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New Study Reveals Sobering Unemployment Forecast

Unprecedented Job Growth Needed to Return Virginia to Pre-Recession Levels

 

Virginia needs to add 12,000 jobs per month, every month, for the next two years in just to return to pre-recession employment level. That sobering statistic is among the numbers released today in a new and dramatic unemployment forecast from The Commonwealth Institute for Fiscal Analysis.

“Economists may have declared the Great Recession over months ago,” says Michael Cassidy, Executive Director of the Commonwealth Institute, “but a recovery doesn’t feel like a recovery to Virginia workers until jobs come back and employment actually picks up.”

Virginians face a long road to recovery from the current recession.  The state’s economy is likely to experience sustained high levels of unemployment throughout 2010 and most of 2011 and, according to the Commonwealth Institute’s new study, will not return to pre-recession levels of unemployment until after 2014.

The study, entitled “The Long Road to Recovery” uses the recovery patterns of the 1980s, 1990s, and 2000s recessions to forecast changes in three important trends in Virginia’s economy: the unemployment rate, number of jobs, and median income.

Among the report’s key findings is that when growth in Virginia’s population is accounted for, the state’s total job shortfall hovers at 200,000 jobs. In order to fill this shortfall and return to pre-recession employment levels by the end of 2011, Virginia would have to start adding jobs at an unprecedented rate: over 12,000 per month for every month of the next two years.

Additionally, the report estimates the negative effect lingering unemployment is likely to have on wages in Virginia. The report projects that in 2014, Virginia workers in the middle of the income distribution will have actually lost ground, earning less in 2014 than they did in 2007.

”People’s income is the core building block for their standards of living and for the growth of our economy.  This sobering finding shows that most people will see their income sliding for many years to come as they try to recover from the impacts of the recession,” says Cassidy.  “This negative growth will act as a real drag on consumer spending and family economic security.”

Current efforts to meet the needs of Virginians struggling with unemployment and to foster job creation and preservation are critical in addressing this long road ahead.

“Because Virginians are likely to struggle in this economy for some time, it is critical that lawmakers take needed steps to strengthen our state’s unemployment insurance system,” Cassidy said. “Congress is also considering jobs-creation legislation that should include, among other things, needed changes to extend aid to states, for example, to preserve jobs.”