Illinois unemployment hits 2nd highest in U.S.
The Fed just cut interest rates over worries about the national jobs outlook, but in Illinois unemployment has been a persistent problem. Tax and state economic policy should get much of the blame.
Illinois’ latest employment figures show the state is continuing to struggle with job growth and still suffering from perpetually high unemployment – ranking second highest in the nation during August.
Illinois’ unemployment rate was 5.3%, according to the latest data release from the U.S. Bureau of Labor Statistics. There were 343,000 Illinoisans seeking a job in August.
Illinois’ unemployment rate continued to exceed the national average of 4.2% in August. It was higher than in any neighboring state. The national unemployment outlook on Sept. 18 prompted the Federal Reserve to cut its benchmark rate by 0.5 of a percentage point – the first reduction in four years, but big the job killers in Illinois are tax and state economic policy more than interest rates.
Illinois saw jobs grow by 36,300 since August 2023. This growth rate ranked Illinois 44th among all states for non-farm job growth at 0.59%. This is far behind the national growth of 1.51% in the same period.
Illinois saw the highest growth rates in state government, adding 10,000 jobs (a 7.01% increase). Other sectors with strong growth rates were “other services” with 11,200 new jobs (a 4.48% increase) and local government with 24,300 new jobs (a 4.12% increase).
The professional and business sector saw the largest net decline during the 12-month period, reporting 27,800 fewer positions than a year earlier. The information sector shed 4.77% and finance sector dropped 1.34% percent of their workforces.
Illinois saw modest gains in only five out of 11 industries, not including government. The state only outperformed its neighbors in two job categories.
Illinois ranked seventh for its job growth rate among neighboring states from August 2023 to August 2024 at 0.59%. Missouri reported the strongest job growth at 3.32%.
Illinois’ job recovery rate since the pandemic has been slow, ranking 46th in the nation, with only 13,500 more jobs than were available in January 2020, only a 0.22% increase. This also ranks last among neighboring states.
The continual loss in population and businesses is a large culprit in the state’s lagging job market. High taxes and crime have led to the city losing businesses such as Caterpillar, Boeing and Citadel to other states.
Data from the U.S. Census Bureau shows the state lost 32,826 residents in 2023 with 3 in 4 Illinois communities losing residents. It marked 10 consecutive years of net population decline.
Illinois’ state and local tax burden is the highest in the Midwest. The state also levies the second-highest state corporate income tax and the state’s tax code is among the least friendly for businesses in the Midwest.
Despite this, the state continues to overspend with over $1.1 billion in new taxes added as part of an all-time record state budget. Illinois continues to foster an environment that makes it harder for Illinoisans to find work and reduces wage growth prospects for those who are employed.
Illinois has many advantages such as its diverse economy, central location and strong infrastructure. To take advantage of this, Illinois must focus on strengthening its fiscal position, 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.