy is placing on its workers and families.

Figure2.5alsotakesacloserlookatlaborforce participation by demographic for the South Atlantic region and the nation.

Large growth among people of 55 yrs who are working.

individuals55andolderisnotanewobservation. Since the last recession, Virginia has exceeded the nation on this measure. In fact, in 2008 only 13 other states had higher participation among the 55andoldersegmentoftheirpopulations.The dramatic growth in Virginia’s rate that has occurred over the past two years is likely the result of the slowing economy. As health improves, workers are capable of working later into their lives. As retirement benefits weaken, and many workers near retirement see their savings fall with declines in the market, it may become necessary for this group to work longer just to cover their basic needs.

Another interesting observation is the


increase in the labor force participation of young adults, age 16-24. Between 2006 and 2007 the rate for this group declined from 62.9percentto59.1-yetin2008,itclimbedback up to 61.4 percent. While the previous year’s drop in participation can be explained by increased enrollment in institutions of higher education, this past year’s rise in participation does not coincide with a similar drop in educational enrollment (refer to Figure 2.7). In fact, enrollment in higher education rose just under 4 percent. This suggests that, in the face of rising economic pressures, Virginia’s young adults are juggling both school and a job.

Unemployment and Underemployment MattersVirginia’s unemployment rate still compares relatively well to the national rate, and that of other states. As of June 2009, only 13 other states have a lower unemployment level than Virginia. While the national unemployment rate currently hovers around 10 percent, Virginia’s rate is over 3 percentage points lower at just under 7 percent. This does not mean that Virginia does not have an unemployment problem, however. As shown in Figure 2.8, Virginia benefitted from a lower rate going into this recession, but has seen the same pattern of steady increases that have been observed at the national level.

To put the severity of the current situation in perspective, Figure 2.9 shows the growth in Virginia’s unemployment rate over the courseofdifferentrecessions.Duringboth the 1981-82 recession and the 2001 recession, Virginia’s unemployment rate increased by roughly 41 percent. Between the start of the current recession in December2007andSeptemberof2009,Virginia’s unemployment rate has increased by over 106 percent. This growth in unemployment is over two and a half times that of the 1981 and 2001 recessions.

NotallVirginiansarebeingimpactedequally by the state’s unemployment crisis. The recession is hitting certain groups of


the labor force harder than others. One of the most glaring differences is observed in the effect the recession is having on men versus women. As shown in Figure 2.10, Virginia men experienced a larger increase in unemployment between 2007 and 2008 than Virginia women and the gap between these rates grew from 0.4 percentage points in 2007 to 0.6 percentage points in 2008. The gender unemployment gap has not favored women by this much since 1992.

There are a number of potential explanations for this trend in male and female unemployment. One reason may be that the bulk of the very meager job growth occurring in the state is concentrated in education and health, which are typically considered more traditional “female” occupations; whereas Virginia’s job loss has been concentrated in areas of the economy which are considered more “male” dominant.Nationaldataseemstosupportthisidea:womenmakeuproughly75percent of total employment in education and health services, while 9 out of every 10 construction workers is male. Another possible explanation is that women may be willing to accept less desirable work or lower compensation than men.

In addition to the growing gender unemployment gap, the recession has interrupted progress in reducing Virginia’s racial unemployment gap. The unemployment rate for African-American Virginians has historically exceeded that of White Virginians. Figure 2.11 shows the ratio of the African-American unemployment rate to the White unemployment rate over time- or in other words, the odds of an African-American Virginian being unemployed as compared to the odds of a White Virginian being unemployed. Since the ratio hit its peak in 2003, when African-Americans were over

Racial gaps in unemployment widen

Scratching the Surface Debhasworkedingraphicsandprintproduction for 18 years. She lost her job at an advertising company earlier this year. “This is the fifth time that I have been laid off,” she told the Richmond Times-Dispatch in February.

Deb,wholivesinHanover,saidabouther field, “Unfortunately, it is one of the industries that gets hard-hit in an economic downturn.”ThelasttimeDebwaslaidoff,in 2001, it took four months to find a new job, she said. “It was every day pounding the pavement, calling people and networking. It is a full-time job to find a job.”

“I know it is going to be a rough road ahead,” she said. “But I think by staying positive, we can all turn it around.”

Source: The Richmond Times-Dispatch, February 18, 2009


percent for Virginians with only a high school diploma.

Another key indicator of the strength of Virginia’s labor market is the underemployment rate. The term “underemployment” is typically defined as the underutilization of skills, underuse of economic capacity, and underuse of employed workers. A worker who is considered underemployed, for example, may work fewer hours than they would like to be working or they may work in a job where their skills exceed those required to perform the position adequately. A low underemployment rate, like a low unemployment rate, is a sign that a state’s economy is using its labor force in an optimal way.

As with unemployment, Virginia workers are underemployed at a lower rate than workers in neighboring states and nationally. In fact, only 6 other states had fewer underemployed workers than Virginia in 2008.

