USVI Labor Commissioner Proposes Slashing Unemployment Benefits by 50 Percent to Spur People Back to Work

In 2022, the unemployment rate in the U.S. Virgin Islands fell by half — from 8.4 percent in January to 4.2 percent by the end of the year. Now, V.I. Dept. of Labor Gary Molloy believes that employment numbers could be boosted even more by slashing unemployment benefits by up to 50 percent.

Mr. Molloy hailed current employment statistics as welcome news during last week’s Spring Revenue Estimating Conference, but highlighted a U.S.V.I. labor participation rate of just 49.2 percent as something that could be improved. The commissioner believes that not enough people are returning to the workforce post-pandemic, a scenario which hampers the potential for revenues to grow even further.

“Simply put there are many Virgin Islanders in our community that are still at home and not looking for work,” Mr. Molloy said.

Part of the reason for this, the commissioner believes, is that unemployment benefits of $642 a week are currently too generous. Unemployment insurance currently lasts for 26 weeks, resulting in a total payout of $16,692. Mr. Molloy reported that the department’s observations are that unemployed people on government safety net programs tend to receive the benefits up to the maximum length of the program.

He believes that removing that safety net of unemployment insurance earlier will spur people back to searching for work. Cutting the maximum time frame in half, from 26 to 13 weeks, Mr. Molloy argues, would not only save the government over $8,000 in benefits per individual, but also would work to lower unemployment figures even more.