Illinois ranks No. 2 in nation for small business layoffs
Illinois ranked No. 2 in the nation for number of small businesses planning to lay off employees in the coming months. A majority of entrepreneurs have already put a freeze on new hires. Amendment 1 threatens Illinois’ business climate even more.
A new survey found 11% of Illinois’ small businesses plan to lay off employees in September, the second-highest percentage among states surveyed.
Responses to Alignable’s monthly hiring survey show a majority of U.S. small business owners are no longer seeking new employees, including 60% of entrepreneurs in Illinois who said they have a hiring freeze.
Nearly half of these small businesses reported hiring earlier in 2022, but reversed course because of decades-high inflation, rising payroll costs and reduced revenues. Illinoisans will be among those most impacted, said head researcher Chuck Casto.
“Illinois is second only to Florida in having the highest layoff rate,” Casto told the Center Square. “Eleven percent of the small businesses say they are planning layoffs as early as this month. With all of the numbers going up in terms of people not hiring, that really is quite a sign that people are scaling back.”
Researchers found fewer than a quarter of small businesses reported fully recovering financially from the worst years of COVID-19, with 51% generating half of their pre-pandemic monthly earnings.
A majority of respondents said payroll costs increased by at least 50% for employees since COVID. Alongside higher rent and energy expenses, business owners told researchers hiring new workers is just too expensive.
While small businesses create 69% of all new jobs in Illinois, the state was ranked last in the nation in 2021 for growth in high propensity businesses applications, or companies the IRS deemed more likely to create jobs.
Illinois also ranked third-worst in the Midwest for business formation rates in 2021 despite receiving the 1oth highest number of business applications in the nation, and the most in the region. More than 92% of applications to start businesses were denied.
Illinois’ status as the third-most regulated state in the U.S. has made it harder for small business owners to enter the market during the pandemic and create jobs to address record unemployment.
If Illinois hopes to recover the 88,000 jobs still missing from before the pandemic, state leaders should simplify the state regulatory code to ensure more applications result in new employers. They should also start paying attention to the state’s lousy reputation for fostering business.
And voters should take a hard look at the first question on their Nov. 8 ballot, Amendment 1.
Amendment 1 would enshrine permanent power for government unions in the state constitution, which could mean higher taxes, higher costs and potentially costly litigation for business owners. It will also mean higher taxes to satisfy greater union demands, which will further stifle new business and hiring.