Yet Figure 2.13 shows that, like states in the South Atlantic region and nationally, underemployment has increased in Virginia since the start of the recession. In2008,roughly7.5percentofVirginiaworkers were underemployed, compared to 10 percent across the South Atlantic region,and10.5percentacrossthenation. This is a 23 percent increase in the underemployment rate from the previous year for Virginia.

As Figure 2.14 illustrates, since the beginning of the downturn, men have been more likely to be underemployed than women, a trend that is not unique to Virginia. Virginia’s current gender underemployment gap began in 2007 and has become more pronounced with time:

More Virginians underemployed

three times as likely to be unemployed as Whites, the racial unemployment gap has been declining. With the exception of2005-2006,thisdeclinehasbeenfairlysteady up until 2007, where the ratio hit a low of 1.64. In 2008, however, this ratio increasedslightlyto1.85.Althoughtheunemployment rates of African-American and White Virginians both increased between 2007-2008, the increase was larger for African-Americans (a 37% increase in the rate vs. a 21% increase in the White unemployment rate.)

The recession has also increased the gap in unemployment rates by education level. As shown in Figure 2.12, the unemployment rate for Virginians with a high school education is historically much higher than the unemployment rate for Virginians with a bachelor’s degree or higher. Although the recession has affected both groups, the increase in unemployment among the high school educated has been dramatically higher. In 2008, the unemployment rate for Virginians with a bachelor’s degree or higher was just 2 percent, compared to 4.7


Scratching the Surface “I just want to work. It doesn’t matter where or what,” said Jamie, a Stafford County carpenter. He shared his story with the Free-Lance Star in March.

Carpentry work is usually steady enough for Jamie and his family to get by and pay the bills, but by March it had been four months since he was laid off. He put in applications and tried to find odd jobs helping people with home improvement projects, but no one is hiring.

“I feel very useless, like someone who can’t do anything,” Jamie said, eager to find a job. “When I’m working, I’m helping my family.” To stay busy and feel useful, he donates his time to a community-based outreach ministry, delivering food in his pickup truck to other families facing hard times

Source: The Free-Lance Star, March 12, 2009

itrosefroma.5percentdifferencein‘07toa1.4percentdifferencein‘08.Infact,only 10 other states observed a larger gap between the underemployment rates of men and women in 2008.

Prior to the onset of the recession, the gap in underemployment rates by race had been declining in Virginia. Yet between 2007 and 2008, the gap grew very slightly, which was the result of an increase in both the underemployment rates of White and African-American Virginians (seeFigure2.15).In2008,morethanone in ten African-American workers was underemployed compared to one in seventeen White Virginian workers.

Figure 2.16 shows the dramatic increase in the share of men who work part-time that has occurred since the start of the current recession. Although Virginia women work part-time at historically higher rates than men, they also work part-time slightly more consistently. The recent volatility in the share of men working part-time is illustrated in Figure 2.16. In 2008, for example, 27 percent of working Virginia women worked part-time, compared to just under 17 percent of working Virginia men, but this represented a 12 percent increase for men compared to the previous year, and a very slight decline for women.

One possible reason women work part-time more consistently than men could

More workers forced into part-time work


be because they are doing so by choice. As shown in Figure 2.17, women are employed part-time involuntarily at lower ratesthanmen.In2008,over1in5menworking part-time did so for economic reasons, compared to just 1 in 10 women. This suggests that women’s part-time work may be more dependent upon personal circumstances and preferences than on the health of the economy; whereas changes in the share of men working part-time may be more driven by forces in the labor market than by availability and preferences.

These factors, combined with the way the current recession is impacting industries differently, may explain much of the volatility in the share of men working part-time. For instance, in the growing female-dominated education and health services industry, part-time work is more common than in other industries, and among those working part-time, a higher share do so for noneconomic reasons. This differs from the struggling male-dominated construction industry, which in response to reduced demand and declining revenues, may be shifting full-time workers into part-time work. Part-time work in this industry is about one-third less likely than in education and health services, but the share of those workers employed part-time involuntarily is roughly four times larger.


Chapter 3

Wages and Income

Scratching the SurfaceRichard works with the umbrella organization FeedMore that brings together the Central Virginia Food Bank and the Meals on Wheels Serving Central Virginia program to more efficiently deliver food and grocery products to vulnerable Virginians. Despitenewsonthenationalfrontthat the economy may be improving, he told the Richmond Times-Dispatch in October (2009) that demand for his organization’s services is still high.

“Improvement in unemployment numbers typically lags behind the recovery from a recession, and that’s what is happening now,” he said. Hotline calls to FeedMore increased 50percentfromlastyear,andtheorganization has distributed 30 percent more food in the 3rd quarter of 2009.

Richard explained the increase in demand for food services: “When people have lost jobs and income, it takes a long time to recover from that.”

