Illinois at risk of losing leisure and hospitality job gains as Chicago reimposes COVID-19 restrictions

Illinois at risk of losing leisure and hospitality job gains as Chicago reimposes COVID-19 restrictions

Illinois’ leisure and hospitality sector has added 94,200 jobs since April, but remains down 223,200 jobs since February.

An additional 35,938 Illinoisans filed for unemployment the week ending July 18 bringing total job losses to 1,494,670 since COVID-19 and associated lockdown measures began shutting down the state’s economy, according to recently released data from the U.S. Department of Labor.

However, as Chicago begins to reimpose COVID-19 lockdown measures on bars, gyms and spas, Illinois is at risk of losing the 94,200 jobs the hospitality sector has re-gained since April if these measures spread throughout the state, as Gov. J.B. Pritzker has threatened. The leisure and hospitality sector remains down 223,200 jobs since February.

The re-instatement of lockdown measures comes just weeks after Illinois began easing restrictions that were among the toughest in the nation and coincided with the leisure and hospitality industry being hit hardest by jobs fallout.

Harsher lockdown measures have been associated with greater job losses during the COVID-19 pandemic. As Chicago, and potentially the rest of the state, pursue further lockdown measures, many “temporary” business closures are likely to become permanent.

According to the Illinois Restaurant Association, 20% of food establishments are expected to remain closed due to COVID-19-related economic fallout. If that estimate is correct, that means nearly 5,100 businesses will be forced to shut their doors permanently. While the 20% estimate is troubling, the closures could be far worse. Surveys show only 30% of businesses in the industry were expecting to be able to survive if the crisis lasted for four months, while only 15% expected to be able to survive if the COVID-19 crisis persisted for six months. Business closures of this magnitude would mean that 17,800 to 21,700 Illinois restaurants would remain closed for good.

Lockdowns hurt, as the evidence suggests most small businesses have less than two months of cash on hand while the median small enterprise has more than $10,000 in monthly bills and less than one month of cash on hand. Illinois’ small businesses employ the majority of Illinois workers. Allowing businesses to open again is an important step to save lives and livelihoods.

As new data on COVID-19 emerges, Illinois will have to adapt to changing circumstances. Still, research shows the sequential lift of a lockdown is the best way to mitigate both the human cost of the virus and the economic damage.

Illinois voters need to consider the potential for the COVID-19 economic damage to be magnified by the progressive income tax hike state leaders are seeking Nov. 3. Economists argue against increasing taxes during a recession. A progressive tax will increase taxes up to 47% on more than 100,000 small businesses just as they are trying to recover from the COVID-19 economic damage. Those small businesses are responsible for the vast majority of new jobs in Illinois.

A safe return to work is the first step to tackling growing racial gaps and to reviving the Illinois economy. A tax increase would be a grave error.

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