Concerns Over Low Labor Participation in USVI Amid Debates on Unemployment Figures

In a recent Senate Committee meeting on Education and Workforce Development, the state of unemployment in the U.S. Virgin Islands was a central topic. Senator Marise James, chair of the committee, challenged Labor Commissioner Gary Molloy on the veracity of the reported 3 percent unemployment rate, questioning its reflection of the territory’s actual employment scenario.

Commissioner Molloy, addressing these concerns, highlighted the complexities in unemployment metrics. He differentiated between the U-3 and U-6 unemployment rates, as defined by the U.S. Bureau of Labor Statistics. The U-3 rate, which counts the unemployed as a portion of the civilian labor force, was 3.6% nationally from Q4 2022 to Q3 2023. In contrast, the U-6 rate, encompassing unemployed, underemployed, and marginally attached workers, was higher at 6.8% for the same period.

For the USVI, Molloy confirmed a U-3 rate of 3.5%, closely aligning with the national average. However, he was unable to provide the U-6 figures for the territory. He pointed out that many non-employed individuals might be missing from these statistics due to their absence in the data system.

Senator James raised concerns about the lack of U-6 data for the Virgin Islands, despite its availability nationally. In response, Molloy revealed that the labor force participation rate in the territory, last calculated in 2022, stood at 49.5%. This rate measures the proportion of working-age people who are either employed or actively seeking employment.

Expressing dissatisfaction, Senator James highlighted the discrepancy between the seemingly low unemployment rate and the labor participation rate. She emphasized the need to improve labor participation in the territory.

Molloy suggested that generous unemployment benefits could be influencing the low participation rate. He cited data indicating that residents were fully utilizing the available 26 weeks of unemployment benefits, a trend he attributed to the influx of federal and pandemic-related funds.

Senator James, however, pointed to another potential factor: the balance between the cost of living in the territory and the benefits of employment. She hinted that inadequate wages might be deterring people from entering the workforce, thus impacting the labor participation rate.

This discussion underscores the need for a deeper understanding of employment dynamics in the USVI and highlights the complexities in interpreting unemployment statistics.