Source: The Richmond Times-Dispatch, October 26, 2009

Virginia’s median household income was the eighth highest in the nation in 2008. Virginia’s median household income was approximately $61,233 in 2008, compared nationallyto$52,029(seeFigure3.1).ThisdifferencebetweenVirginiaandthenationis the largest witnessed this decade, both in raw dollar and percentage terms. Although the median household income for both Virginia and the nation declined during the first year of the recession, the decline was larger at the national level than at the state level.

The Median WageAnother measure of employee compensation, the median wage, paints a similarly positive picture of the Virginia labor market. Estimated at $16.78 an hour, Virginia had the 12th highest median wage in the nation in 2008. But this trend of above-average median wages is not new. Figure 3.2 shows how Virginia’s median wage has consistently exceeded the median wage for the nation and the South Atlantic region, going back to 2000. While the difference has been narrowing over time, the Commonwealth still maintains more than a dollar higher in median wages than the nation.


But it is not just at the median level that Virginia workers are paid more than the national average. As shown in Figure 3.3, throughout the entire wage distribution, Virginia workers earn more than their regional and national counterparts. Virginia’s highest earners fare the best. In 2008, workers earning at the 90th percentile (or the top 10 percent of wage earners), had the sixth highest wages of workers in any state.

Growing DisparitiesYet despite Virginia’s relatively high wages overall, not all Virginia workers are benefitting equally from the state’s above-average economic performance. Since 1979, the gap between Virginia’s highest and lowest earners has been steadily increasing. Figure 3.4 shows the ratio of the wages earned by Virginia’s top 10 percent of earners to the wages of its lowest 10 percent of earners. This ratio currently hovers around its highest level since tracking began. Virginia’s highest paid workers earn, on average, five times more than the state’s lowest paid workers.

The disparities become even more pronounced when growth rates are compared. Since 1979, the state’s top 10 percent of wage earners have seen their wages grow 18 times as fast as the state’s lowest 10 percent of wage earners. As shown inFigure3.5,thebottom10percentofwage earners have seen a meager 2 percent increase in their real wages over the past few decades; however, Virginia is one of just sixteen states that have not seen a decline in real wages for this segment of the workforce.

Yet in more recent years, the modest gains of Virginia’s low-wage workers evaporate and the gap between high and low earners becomes even more compelling. As illustrated in Figure 3.6, since 2001, Virginians who earn below the median (those who earn less

Highest paid workers earn five times more than the state’s lowest paid workers


than $16.78 an hour in 2008), have actually lost ground, while higher earners have still experienced small, but positive, gains in their pay.Nationally,workersearningatthe40thpercentile and above have seen wage growth during this period of time.

Gender GapIn addition to some substantial disparities across the wage distribution, differences also exist when the data is broken down by gender. In 2008, median wages for Virginia men were the 11th highest in the nation, whereas, median wages for Virginia women were the 14th highest in the nation. Stated slightly differently, women earned 81 cents for every dollar earned by men. While some of this variation can be explained by differences in the educational attainment of men and women, the types of jobs they select, and their attachment to the labor force, it is still somewhat surprising that Virginia’s gender gap in pay is larger than the national average.

In fact, Virginia’s gap is not only greater than the national one, but also at the regional level. Figure 3.7 shows that median wages for men and women are more similar in the South Atlantic region and nationally than in Virginia (Virginia’s ratio of 81 cents to the dollar is two cents below the national and regional ratios). Indollarterms,only15otherstateshadalarger difference between the median wage of men and women in 2008.

Virginia’s gender gap in pay exists not only at the median, but throughout the wage distribution and is more pronounced at higher wage levels. While this pattern is not unique to Virginia, Figure 3.8 shows that Virginia’s gender pay gap is wider at the extremes than both the South Atlantic region and the nation. For instance among the top 10 percent of wage earners (the 90th percentile), Virginia’s gender gap in pay is the 8th largest in the nation. Among this level of high-earners, Virginia women make just 76 cents for every dollar earned by men.


Poverty WageAlthough the percentage of workers earning a wage low enough to place them below the federal poverty threshold recently declined nationally, Virginia’s share of these low-wage workers increased between 2007 and 2008. Figure 3.9 shows that despite this recent increase, Virginia still ranks below the national rate with roughly one in five workers earning a poverty wage, compared to one in four workers nationally.

In 2008, roughly one in every 10 Virginian lived in poverty, which represents more

Scratching the SurfaceJill and Bryan of Henrico both struggled with unexpected joblessness earlier this year. Although they are now both working, they work for much less. “We used to be long-term planners,” Jill told the Richmond Times-DispatchinAugust,“Nowweare,“Let’sgetthroughthismonth.”

Just five days after Jill was laid off from Capital One in January, Circuit City — where her husband Bryan was employed in the real estate department — announced that it was closing. The couple immediately began reaching out and networking.

“You get a little depressed,” Bryan said. “You don’t feel like you’re getting anywhere because the employers have all the cards in their favor. You get the feeling nobody wants you.”

The financial struggles placed upon their family got so bad that their eldest daughter wanted to sell her paintings at the mall in order to help keep the family afloat.

