Va. jobless rate at 13-year high

Virginia's unemployment rate spiked to 5.2 percent in December, hitting its highest point in nearly 13 years.

An increasing number of permanent layoffs, longer holiday furloughs and lackluster hiring in the retail sector led to the increase, said William F. Mezger, Virginia Employment Commission chief economist.

The number of people counted as unemployed in the commonwealth reached 213,400 in December, up 22,600, or 0.6 percentage points from the previous month, commission data released yesterday showed. December's jobless rate was the highest recorded since January 1996, when the rate hit 5.3 percent.

Nationwide, the unemployment rate also increased 0.6 of a percentage point in December to 7.1 percent.

For the second time in as many months, the jobless rate in the Richmond area increased by half a percentage point to 5.5 percent, up from 5 percent in November.

A year ago, the region's unemployment rate was 3.4 percent.

Layoffs from Reynolds Packaging, Circuit City Stores Inc. and LandAmerica Financial Group continued to hit in December. When it came to permanent layoffs, "the Richmond area probably had more than most others," Mezger said.

The first two months of the year typically have high jobless rates and Mezger expects that to continue to be the case for 2009.

"It's probably going to get worse before it gets better," he said.

The cuts have been from a variety of sectors: financial, manufacturing, construction and retail.

"In the early part of the layoffs it was mostly coming from manufacturing and finance, but now it's across the spectrum," said Sophie Williams, operations manager for career development services at Goodwill of Central Virginia.

The Community Employment Centers operated by Goodwill have seen a noticeable increase. In December, 967 people visited one of Goodwill's six assistance centers for the first time. A year earlier, 363 first-timers went to Goodwill seeking similar career help, Williams said.

The traffic mirrors the jobless rate.

Initial claims for unemployment insurance increased 33 percent between 2007 and 2008, and claims between this past December and the previous one are nearly double, according to a presentation VEC Commissioner Dolores Esser made to the House Commerce and Labor committee this month.

Last month, 12,694 claims were filed, compared with 6,430 a year earlier, Esser said.

If commission projections play out, the unemployment insurance fund will end 2009 with $32.6 million to pay future unemployment claims, down from $546.6 million at the beginning of the year. That number accounts for a jobless rate of 6.2 percent in Virginia for the year, said James Wilson, a commission senior economist.

By January 2010, the state will likely need a loan to continue payments, he said. The only other time that happened was in 1983. Virginia's unemployment rate peaked in January 1983 at 7.8 percent, according to The Associated Press.

A loan would not interrupt benefits payments, he said.

Federal law requires that they be paid and there is a federal loan program to act as a backup to states needing funds. Six states -- South Carolina, Ohio, New York, Michigan, Indiana and California -- have taken advantage of the loan program recently, said Andrew Stettner, director deputy of the National Employment Law Project.

Contact Emily C. Dooley at (804) 649-6016 or .