Job Loss

During the General Assembly session, Senate Democrats spoke often about the job loss that would result from reductions in the state budget. Senator Edd Houck of Spotsylvania collected statistics from various groups about the effects on people in their industry; for example, the Hospital and Healthcare Association said more than 10,000 private sector jobs would be lost if the most severe cuts were put in place.

Senator Houck and others spoke frequently on the floor of the Senate to remind our members, the Governor and the general public that reductions in state funding mean not only the loss of services but also the loss of jobs.

Now that the budget has been adopted, a new analysis of the resulting job loss has been released by The Commonwealth Institute for Fiscal Analysis. I am going to share some of the information found in the executive summary of this analysis; the full study can be found on the website of the Commonwealth Institute.

The analysis shows that 37,000 jobs will be lost in Virginia from the cuts in education and health and human services sectors alone. That will add to Virginia’s already-increasing unemployment rate, now over 7%. The report estimates that these lost jobs will mean that the unemployment rate will go up at least three-tenths of a percent in the first year and nearly a full percentage point in the second year unless they can rapidly find new employment – unlikely at a time when the national long-term unemployment rate is near 40%.

Several of our colleagues in the Senate told us that teaching jobs are highly prized in their communities as relatively well-paying positions with health benefits; furthermore up until now they have been steady jobs in communities that offer very few employment opportunities. In Southside and Southwest Virginia, hard hit by loss of manufacturing and tobacco-related jobs, education and health care have been bright spots for employment.

There will be additional collateral damage. Those persons laid off will not be paying taxes, thus further reducing state revenues. They will not be spending money in our consumer-based economy, just at the time when the state needs a boost in consumer demand. One chart in the report shows that the job losses included in the budget will reduce state GDP by more than $2.2 million, personal income by about $1.5 billion, and general fund revenues by an estimated $37 million in 2011 and $93 million in 2012.

The executive summary of the report concludes that “The fragile economic recovery in the state could be torpedoed by this latest hit on Virginia’s economic recovery.”

An irony of the whole matter is that Governor McDonnell wants to be the “jobs Governor.” He insisted on setting aside close to $50 million in the budget for economic development and job creation that he says will produce 29,000 jobs over time. Maybe so; but in the meantime, even more jobs have been eliminated in this budget.

Senator Whipple represents the 31st District in the Virginia State Senate. She may be e-mailed at district31@sov.state.va.us