Jill was eventually hired as a career consultant and Bryan was able to find work as a project manager in Chesterfield. While the pay is less with his new position, Bryan focuses on the opportunities for growth.

Source: The Richmond Times-Dispatch, August 16, 2009

than 768,000 Virginians. For a family of four, the federal poverty threshold in 2008 was set at $21,200. As shown in Figure 3.10, the poverty rate is substantially higher among certain groups of Virginians. However, compared to national rates, Virginia still has a lower poverty rate for every single demographic group.

The poverty rate is highest among children, African-Americans, and Hispanics, and those Virginians with less than a high school degree.


Health Care OverviewTraditionally, Virginia has had a comparatively high rate of employer-provided health insurance coverage, in large measure because of a large federal and military workforce. However, in recent years, the Commonwealth has shown a downward trend in the percentage of workers who get insurance coverage through their jobs. Many businesses are either not offering coverage anymore, or asking workers to pay an increased share of the cost.

For those who are without employer-provided health insurance plans, the safety net in Virginia remains extremely weak. Hundreds of thousands of Virginians working for small businesses, unlike their counterparts at larger companies, cannot continue their employer-provided health insurance coverage if they lose their job. And, for low-income working Virginians, strict income eligibility for Medicaid puts coverage out of reach for parents earning more than $6,000 a year.

Employees Shouldering Large Share of Health Insurance CostsIn 2008, health care costs for Virginia’s workers continued to be a concern. The average premium, not including other cost sharing like deductibles and co-pays, for individual worker insurance coverage was approximately $4,200 in 2008. For families, the average employer-provided insurance premium topped $12,000.

While the premium is paid by both the employer and the employee, businesses continue to require workers to pay a high share of the total premium cost, even relative to other states. Each year, the federal Agency for Health Care Research and Quality (AHRQ) conducts the Medical Expenditures Panel Survey (MEPS). Among many measures, the MEPS survey estimates the average percentage of the total premium that workers pay for health insurance. For the second survey in a row, Virginia workers with individual insurance coverage were responsible for paying the highest average percentage (about 24 percent) of any state in the nation. This is well above the national average of 20 percent. Virginia does not fair significantly better for family coverage. The average worker pays more than 31 percent of the total premium cost, according to the MEPS data.

To place the figures in context, Virginians were paying an average of less than 19 percent of the total premium cost as recently as 2004 (see Figure 4.1). Employer-provided health insurance is a benefit that is considered part of a worker’s total compensation. The increased percentage burden on the worker, unless made up for in salary or other benefits, erodes compensation and places an increased financial burden on Virginia’s workers. Many have simply been unable to keep their workplace provided health insurance. In 2000-2001, 67.9 percent of individuals in Virginiahademployer-sponsoredhealthinsurance.Thatsharedroppedto66.65percentin2005-2006andto63.15percentin2007-2008.

Scratching the SurfaceDebby,ofWiseCounty,developedkidney cancer in 1998. At the time, her father was dying of colon cancer and Debbyservedashisonlycaregiver.Inorder to keep providing care for her father, she accepted radiation treatment instead of having the kidney removed.

However, when she was unable to work after the radiation treatment, she lost her employer-sponsored insurance. Her tumor returned and she had no health insurance and did not qualify for federal orstateassistanceprograms.“NowIhaveanewtumor,”Debbysaid.“Ihaveno way to pay for it.”

“ …I’m just trying to figure out how I’m going to make it nine years until I’m qualified to get my regular Social Security.” Her story appeared in the Richmond Times-Dispatch this July.

Source: The Richmond Times-Dispatch, July 2, 2009

Chapter 4

Benefits and the Safety Net


An Insufficient Safety NetFor Virginians without health insurance coverage through their employers, the options for coverage are limited. Virginia has long neglected safety net public insurance programs for low-income Virginians. The Commonwealth is 48th in the nation in per capita Medicaid expenditures, and 44th in Medicaid income eligibility for parents (well below our neighboring states, see Figure 4.2). While the national average for parental incomeeligibilityforMedicaidisabout65percent of the federal poverty level, Virginia has a top eligibility rate less than half the national average. Essentially, parents with even one full-time worker are unlikely to qualify for Medicaid coverage.

The safety net for children is more generous, but Virginia still lags behind many states. Virginia extends Medicaid coverage to children with family incomes up to 133 percent of the federal poverty level.

In addition, children with family incomes between 133 and 200 percent of the federal poverty level qualify for health coverage under the Family Access to Medical Insurance Security (FAMIS, Virginia’s formal name for its Children’s Health Insurance Program (CHIP)). In 2008, about 490,000 children accessed Medicaid benefits and an additional 155,000kidsreceivedFAMIScoverageatsome point during the year. However, an estimated 100,000 children eligible for either Medicaid or FAMIS remained uninsured, according to U.S. Census Bureau data.

The overall inadequacy of Virginia’s safety net has helped lead to a significant increase in the percentage of uninsured in the last decade. According to census data, 13.6 percent of Virginia’s population was uninsured in 2007-2008, compared with 10.3 percent in 2000-2001 (see Figure 4.3).


