State program would incentivize new workers with up to $1,000

To combat Virginia’s tight labor market, the state plans to invest $3 million in a program to provide new employees of qualifying small businesses with up to $1,000 to support their transition back into the workforce, Gov. Ralph Northam announced Friday.

The Virginia Return to Earn grant program will match up to $500 from eligible small businesses that are paying new hires at least $15 an hour and employ fewer than 100 people. The program will be funded through Virginia’s federal Workforce Innovation and Opportunity Act (WIOA) funding, and additional COVID-19 pandemic recovery funds may be allocated based on demand, the governor’s office said.

“Many Virginians who lost their jobs as a result of the COVID-19 pandemic still face a variety of barriers to returning to work like access to affordable child care, transportation and a living wage,” Northam said in a statement. “These bonuses will serve as an incentive for unemployed workers to get back into the workforce while also helping employers fill vacant jobs. The Virginia Return to Earn grant program is about empowering the true catalysts of our economic comeback — Virginia’s workers and small businesses.”

To qualify for the state’s matching fund of up to $500 per person, businesses must pay that amount directly to a new employee hired after May 31, either as a lump sum or in installments to offset ongoing costs of child care, transportation or other barriers to re-employment. Funds will be reimbursed only to businesses that pay at least $15 per hour for jobs that qualify as W-2 employment, either full time or part time.

Virginia has seen a staffing crisis this year, part of a national trend, as businesses that were shut down or at limited capacity during the pandemic are now fully reopening for businesses — or would if they had enough employees. There are a variety of reasons for the labor shortage, among them state and federal unemployment benefits extended through Sept. 4 and a lack of child care options. Businesses are offering signing and referral bonuses, as well as free meals and end-of-shift cocktails at some restaurants.

Hotels and restaurants have been hit particularly hard, notes Eric Terry, president of the Virginia Restaurant, Lodging & Travel Association, who estimates that about 56,000 hotel jobs were lost in Virginia last year, prompting some workers to move on to other career fields. Another pressure point for some employers is Virginia’s minimum wage raise from $7.25 to $9.50 per hour in May, a first step toward $12 an hour by January 2023, and the fact that Northam has set the grant program eligibility at a $15-per-hour minimum.

In response to the governor’s announcement, Terry said, “We are very disappointed that the wage level was set so far above the state minimum wage of $9.50, which was just increased last month. This will do very little to ease the labor crisis our members are feeling as the tourism and restaurant industry tries to recover.”