Claims by furloughed workers up

VA. UNEMPLOYMENT

RICHMOND — More than 900 federal employees have filed claims for unemployment insurance in Virginia after going on unpaid furlough during the federal government shutdown, now in its third week.

Secretary of Labor Bryan Slater said the Virginia Employment Commission had identified the furloughed workers out of 1,250 unemployment claims submitted in the first half of this month by people who identified a former federal employer, including about 700 in the second week of the shutdown, ending Wednesday.

"Our analysis indicates that of those 1,250 claims filed, more than 900 were related to a furlough," Slater said.

Those claims for unemployment benefits won't become official until the state has verified the applicants' federal wages. The number of people under federal furlough isn't clear, but nationally more than 750,000 federal employees were sent home after the government shut down on Oct. 1. Earlier this week, Virginia Secretary of Finance Steve Cummings said that the state had furloughed more than a dozen employees whose salaries are federally funded.

Democrats in the U.S. Senate have blocked a short-term funding bill in a dispute with President Donald Trump and congressional Republicans over funding of health care, especially enhanced insurance subsidies scheduled to expire at the end of the year, which will cause monthly premiums to soar.

Workers would repay

Not all aff ected federal employees will file for unemployment benefits while on furlough because they would have to repay the money after the shutdown ends — if the Trump administration complies with a law adopted in 2019, after the last government shutdown, requiring the government to provide back pay to furloughed workers. Trump has threatened to withhold back pay, but he signed the new law during his first term as president, when the federal government shut down for 35 days.

"If you receive unemployment benefits due to a federal furlough, you will be required to repay those benefits to the Virginia Employment Commission once a resolution is passed reinstating your federal employment, as your federal employer will pay you for the period you were furloughed after your return to work," the VEC states on a new webpage for affected federal employees.

The shutdown comes as Virginia, with the second largest number of federal employees and active-duty military members, grapples with the continuing economic fallout of Trump's cuts to the federal workforce and spending, including work for federal contractors.

"We're still seeing very little due to the 'Fork in the Road' and the federal layoffs," said Slater, the labor secretary. He was referring to one of several buyout offers that cut jobs at federal agencies but left the employees on payroll until the end of the federal fiscal year on Sept. 30.

A little more than a week after the shutdown began, Trump's budget director, Russell Vought, laid off 4,100 workers, although a federal judge on Wednesday ordered a temporary halt to the layoffs. Vought, who also served as budget director during Trump's first term, was the principal author of Project 2025, a policy blueprint for the new administration that The Heritage Foundation and other conservative groups published before the presidential election.

Virginia Works — the Department of Workforce Development and Advancement — reported on Thursday that initial claims for unemployment benefits increased by 4,378, about 56% higher than the previous week, but most of those claims related to a layoff in manufacturing in Southwest Virginia. That was followed by 448 claims from employees in "professional, scientific and technical services," a sector that includes federal contractors who play a big role in the economies of Northern Virginia and Hampton Roads.

"I was surprised that the unemployment claims were not higher," said Terry Clower, an economist and director of the Center for Regional Analysis at George Mason University in Northern Virginia. "That seems awful low for what we were expecting from the 'Fork in the Road.' I would have expected the number to be substantially higher."

The VEC reported continuing unemployment claims of 18,892, which was essentially flat compared to the previous week but still 22% higher than a year earlier.

At the end of September, about 60% of continuing claims were filed by people in Northern Virginia and Hampton Roads, where the federal cuts hit hardest, according to Bob McNab, chair of economics at Old Dominion University in Norfolk. Virginia's unemployment rate rose for seven consecutive months, from 2.9% in December to 3.6% in July, before remaining flat in August. However, McNab said the static unemployment rate in August masked a decline in the civilian labor force in Virginia, representing the number of working age adults who are working or actively looking for work.

"If you treated the people who dropped out of the labor force as being unemployed, the unemployment rate would have increased," McNab said.

Virginia's labor participation rate, representing the percentage of people eligible to work who are employed or looking for jobs, has fallen by more than a percentage point, from 65.8% in December to 64.7% in August.

"That is probably the most distressing [statistic] because of the implication about total output," Clower said.

In a presentation to state legislators this week, McNab said Virginia had 163,000 more people counted in its labor force than were employed, based on numbers from the U.S. Bureau of Labor Statistics.

However, the bureau essentially closed during the shutdown, leaving economists and policymakers in the dark about what's happening to the labor force and economy.

"That is going to become more and more of an issue in the coming weeks," McNab predicted.

The University of Virginia's Weldon Cooper Center for Public Service just published its quarterly economic forecast, which predicts that the state's unemployment rate will rise to 4.1% by the end of the year — a half-percentage point increase — and 4.8% next year, which would be the highest since 2021, during the COVID-19 pandemic.

McNab would not guess about what will happen with unemployment next year, but he said, "I think it is reasonable that the unemployment rate will approach 4% by the end of the year."

Michael Martz, (804) 649-6964 [email protected]