A majority of the uninsured in Virginia are working. A separate Robert Wood Johnson study of census data from 2007 found that more than 600,000 Virginians were uninsured while working full-time. The number and percentage of Virginians who work and are still uninsured is likely to continue rising, unless the safety net, as well as the workplace insurance market, is strengthened through state or federal action.

COBRA and the UnemployedCOBRA (part of the larger Consolidated Omnibus Budget Reconciliation Act of 1985)isafederallawpassedin1985thatallows workers in businesses with more than 20 employees to continue their health insurance coverage for up to 18 months after leaving their job. The worker is required to pay the full cost of the premium (both the employer and employee share) up to a maximum of 102 percent of the premium amount. While the cost of this coverage can be very expensive, especially after leaving or losing a job, it can prevent a gap in coverage that may put families at risk if they get sick. If an individual or family is without employer-provided group coverage for more than 62 days, they could become subject to pre-existing condition exclusions when they get another job and become eligible again for employer health insurance.Normally,Americanswithexisting insurance are protected against any exclusions when they sign-up for their new workplace health insurance plan.

The American Recovery and Reinvestment Act (ARRA) contained funding to provide health insurance premium assistance for COBRA coverage to Americans who lost their jobs during the current recession. For anyone who has lost or loses a job between September2008andDecember2009,thefederalgovernmentwillpay65percentofthe premium cost for COBRA coverage for up to nine months. Currently, such coverage is usually out of reach, since the average COBRA premium for individual coverage would account for roughly a third

Scratching the SurfaceKimberly works full-time as a waitress while raising two children. She shared her story with the Free-Lance Star in June.

Kimberly’s tooth had bothered her for several weeks before it finally broke. “It’s been hurting ever since.” Her employer does not offer health insurance.

Kimberlycalledlocaldentistswhocharge$75foranexamandX-rayandthenadditionalmoney for whatever treatment was needed. Instead, she got a ride from Colonial Beach, where she lives, to the Community Health Center in Fredericksburg, where she was seen by a dentist at a reduced cost.

Free health clinics in Fredericksburg have been overwhelmed, forcing one clinic to stop accepting new patients and a second to cut back its available slots. Michelle, a manager at a clinic, noted the changing face of patients at her clinic. “Before we saw the truly indigent population,therealpoor.Nowit’sthemiddle-classpeoplewhohavebeenlaidoff.”

Source: The Free-Lance Star, June 4, 2009


of the average monthly unemployment benefit (86 percent for family coverage). The ARRA provision was designed to make COBRA coverage more affordable for Americans already hurting as a result of a job loss.

COBRA, however, leaves out workers in businesses with fewer than 20 full-time employees. Congress recognized this problem,andmadethe65percentfederalpremium assistance apply to states with continuation of coverage laws. In all, 39 statesandtheDistrictofColumbiaalreadyhave continuation of coverage laws, often known as “mini-COBRA,” which require employers in firms with fewer than 20 employees to offer to an employee the option of keeping their insurance (at full cost) even after leaving their job (see Figure 4.4). These continuations last for varying lengths of time from three to 36 months, but essentially give all workers the chance to keep their health insurance. And, in these states, all workers would be eligible forthefederal65percentsubsidywhenthey are laid off.

Virginia does not have such a continuation of coverage, so workers in small businesses were not initially eligible for the federal subsidy. However, in April, the General Assembly temporarily amended state law to allow these workers to get the same benefit afforded workers in larger businesses. The amendment simply allowed for the continuation of coverage for a worker in a firm with fewer than 20 full-time employees, for a period of nine months (the duration of the federal subsidy). While this was a helpful change, it is a temporary fix.

Unemployment Insurance Leaving Many Jobless Virginians BehindVirginia’s unemployment insurance system provides a crucial safety net at all times, but it is especially important during times of severe economic downturn when a higher percentage of workers face unemployment.

A robust system is not only advantageous to the workers who find themselves suddenly without a job during tough times, but it also serves the critical role of stabilizing and stimulating the state’s economy. Although Virginia’s unemployment rate has been consistently below the national unemployment rate, unemployed Virginians are much less likely to qualify for unemployment insurance benefits.

In2008,only25.7percentofunemployedVirginians received unemployment insurancebenefits.AsshowninFigure4.5,the rate at which unemployed individuals received benefits was nearly 31 percent lower in Virginia than nationally. Even more alarming, recipiency has declined in Virginia since the start of the recession. In 2008, only four states extended benefits to a smaller share of their unemployed workers.

Only four states extend unemployment insurance to fewer unemployed workers


Another signal of the severity of the current recession can be observed in the rising number of unemployed Virginians exhausting their unemployment insurance benefits. Since 2007, there has been an uptick in the unemployment insurance exhaustion rate — both in Virginia and nationally. More specifically, in 2008, roughly 39 percent of Virginians receiving unemployment insurance saw their benefits run out before they found a job. While this rate is on the rise in Virginia, it still remains slightly below the national rate (see Figure 4.6).

