Weldon Cooper Center Report Examines Unemployment Insurance
Tougher To Be Unemployed In Virginia Than Elsewhere
January 29, 2004 --
It’s tough to be unemployed, but it’s tougher
in Virginia than in many other states, according to a recently
study by the University of Virginia’s Weldon Cooper Center
for Public Service.
2002, only 35 percent of unemployed people in Virginia received
benefits, compared with the national average
of 44 percent, said
John L. Knapp, director of business and economics research at
the Cooper Center and co-author of the study, “Virginia’s
Unemployment Insurance Program.”
are many reasons for the difference, but they include Virginia’s
tougher qualifying requirements and a stronger job market,” he
co-authored the research report, based on an analysis of several
studies on the topic, with Megan Coltson Moyer,
research assistant at the Cooper Center. Their study appears
in the current issue of The Virginia News Letter, published
noted that cracks in Virginia’s
unemployment insurance system became apparent in recent
years as the state economy suffered
through a recession and a recovery bringing few new jobs.
and Knapp examined research about Virginia’s unemployment
insurance system, focusing on a study conducted by Wayne
Vroman, a nationally known expert on unemployment insurance
was commissioned by the Virginia General Assembly in
2001 to study the state’s system.
completed his report, “An Analysis of the Virginia
Unemployment Compensation System,” in 2002. The
next year, the General Assembly adopted some of Vroman’s
suggestions, addressing in particular the weekly benefit.
legislators did not act on Vroman’s recommendation
for indexing the maximum weekly benefit to changes
in the state’s
average wage, although he admitted that when need
is high and trust fund balances are low — as
they are now — Virginia
employers would face an added tax burden.
unemployment insurance program began in 1935, during
the Great Depression. The goal of the state-federal
venture was to partially replace lost wages and
aid in reemployment by creating a nationwide public job
placement system. In Virginia,
the program is managed by the Virginia Employment
workers in Virginia qualify for benefits if they earned at least
$2,500 in four out of five
of employment. The requirements recently were
changed, so that if a claimant does not qualify using this
attempt to qualify using the most recent four
quarters of employment. Currently,
the minimum weekly benefit is $50 and the maximum
is $316. Beginning in July, the maximum will
rise to $326.
may be paid
up to 26 weeks.
benefits are paid out of the state’s unemployment
insurance trust fund, which is funded by a
tax on employers. A dip in the solvency of the trust fund results
in a surtax on employers.
trust fund solvency is higher than the national average, and
its employers pay
lower taxes than in most other states.
In 2002, when the national average employer
tax was 0.5 percent of total wages of covered employees,
average tax rate was 0.2 percent. Only Georgia had a lower
rate and only Arizona,
New Hampshire and South Dakota matched Virginia’s
unemployment insurance system, the challenge
is to maintain an adequate trust fund balance
the face of what has been, until recently,
a weak economy. VEC analysts expect the trust
fund to run low next year, with recovery
expected by 2006.
Charlotte Crystal, (434) 924-6858