Illinois sees nation’s largest spike in new initial unemployment claims

Initial unemployment claims in Illinois increased by more than 9,800 last week, the worst spike in the country.

More than 46,000 Illinoisans filed new unemployment claims last week, an increase of 9,805 compared to the week ending Oct. 3, according to recently released data from the U.S. Department of Labor, or DOL.

That spike in claims was the largest raw increase in the nation. And Illinois’ 27% increase in claims was three times larger than the national average.

New unemployment claims have been on the rise for the past four consecutive weeks in Illinois, indicating the state’s economic recovery could be stalling out. Newly released jobs numbers are also a major cause for concern.

Data released today by the Illinois Department of Employment Security, or IDES, show Illinois’ recovery continues to lag the national average. The state shed 12,000 jobs from mid-August to mid-September as the rest of the nation continued growing payrolls. Aside from the COVID-19 downturn, that stands as the worst monthly job loss in Illinois since July 2010.

Meanwhile, the state’s unemployment rate of 10.2% remains nearly 30% higher than the national average of 7.9%.

“As thousands of Illinoisans have returned to work in recent months, today’s report is a positive sign that Illinois is on the path to recovery amid extraordinarily challenging economic times,” an IDES official touted in a press statement.

But surging unemployment claims and falling job counts are clear signs Illinois’ economic recovery is in jeopardy.

Illinois is facing a long road to recovery and must focus on policies that will foster a healthy labor market where businesses can feel confident in their futures and hire Illinoisans who are in desperate need of work.

State leaders are trying to persuade voters to pass a $3.7 billion tax hike that will especially hit the small businesses that create most Illinois jobs. Lawmakers already set rates for the initial tax hike that would create combined state and local income tax rates in excess of 50% for small businesses, and the state income tax increase alone would be up to five times greater on small businesses than on large ones. More than 100,000 small businesses will face tax hikes of up to 47%, just as they are trying to recover from COVID-19 restrictions, if voters approve the “fair tax” on the Nov. 3 ballot.

Economists argue against increasing taxes during a recession, but Gov. J.B. Pritzker so far has put $56.5 million of his own money into a campaign to convince voters his $3.7 billion income tax hike is truly a “fair tax.” His proposal would give lawmakers more power to raise state income taxes, including on retirement income, and make city income taxes more likely.

The impacts of the tax hike would likely fall on job seekers in low-income households and minority households – those who already have been disproportionately hurt by the COVID-19 pandemic.

Illinois must avoid tax hikes now more than ever to ensure Illinois fully participates in the national economic recovery. A massive income tax hike that punishes job seekers will only serve to exacerbate inequality and make the state less competitive.