Pension Coverage Still Below Previous LevelsNationally,pensioncoveragehasbeenonasteady decline, yet it appears that Virginia workers’ access to pensions has actually increased slightly in recent years. As illustrated in Figure 4.7, over the 2006-2008 period, about 48 percent of private sector employees had pension coverage. While Virginia still ranks in the top 20 states on this measure of employee benefits, it is important to consider that the state is still worse off now than at the beginning of the decade, when more than half of private sector employees in Virginia had access to an employer-sponsored pension plan.

More Virginians are running out of UI benefits


Overview With an extremely diverse economy, Virginia’s workforce composition and employment landscape vary greatly from one area of the state to another. This geographic variation is a key contributor to Virginia’s sustained economic success, but it also means that the economic headlines don’t paint an accurate picture ofhowVirginia’sworkersarefaring.BecausetheNorthernVirginiaeconomyboasts some of the wealthiest localities in the nation, and is home to such a large proportion of Virginia’s workers, figures such as the state’s average weekly wage are greatly skewed upward. In order to more fully capture the opportunities and challenges facing all of the Commonwealth’s workers, it is necessary to look beyond statewide indicators and examine regional trends.

This chapter reviews the most recent data available at the regional level and includes a section on employment levels, wages, and income for each of Virginia’s 11 metropolitan statistical areas (MSAs).

Weathering the StormBecause different areas of the state have higher concentrations of jobs in certain sectors than others, this recession has more severely affected some localities. Localitieswithrelativelyhighpercentagesofjobsindecliningsectorssuchasmanufacturing and construction, for example, have experienced much higher rates

Scratching the Surface Even though many workers at the General Motors plant in Fredericksburg expected the plant to close, the news still hit hard. “It was like a brick being thrown through a glassplatewindow,”saidLouis,58,totheWashington Post.

LouisworkedattheFredericksburgGMplant for 28 years. He learned the plant was closing when a manager read from a prepared statement during the morning shift. “His hands were trembling and shaking,asheread,”Louissaid.“Hearingit made you realize … it’s real.”

Workers at the plant worry about how hard it could be to find a job in a city with a 10 percent unemployment rate when the plant closed. “It’s hard to get a good jobnow,”saidJacqueline,a50-year-oldproduction worker.

Source: The Washington Post, June 2, 2009

Chapter 5

Regional Diversity


of unemployment than localities that employ more people in expanding sectors such as health and education.

The most recent unemployment data (as of September 2009) shows that the unemployment rate of the locality with the highest unemployment rate (Martinsville City) is more than four times that of the locality with the lowest rate (Arlington County).Figure5.1showstheSeptember2009 unemployment rates for the localities with the five lowest and five highest rates.

The pages that follow further explore the regional impacts of the recession in Virginia.


Blacksburg-Christiansburg-Radford MSAThe Blacksburg-Christiansburg-Radford MSA is currently home to about 82,600 workers, slightly over 2 percent of the state’s civilian labor force. This region had the third highest unemployment rate of the state’s 11 metropolitan statistical areas in September 2009 — and the highest poverty rate. Its median household income of $41,402 is $19,000 below the state figure and the third lowest in the state.

Home to Virginia Tech and Radford University, 22 percent of workers in the Blacksburg-Christiansburg-Radford MSA are employed in education services. This is the highest concentration of workers in any one regional industry anywhere inthestate.AsshowninFigure5.3,the second largest industry in the area is manufacturing. The manufacturing positions in Blacksburg-Christiansburg-Radford pay the best of its five most concentrated industries, but the average weekly wage for this sector still lags the statewide industry average by $60.

Unemployment in the Blacksburg-Christiansburg-Radford MSA has exceeded that of the state throughout thecourseoftherecession.Figure5.4shows that the region experienced a spike in unemployment both during March 2009 (9.4 percent) and June 2009 (also 9.4 percent), but has recently declined to under 8 percent in September 2009.


Charlottesville MSAUnemployment in the Charlottesville MSA is the second lowest of any MSA in the stateat5.5percentinSeptember2009.TheCharlottesville MSA contains just under 3 percent of the Commonwealth’s civilian labor force and boasts the fourth highest median household income in the state.

LiketheBlacksburg-Christiansburg-Radford MSA, Charlottesville has a very high concentration of workers in the education services industry, as it is home to the University of Virginia. Just under one in five Charlottesville workers is employed in this sector of the region’s economy, and their average weekly wages are $190 higher than the statewide industry average. After education, health care and social assistance is the second largest industry, employing more than 16,000 Virginians at an average weekly wage of $897.

Charlottesville has experienced lower unemployment levels than the state throughout the course of the recession. AsshowninFigure5.7,theareahititspeak unemployment rate of 6.4 percent in June 2009.


