Illinois job growth modest amid high unemployment, competitive market
Illinois’ unemployment improved somewhat in January. It ranked fifth highest in the nation after being third highest for months.
Illinois’ unemployment rate improved but was still fifth highest in the nation at 4.9% in January.
That 4.9% unemployment rate translated into about 324,000 Illinoisans looking for work. Only four states had higher unemployment rates in January including California, Nevada, Kentucky and Michigan, according to the U.S. Bureau of Labor Statistics.
Illinois’ rate exceeds the national unemployment rate of 4%.
During the year, Illinois added about 36,000 jobs. The state grew jobs by 0.59% from January 2024 through January 2025, ranking 36th in the country. That was less than half the rate the nation grew: 1.28%, or 2.02 million jobs.
Data from December shows competition for jobs remains high in Illinois with 1.2 unemployed workers competing for every job opening, giving Illinois the fourth-highest unemployed-to-job-opening ratio nationwide. Job seekers face stiffer competition than in most other states, especially in less in-demand industries. For comparison, neighboring Wisconsin had only 0.6 unemployed persons per job opening while states such as North and South Dakota have ratios as low as 0.4.
Illinois saw the highest growth rates in government-related jobs, with state government adding 6,600 jobs, an increase of 4.248%, and local government adding 18,700 jobs, a 3.12% increase. Private education and health services also saw strong job growth during the year, adding 27,500 new jobs. The professional and business sector saw the largest net decline during the 12-month period, reporting 17,800 fewer positions than a year earlier. The wholesale trade sector lost 4,900 positions.
Overall, Illinois saw modest gains in six of the 11 job sectors, not including government. The state outperformed its neighboring states in five of the 11 sectors, showing Illinois has some bright spots despite overall modest growth.
Illinois’ job recovery rate since the pandemic has been notably slow, ranking 45th in the nation, with only 19,000 more jobs than were available in January 2020. This translated to a 0.31% increase. This ranks dead last among neighboring states.
The primary culprit in Illinois’ slow economic growth and high unemployment is an unfriendly business environment because of high taxes resulting from a constantly mismanaged state budget.
Illinois’ job market is slow thanks to a large exodus of skilled workers, but high tax rates are the top reason those workers are leaving. Illinois’ state and local tax burden is among the highest in the Midwest, it levies the second-highest state corporate income tax in the nation and the state’s tax code is among the least friendly for businesses in the Midwest.
Runaway budget expenditures continue to necessitate high tax rates making Illinois uncompetitive. Rapid growth in pension and health care costs crowd out budget expenditures which could be used to promote economic development and growth. Rising income and property taxes have made housing less affordable in Illinois and reduced returns on housing investment relative to other states.
Illinois has many advantages including its central location and diverse economy. Its problems are self-inflicted. To grow, the state must focus on maintaining a stable and responsible budget focused on growth and efficiency, removing regulatory burdens, and providing real tax relief both to workers who are already finding it difficult to remain and to job creators who are desperately trying to stay.