PRESS RELEASE from the
ILLINOIS POLICY INSTITUTE

CONTACT: Melanie Krakauer (312) 607-4977

The State of the State: Illinois’ economy $31.4 billion smaller due to population loss
251,900 jobs lost during the COVID-19 pandemic are still missing in Illinois

CHICAGO (Jan. 27, 2022) — After enduring two years of the COVID-19 pandemic’s economic downturn and eight years of population loss, research from the nonpartisan Illinois Policy Institute estimates Illinois’ economy is $31.4 billion smaller than it should be.

The “2022 State of the State” report from the Institute indicates employment in Illinois may never fully recover to its previous pre-pandemic peak, despite having high vaccination rates, a talented workforce and geographic and cultural amenities. The state’s population loss is responsible for slower than average housing appreciation and a relatively sluggish employment recovery compared to the rest of the nation.

“Population decline was already contributing to lower economic growth for Illinois, when COVID-19 and government shutdowns piled on and the problems accelerated,” Orphe Divounguy, chief economist at the Illinois Policy Institute, said. “These losses have been severe enough that productivity increases alone can’t make up the difference, explaining why economic growth in Illinois had been relatively more sluggish even before the pandemic. As a result, Illinoisans suffer, especially when it comes to job opportunities and wage growth.”

In addition, Illinois’ jobs have not recovered to pre-pandemic levels, with 251,900 total jobs still missing, affecting nearly every industry.

Institute experts point to the need for less red tape to spur job creation and for more affordable budget and tax policies to make Illinois more attractive to families and businesses.

“Illinois must focus on stomping out corruption, lowering the cost of government and improving services. Currently, Illinois has the worst pension debt in the nation, which means rather than investing our taxes into addressing skills gaps and local services, which would benefit the community and raise property values, Illinoisans are paying more to receive the same or less. Pension reform would be a boon for the economy,” Divounguy said. 

The state of Illinois’ economy: 

• Population loss: Illinois’ relatively lower economic growth can be mainly attributed to eight years of population loss driven by residents moving out of Illinois to other states.
• Housing crisis: In 2021, Illinois’ home appreciation rate of 11.4% was significantly lower than the national average of 18.4%. Because the real estate market is connected to economic performance, historically persistent lower housing appreciation in Illinois – even before the pandemic – means lower increases in consumer spending, less new home construction, less job creation and lower wage growth.
• Shrinking labor market: The state added 262,600 jobs in 2021, but still lags compared to the state’s pre-pandemic employment level. For each unemployed Illinoisan, the number of job openings was 37% lower than the national average in 2021, making it more difficult to find a job in Illinois than most states.
• Racial gaps: Black workers and working mothers were disproportionately hurt by COVID-19 related job losses and saw lower return to work rates. Coupled with growing skills gaps, the pandemic and public health measures exacerbated pre-existing racial gaps in Illinois’ employment.

To read more about the State of the State, visit illinoispolicy.org.

For bookings or interviews, contact media@illinoispolicy.org or (312) 607-4977.