Ted Dabrowski
Vice President of Policy

John Klingner, Public Policy Research Assistant

Illinois’ unemployment rate remained at a stagnant 8.8 percent in October, unchanged since September and still far above the national unemployment rate of 7.9 percent. Adding only a paltry 4,800 jobs last month, the state has been stuck in neutral, at best.

Illinois’ neighbors, on the other hand, are watching their unemployment rates drop. They’re enacting positive growth policies, such as tax cuts and labor reforms. The average unemployment rate of Illinois’ neighbors dropped to 7.2 percent in October. That’s 1.6 percentage points lower than Illinois’ unemployment rate.

Wisconsin, in particular, continues to reap the benefits of its recent reform efforts, with unemployment dropping to 6.9 percent in October from 7.3 percent in September. And Iowa continues to lead the region with an unemployment rate of only 5.2 percent, the fourth lowest in the country.

Illinois’ poor public policies continue to be a drag on the economy. The failure of the state’s policies, particularly since the end of the recession, is visible in the widening gap between Illinois’ unemployment rate and that of its neighbors.

Instead of implementing reforms, Illinois borrowed and taxed to feed its spending addiction. In 2010, Gov. Pat Quinn borrowed $3.5 billion to fund the failing pension systems. He repeated that act in 2011, borrowing another $3.7 billion. Then, when he couldn’t tap the bond market one more time, he passed the largest tax hike in Illinois history. Quinn sapped the energy from Illinois’ private sector, and the negative effects of his actions is made evident by the fact that more than 1.1 million people are unemployed or underemployed in the state.
 
But comparing Illinois’ unemployment to its neighbors does not tell the whole story. Illinois fares poorly nationally as well. The latest October numbers reveal that Illinois has the ninth-highest unemployment rate in the nation.

The Illinois Policy Institute’s oft-stated goal is to transform Illinois back into the economic powerhouse it once was. Looking at the 10 states with the lowest unemployment rates, Illinois has a long road ahead of it.

North Dakota has the lowest unemployment rate in the nation at 3.1 percent. Iowa, a Midwest state with an economic agricultural base similar to Illinois, has an unemployment rate of 5.1 percent. Currently, there are more than 580,000 Illinoisans without work, but if Illinois could reach Iowa’s rate of unemployment, Illinois could reduce its unemployment rolls by more than 40 percent, meaning 245,000 more Illinoisans would have a job. Such an outcome is possible if Illinois enacts meaningful fiscal and economic reforms.

Competition among the 50 states is the great driver of innovation, growth and prosperity in this country. It’s how states attract businesses, create jobs and foster a higher standard of living.

But Illinois politicians have lost their way. They believe that higher taxes, increased spending and greater government dependency will somehow restore economic and fiscal prosperity.

They need to look at the facts. If nothing is done, Illinois will continue to slip further and further behind.