Employment in the Washington area may be showing the first few effects of the automatic federal budget cuts known as sequestration, judging by a Thursday report from the Labor Department.
The jobless rates in Maryland and Virginia grew slightly in June — climbing faster than they had in May — while in the District, the rate held at 8.5 percent, higher than the national rate of 7.6.
Maryland’s jobless rate increased 0.3 percentage points in June, from 6.7 to 7.0 percent, having risen 0.2 percentage points in May. The state actually added 4,300 positions to payrolls over the past month, but since possibly more people stopped looking for jobs, the size of the workforce declined by 3,900, according to the report. Maryland lost 1,900 government jobs but added 3,200 jobs in the leisure and hospitality sector and 400 in the professional and business services sector.
Virginia’s jobless rate increased 0.2 percentage points from 5.3 to 5.5 percent in June, having risen 0.1 percentage point the month before. Though the state added 3,400 positions in total last month, the labor force decreased by 3,800. It lost 1,400 government jobs but gained 4,600 in the professional and business services sector and 1,200 in the leisure and hospitality sector.
The District lost 1,300 government jobs and gained 400 in the professional and business services sector. The size of the labor force dropped by 500.
The number of jobs cuts as a result of sequestration is likely to become more apparent in future job reports, said Alan Chvotkin, executive vice president of the Professional Services Council, a trade association for the government services industry based in Washington.
The monthly unemployment reports, he said, tend to be “a trailing indicator.”
“Once sequestration occurs and the individuals are laid off, there will be a 30-day period and 15-day period before they file for unemployment,” Chvotkin said.
It could take even longer than a month for the jobs reports to show these effects, Daraius Irani, executive director of the Regional Economic Studies Institute at Towson University, said, because employers have had several months to prepare as they watched sequestration deliberations unfold.
The slight increases in regional unemployment could be indirect effects of federal budget tightening, but “it’s not going to be as obvious as people want it to be,” Irani said. “It’s going to be kind of a subtle thing — ‘Well, we’re not firing anybody but we’re not hiring anybody,’ ” he said.
Nationally, Nevada had the highest unemployment rate in June at 9.6 percent, followed by Illinois and Mississippi at 9.2 and 9 percent, respectively.