Danville MSAThe current recession has most severely affectedtheDanvilleeconomy.InSeptember 2009, only one in every 100 Virginia workers was from this area of the state. The area’s unemployment rate of 11.4 percent is the highest in the state — and the area’s median household income of$34,785isthelowestofanyMSA.Infact,asshowninFigure5.8,Danvilleisthe only MSA in the state that experienced declining employment levels during the economicexpansionofNovember2001toDecember2007.

PartofthereasonDanvillehasbeenhitsohard by the downturn has to do with the area’s large concentration of jobs within the manufacturing industry. Although these jobs are some of the better paying jobs in the state, as the national economy has shifted into more service-based sectors,Danvillehasseenalmosthalfofits manufacturing jobs disappear since theendofthelastrecessioninNovember2001.AlthoughDanville’ssecondlargestindustry, health care and social assistance, is one of the few growing industries in the state,wagesinDanvilleareonly79percentof the statewide industry average.

UnemploymentinDanvillehasexceededthat of the state throughout the recession and by more than any other metropolitan statistical area. As illustrated in Figure 5.10,unemploymentintheareahitapeakof 13.9 percent in January 2009.


Harrisonburg MSAThe Harrisonburg MSA is home to more than 64,800 workers, just under 2 percent of the state’s civilian labor force. As shown inFigure5.11,theareahasoneofthelowest average weekly wages in the state and the second highest poverty rate in the state. Yet, the area’s unemployment rate was the third lowest of any MSA in September 2009.

LikeDanville,Harrisonburghasthelargestshare of its employment in manufacturing. Its second most concentrated employment sector is education services, yet the average weekly wage in this industry is almost $100 below the statewide average.

Unemployment rates in Harrisonburg have tracked the statewide rate fairly closely. As showninFigure5.13,theMSAhitapeakof 7 percent in June 2009, but has since fallen to below 6 percent.


Kingsport-Bristol MSAThe Kingsport-Bristol MSA is the state’s smallest MSA in terms of employment. In September 2009, it was home to 1.26 percent of the state’s civilian labor force.BehindDanville,thisMSAhadthe second highest unemployment rate (as of September 2009), and its median household income of $39,081 is the second lowest in the state. Its poverty rate of 16.6 percent is notably above the statewide rate of 9.9 percent, but towards the middle of the pack relative to other regions of the state.

LikeDanvilleandHarrisonburg,Kingsport-Bristol has a large concentration of jobs in the manufacturing industry. In 2009, roughly one in every six jobs was in manufacturing, where the average weekly wage was $714, which is $100 lower than in the other two manufacturing-intensive MSAs. The second highest concentration of jobs in Kingsport- Bristol is in the relatively low-paying retail trade industry, where workers earn an average weekly wage of just $373.

Unemployment levels in Kingsport-Bristol have grown considerably since the summer of2008.AsshowninFigure5.16,theareahitapeakrateof9.5percentinJanuary2009, then fell slightly and hovered there again in June and July.


Lynchburg MSATheLynchburgMSAcontainsroughly3.5percentofthestate’scivilianlaborforce. The area’s workers are paid less than workers statewide on both measures of wagesandincome.In2008,Lynchburg’smedian household income of $44,447 placed it $16,786 below the statewide figure, while the average weekly wage was $249 below the statewide average.

WhilethelargestshareofLynchburg’semployment is in manufacturing, this MSA is less manufacturing dependant than Danville,Harrisonburg,andKingsport-Bristol. The average weekly wage for workers in this industry, however, is greater inLynchburgthaninanyoftheotherthree manufacturing-intensive regional economies- likely due in part to the nuclear manufacturing facilities located in the area.

Lynchburg’sunemploymentratehastracked that of the state very close throughout most of the recession, yet the gap between its rate and the statewide rate grew during most of 2009. As showninFigure5.19,theareahitapeakunemployment rate of 8.2 in June 2009.


Richmond MSARichmond is home to about 17 percent of the state’s civilian labor force, which represented more than 642,000 of Virginia’s workers in September 2009. In addition to being the third largest MSA, its workers are among the best paid in the state. Richmond’s median household incomein2008wasjust$2,571belowthe statewide figure, second only to the Washington-Arlington-Alexandria MSA. Its average weekly wage of $891 was also second only to Washington.

The largest share of Richmond’s jobs are in the health care and social assistance industry. These workers include hospital staff, nursing facility employees, and child day care workers, who are paid slightly above the statewide industry average. Behind health care, the retail trade industry holds the second largest number of jobs in Richmond. Yet, unlike health care, these workers are paid slightly below the statewide industry average.

LikeLynchburg,theRichmondMSAtracked statewide unemployment trends fairly closely from the start of the recession to early 2009. Since then, the unemployment rate in Richmond has consistently been about 1 point higher than the state level.


Roanoke MSARoanoke is the state’s fourth largest MSA in terms of the size of its civilian laborforce.AsshowninFigure5.23,itsunemployment rate is just slightly higher than the statewide rate, as is its overall poverty rate. Roanoke’s 2008 median householdincomeof$47,474is$13,759below the statewide figure- and its average weekly wage falls $227 dollars short of the statewide average.

