Virginia could lose 32,000 jobs in 2025, U.Va. estimates

Virginia is expected to lose up to 32,000 jobs in 2025, according to a quarterly forecast from the University of Virginia‘s Weldon Cooper Center for Public Service.

The commonwealth’s unemployment rate could rise to its highest level since 2021 in coming months, according to the forecasters at Weldon Cooper, which provides nonpartisan research and data analysis, among other services.

The state’s monthly unemployment rate is expected to average 3.9% this year and rise to an average rate of 4.7% in 2026, Virginia’s highest unemployment rate since 2020, when the COVID-19 pandemic shutdown caused massive temporary layoffs and closures.

These estimates “could change,” Eric Scorsone, the center’s executive director, said during a Monday media roundtable. “That could get worse, potentially, depending on how things evolve.”

Scorsone noted that many of the center’s unemployment projections are related to federal layoffs and government spending cuts, which hit Virginia harder than most other states. Nearly one in eight Virginians either work for the federal government or have jobs connected to federal contracts. The forecast says the state will likely see a net loss of more than 9,000 government jobs this year.

“The state is highly dependent on the [federal] sector, and the sector is declining right now,” he said. “And so that’s going to be, I think, an important story going forward for Virginia.”

Since President Donald Trump returned to the White House, more than 100,000 federal employees have been fired or put on leave as part of a measure to cut federal spending. A CNN tracker puts the number of federal workers laid off or targeted for layoffs at 121,361 as of April 28.

The Trump administration has also cut federal contracts to curb federal spending, which is anticipated to result in layoffs among some government contractors. In April, Goldschmitt and Associates, a Sterling-based business management firm, announced plans to lay off 217 employees, citing a reduction in a federal contract as the reason for its layoffs, and federal not-for-profit contractor Mitre, with dual headquarters in McLean and Massachusetts, announced in April it plans to cut 442 jobs in McLean by June 3.

Hamilton Lombard, estimates program manager for Weldon Cooper’s demographics research group, pointed out Monday that in nine of Virginia’s 11 congressional districts, a larger share of the population is employed by the federal government than the national average. It’s incorrect to think that only Northern Virginia and Hampton Roads will be impacted by federal cuts, he said.  “That influence has spread further out, particularly the last few years, with more federal workers being remote.”

It’s difficult to quantify the federal job losses, Scorsone explained, because some federal workers took deferred resignations, meaning they’ve quit working but will be paid through September, under a Trump policy announced this year. Court cases involving the federal layoffs are still pending as well.

“So, we may see a lot more [layoffs] down the road, over the next, say, six months,” he said.

Statewide job losses are expected to deepen in the second half of the year and extend into early 2026. Recovery is expected to begin in late 2026, with a net gain of about 17,000 jobs in 2026, or 0.4% growth, the forecast says.

Weldon Cooper’s forecast notes that nationwide employment grew by 228,000 jobs in January and February, but Virginia saw a net loss of nearly 8,000 jobs in those months.

“Virginia is losing jobs while the rest of the country is creating jobs,” Scorsone said. “That has a lot of negative implications. People might decide to leave Virginia to look for jobs elsewhere. There might be some form of brain drain.”

In addition to layoffs by the federal government and federal contractors, Virginia has seen significant business closures and layoffs in other sectors, including Georgia-Pacific’s announcement that it would close its Emporia mill, cutting more than 550 manufacturing jobs, and this week’s WARN notice from Saddle Creek Logistics Service that it expects to lay off 54 employees in Richmond in July.

According to the Weldon Cooper forecast, Virginia’s administrative services sector is expected to lose more than 5,000 jobs, while the state’s manufacturing industry is expected to shrink by 4,500 jobs. In the hospitality and tourism sector, the state could lose 7,740 hotel and food services jobs, and 6,486 arts, entertainment and recreation jobs.

However, there was a bit of good news: the state’s economy is expected to post 0.4% growth in its GDP this year due to higher productivity, Scorsone said.

“We do expect economic production to remain in slightly positive territory for the moment, although I want to emphasize the impact of the federal cuts is still coming,” he said.