Wednesday, October 5, 2022

As expected, unemployment claims in Hampton Roads continue to rise…and will climb even more. Here are the numbers, forecast

As the coronavirus devastates local economies, many people are learning how to apply for unemployment benefits for the first time. (WYDaily/Moody Air Force Base)

Nonseasonally adjusted data from Virginia’s Employment Commission shows initial unemployment claims increased dramatically for cities and counties in the Hampton Roads Metropolitan Statistical Area.

That’s according to Old Dominion University’s Dragas Center for Economic Analysis and Policy.

For the week ending March 21, 10,945 individuals filed initial claims for unemployment insurance in Hampton Roads, an increase of 10,481 claims from the prior week.

Every city and county in Hampton Roads observed significant increases in claims. The smallest increase was in the city of Franklin, where claims rose from 3 to 31, an increase of 933 percent from the previous week. The largest increase was in James City County, where claims rose from 17 to 876, an increase of 5,053 percent. Virginia Beach saw the largest numerical increase in claims, from 92 to 3,314.

The new estimates show the prevalence of coronavirus-related layoffs across the region. As more businesses are ordered to close, the center said it expects the sharp rise in initial claims will continue in coming weeks. Several states, including Virginia, have issued orders closing many nonessential businesses that we expect to be reflected in future estimates.

The widespread and historic rise in initial unemployment claims in Virginia is a warning sign of anticipated increases in unemployment in April and May. The rapid contraction of the leisure, hospitality and restaurant sectors will be followed by the retail and trade sectors as more stringent social distancing measures take hold.

The Dragas Center projects unemployment rates in Hampton Roads and Virginia will approach, if not exceed, 10 percent. While the defense industry in the region does provide a buffer from some layoffs, the declines in hospitality, leisure and retail employment will be unprecedented in the coming weeks.

While expanded unemployment benefits may provide some relief to workers who are laid off, a longer period of income support for workers and small businesses may be necessary to avoid a prolonged recession.

Out of Virginia’s 133 independent cities and counties, only two, Galax City and Grayson County, experienced a decline in initial unemployment claims from the previous week.

Note: Advance claims are not directly comparable to claims reported in prior weeks. Advance claims are reported by the state liable for paying the unemployment compensation, whereas previous weeks’ reported claims reflect claimants by state of residence. In addition, claims reported as “workshare equivalent” in the previous week are added to the advance claims as a proxy for the current week’s “workshare equivalent” activity.

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