The unemployment rate -- the number of currently unemployed people seeking jobs -- is a vital indicator of the health of a state's economy and the well-being of its citizens. As with nearly every state in the U.S., Virginia's unemployment rate dropped further in 2014 as the economy continued to recover from recession; Virginia's unemployment rate was lower than all but 16 other states.
Why is This Important?
Unemployment is a measure of how many people without jobs are actively seeking employment. Since most people earn a living through a job, unemployment is also a measure of how the economy is doing in providing opportunities for people to support themselves and their families. Unemployment not only hurts the personal finances of those without work, but also reduces their participation in the overall economy. The inability to find work is also associated with stress, financial hardship, health problems, and strain on family relationships.
How is Virginia Doing?
Only people who have jobs or who are actively seeking one are considered part of the labor force; unemployed people who have stopped looking for a job are no longer counted as members of the labor force. With a 5.2 percent unemployment rate, Virginia ranked 17th among the states in 2014 (a drop from 13th for the previous 2 years). Virginia's rank is a sign that the economic recovery is widely shared across the U.S., and now includes 14 states with unemployment rates below five percent.
North Dakota again had the lowest unemployment rate at 2.8 percent in 2014. Virginia's rate was lower than its peers -- Maryland (5.8%), North Carolina (6.1%), and Tennessee (6.7%) -- and also lower than the national average of 6.2 percent. For current monthly unemployment statistics, explore the state's Labor Market Information (LMI) tools.
Every region within Virginia saw a drop in their unemployment rate in 2014. Rates varied from a high of 7.3 percent in the Southside and Southwest regions to a low of 4.3 percent in the Northern region. The Central, Valley, West Central, and Hampton Roads regions had rates between 5.2 to 5.7 percent, followed by the Eastern region at 6.3 percent. Since 2000, the Southside and Southwest regions have routinely experienced higher rates of unemployment than other areas, largely due to the loss of manufacturing jobs and limited economic growth. For current monthly unemployment statistics, explore the state's Labor Market Information (LMI) tools.
In 2013, information services, manufacturing, construction, trade, and professional and business services saw increases in unemployment. Other industries saw declines in unemployment, including leisure and recreation and education and health services; those in transportation and utilities saw unemployment rates drop to under 3 percent.
What Influences Unemployment?
In the short run, unemployment is largely driven by national macro-economic factors. The jobless rate in Virginia moves with the national business cycle. This is especially true for industry-specific data, as it is highly dependent on national performance trends for each particular field.
One factor recently affecting Virginia's economy -- and as a corollary, its rates for unemployment, personal income, and even job growth -- is the federal budget sequester enacted in late 2011 (and slated to last until 2021). Since about 20 percent of the state's economy has been reliant on federal spending, these cuts are having a sizable and lasting impact, especially in the Northern and Hampton Roads regions.
Among the long-term factors that affect the unemployment rate in Virginia are those that also affect the state's overall competitiveness: education levels, infrastructure investments, diversity and balance in its industry mix, tax rates, and the regulatory environment. Any changes that improve Virginia's attractiveness as a place to live or to do business will, over longer periods of time, tend to reduce the unemployment rate.
What is the State's Role?
State government has a number of programs that are designed to reduce the level of unemployment or to lessen its impact on people's lives. Most of the work of the Virginia Employment Commission (VEC) is directly related to addressing unemployment issues, including worker training programs. The Unemployment Insurance Program provides temporary financial support for workers losing their jobs. The VEC also has numerous programs designed to match unemployed workers with firms that have jobs to fill. The Virginia Board of Workforce Development also works to combat unemployment through programs and incentives designed to improve the state's overall workorce quality.
Virginia's community colleges help retrain workers so that they can develop the skills they need to re-enter the workforce. Finally, the Virginia Economic Development Partnership works to bring new employers into the state and to encourage existing employers to keep jobs here.
State rankings are ordered so that #1 is understood to be the best.
Data Definitions and Sources
State and regional unemployment data are from
the U.S. Bureau of Labor Statistics, Local
Area Unemployment Statistics
State industry unemployment data are from the
U.S. Bureau of Labor Statistics, Geographic
Profile of Employment and Unemployment
See the Data Sources and Updates Calendar for a detailed list of the data resources used for indicator measures on Virginia Performs.