Virginia work group reviews law that raises weekly unemployment benefits and studies automatic indexing

Members of the Commission on Unemployment Compensation’s weekly benefits work group met in Richmond to review recent legislation that raises weekly unemployment benefits and to begin studying whether future annual adjustments should be tied to the state’s average weekly wage.

The enactment clause of HB 1766 and its Senate cognate SB 1056, passed in the 2025 session, requires that for unemployment compensation claims effective on or after Jan. 1, 2026, an eligible individual’s weekly benefit amount shall be $52 higher than the current weekly benefit amount and directs the commission, in consultation with the Virginia Employment Commission (VEC), to convene a work group to meet at least once each quarter to study making annual adjustments based on the average weekly wage. The clause also requires the work group to complete meetings by July 1, 2026, and submit an executive summary and report of findings and recommendations to the governor and the General Assembly.

The VEC’s director of policy and legislative affairs, Ashley Irvin, reviewed how benefit amounts are calculated and funded. “Currently, the maximum weekly benefit amount is $378,” Irvin said, and she noted that the enacted law raises that maximum to $430 and raises the minimum from $60 to $112 for initial claims with effective dates on or after Jan. 1, 2026. Irvin also explained key program mechanics: Virginia’s taxable wage base remains $8,000, taxes are applied to the first $8,000 of each employee’s wages, and some employers (mainly nonprofits and governmental entities) reimburse the state for benefits paid to their former employees rather than paying into the trust fund.

Flannery O’Rourke of the National Employment Law Project summarized how other states use automatic indexing to maintain benefit levels. “Virginia’s average weekly wage in 2023 was $1,421.36,” O’Rourke said. She told the group that states that tie benefit maximums and minimums to the average weekly wage tend to preserve the benefit replacement rate over time, while states with flat benefit amounts can see replacement rates decline as wages rise. O’Rourke reported that Virginia’s replacement ratio ranges roughly from 26% to 36%, below U.S. averages of about 36% to 43%, and noted that many experts recommend benefits replace about 50% of prior wages.

Discussion at the meeting focused on trade-offs between increasing benefit levels and preserving trust fund solvency and manageable employer tax rates. Members asked for data the work group will need: current trust fund balance and solvency metrics, the projected employer cost per employee for illustrative benefit increases, and options for guardrails (for example, tying automatic increases to solvency thresholds or capping annual increases).

Speakers cited earlier analyses and precedent. The group discussed the 2021 JLARC report, which recommended indexing maximum benefits to a percentage of average weekly wage, and noted that Virginia’s last increase to the taxable wage base occurred decades ago. The VEC described program features that influence employer tax changes, including experience-rating, pool charges, and a 0.2% fund-builder tax that applies when the trust fund balance falls to 50% or less; Irvin said the fund-builder tax is not currently in effect because the trust fund solvency is above that threshold.

Members did not take formal votes at the meeting. The work group’s next steps include requesting updated data from VEC and modeling options (for example, percent-of-average-weekly-wage formulas, phased increases, or solvency-based guardrails) for consideration at future quarterly meetings. Staff and the chair said they will schedule the next quarterly meeting and circulate materials in advance.

The meeting closed after public-comment and scheduling items; staff and the VEC were expected to provide additional financial modeling and trust fund data at a future session.