Roanoke’s largest employment sector is health care and social assistance, with about one in six of its workers employed in this industry.

Roanoke has experienced a similar pattern in its unemployment rate as the Richmond and LynchburgMSAs.AsillustratedinFigure5.25,thegapbetweenthestaterateandRoanoke’s rate has grown since early 2009.


Virginia Beach-Norfolk- Newport News MSATheVirginiaBeach-Norfolk-NewportNewsMSAisthestate’ssecondlargestMSA. In September 2009, it was home to more than one in five of the state’s workers. In addition to being large, the region’s median household income is the third highest in the state, despite being $4,111 below the statewide figure. Poverty in t his MSA is also slightly lower than statewide, yet among children it is slightly higher.

Roughly one in nine workers in the VirginiaBeach-Norfolk-NewportNewsMSA is employed in health care and social assistance. Among its other top employment sectors, manufacturing pays the most — at an average weekly wage of $1,036, which is higher than in any other MSA for which manufacturing is a top five employment sector.

Of all 11 MSAs, the Virginia Beach-Norfolk-NewportNewsMSAhastrackedthe statewide trend most closely during the recession.AsshowninFigure5.28,despiteentering the recession with a slightly higher unemployment rate, the Virginia Beach-Norfolk-NewportNewsMSAisnow within .1 percentage points of the statewide rate.


Washington-Arlington-Alexandria MSAThe Washington-Arlington-Alexandria MSA is often regarded as the engine of economic growth in the Commonwealth — and there is plenty of evidence to support the claim. This MSA contains a larger percentage of Virginia’s civilian labor force than any of the other 10 MSAs. More than two in five Virginia workers is from this region. Of the total growth in employment that occurred statewide during the last economic expansion, half of it was realized in the Washington-Arlington-Alexandria MSA. In 2008, the median household income exceeded that of thestatebyabout$24,500.ItistheonlyMSA that performs better than the state foreveryindicatorincludedinFigure5.29.

The Washington-Arlington-Alexandria MSA is the only MSA to have such a high concentration of jobs in the professional, scientific, and technical services industry. Richmond is the only other MSA to even capture this industry in its top five. NearlyoneinfiveworkersintheMSAare employed in this sector, the second highest concentration of workers in any sector statewide. The average weekly wage for this industry is more than twice the statewide average.

AsshowninFigure5.31,unemploymentin Washington-Arlington-Alexandria has been considerably lower than statewide throughout the course of the recession.


Winchester MSAThe Winchester MSA is Virginia’s third smallest with a civilian labor force of 54,257inSeptember2009.Althoughitspoverty rate is the second lowest in the state, its median household income of $50,999anditsaverageweeklywageof$720 place its employee compensation in the middle of the pack.

AsshowninFigure5.33,healthcareandsocial assistance is the largest employment sector in Winchester, employing just under 16 percent of the area’s workers.

Unemployment in Winchester started slightly below the Virginia rate at the beginningoftherecessioninDecember2007, yet since September 2008, the MSA’s rate has grown much faster than that of the state. The unemployment rate in Winchester peaked at 9.2 percent in February 2009.


The first year of the Great Recession has brought significant challenges to working Virginians. Almost all sectors of the economy have experienced substantial increases in unemployment. In fact, Virginia’s unemployment rate has grown at a pace two to three times that of the 1981 and 2001 recessions. Job losses have occurred in all sectors of the economy, except three.

Forworkerswithjobs,significantchallengesalsopersist.Declinesinthepercentageof workers getting health insurance from their employer continue. And those fortunate enough to get coverage continue to pay a greater share of the premium than in any other state in the nation. In 2008, Virginia’s workers paid the highest average percentage of the total premium cost for individual coverage at 24 percent.

The state’s safety net is not well positioned to offer help. The unemployment insurance system in Virginia remains among the weakest in the country. Only four other states provide unemployment insurance to fewer workers. Additionally, the state continues to retain strict eligibility limits for access to public health insurance through the Medicaid program. As a result, low-income workers who cannot get coverage through their jobs do not have access to a key form of affordable health insurance. For example, a working parent in the state has to make less than $6,000 a year to qualify for the Virginia’s Medicaid program.

As the recession drags on and conditions worsen for Virginia’s workers, these challenges will increase. Finding constructive ways to address the growing needs of Virginia’s workforce needs to be in the center of policy debates. Virginia workers deserve nothing less.

Chapter 6

Conclusions

Finding constructive ways to address the growing needs of Virginia’s workforce should be at the center of policy debates.



For more information on the issues facing workers and the economy in Virginia, visit our website at: www.thecommonwealthinstitute.org


Photo: cover and above by Geri-Jean Blanchard

P.O.Box12516Richmond, VA 23241


Documents

Scratching the Surface - Commonwealth Institute...This report, Scratching the Surface: The State of Working Virginia in the Great Recession, examines trends in employment, wages, labor