Illinois adds 4,100 jobs in August, slowing significantly
Illinois saw a significant slowdown in employment growth during August. The state is still missing 80,700 jobs from the pandemic.
Illinois added just 4,100 jobs from mid-July through mid-August, marking the weakest month of jobs growth in more than a year and a significant slowdown in the state’s employment recovery.
Despite the 15th consecutive month of job gains, Illinois still has not recovered its pre-pandemic jobs and the state’s current unemployment rate of 4.5% remains above the national unemployment rate of 3.7%.
While some major industries experienced job gains during the month, others suffered losses. The largest loss came from manufacturing, declining by 3,200 jobs since the prior month. The professional and business services sector also suffered losses, shrinking payrolls by 2,600 during the month. The information sector lost 500 jobs and other services lost 100.
Trade, transportation and utilities added 4,500 payroll positions; construction added 3,500, government employment grew by 1,500; leisure and hospitality payrolls grew by 400; financial activities gained an additional 300 jobs; education and health and the information sector each added 300 jobs.
Mining payrolls remained unchanged from mid-July to mid-August.
Despite monthly growth in total payrolls during the past year, Illinois is still missing 80,700 jobs relative to pre-pandemic levels, with the missing jobs being spread across virtually every industry.
Leisure and hospitality payrolls are down 44,200 jobs, the most of any sector and accounting for nearly one-third of the state’s missing jobs. Meanwhile, the government and education and health sectors also make up a large chunk of Illinois’ missing jobs, down 33,100 and 31,200 jobs respectively.
Only three sectors have recovered the job losses suffered at the onset of the COVID-19 pandemic and state-mandated lockdown. The construction sector, the trade, transportation and utilities sector, and the professional and business services sector have each recovered and are now above pre-COVID employment levels.
While the continued employment recovery in Illinois is welcomed, a great deal of economic uncertainty remains. The Federal Reserve has raised interest rates four times already this year, with more rate hikes anticipated in the coming months. Despite rising interest rates, inflation remains among the highest levels seen in the past 40 years – up 8.3% from a year ago, the bureau reported on Sept. 13. As national payroll growth continues to meet or exceed expectations, inflation expectations also remain high and increase the likelihood of steeper, more frequent rate hikes by the Federal Reserve.
Larger rate hikes reduce the chances inflation can be brought down without the economy slipping into a recession.
Illinois’ economy still hasn’t fully recovered from the economic downturn of 2020. The state is still missing 80,700 jobs and the unemployment rate is third-highest in the country, only better than Alaska and New York. Making matters worse, Illinoisans suffered more during the Great Recession than most other Americans and are poised to be particularly vulnerable in the event of an economic downturn today.
On top of recent policies that have exacerbated the threat of recession, Illinois governments have less flexibility in their budgets and spending on vital services, which will be especially needed during a recession, has largely been crowded out by pension obligations. The state is also facing a $1.8 billion unemployment trust fund deficit that raises questions about how much assistance could be provided to Illinoisans who lose their jobs and about whether it would result in higher taxes for businesses.
The results could be catastrophic for Illinois, whose businesses and residents are already fleeing the state. Three major corporations – Boeing, Caterpillar and Citadel – have all announced since May they would be relocating company headquarters out of Illinois. A record exodus driving population decline threatens to prevent the state’s economy from ever returning to pre-pandemic employment levels.
The first step to ensure Illinoisans don’t endure a particularly painful future economic downturn will be for voters to take a hard look at Amendment 1 on the Nov. 8 ballot. Amendment 1 would change the Illinois Constitution to grant government unions in Illinois more extreme powers than they have in any other state, including the ability to bargain over virtually limitless subjects, the ability to override state law through their contracts and guarantees taxpayers and lawmakers would have an extremely difficult time reversing course.
Should Amendment 1 pass, Illinois’ $313 billion pension debt would continue to balloon as state and local taxes, which are already among the highest in the nation, rise in an attempt to keep up. The property tax alone is conservatively estimated at more than $2,100 over four years if the amendment passes. Spending on vital programs would continue to fall. Illinois’ housing and labor markets are already suffering as high taxes and reduced services make finding a job and living in the state tenuous. These problems would be exacerbated should the U.S. enter a prolonged recession.
Illinois needs reform that will control the state’s cost drivers and deliver vital support to taxpayers when they need it the most. Amendment 1 ensures those challenges worsen during periods of economic duress.