Illinois workforce shrinks by 22,000 people in August

Illinois workforce shrinks by 22,000 people in August

August IDES report shows 22,000 people dropped out of the workforce, and 4,400 manufacturing jobs were lost.

The Illinois workforce shrank by 22,000 people in August, according to a new report by the Illinois Department of Employment Security, or IDES. Unemployed people dropping out of the workforce was the entire cause of the unemployment rate dropping to 5.5 percent from 5.8 percent on the month.

Illinois’ August jobs hemorrhage most adversely affected the manufacturing sector, which saw a loss of 4,400 jobs, bringing the total number of manufacturing jobs lost in 2016 to 8,000. This comes after Illinois lost 6,200 manufacturing jobs in 2015.

The first eight months of 2016 marks the worst year for manufacturing job losses in Illinois since the Great Recession, and the year isn’t even over yet.

“In this 30-day snapshot, manufacturing losses were heavy, which contributed to more than half of the month’s decrease in nonfarm payroll jobs,” IDES Director Jeff Mays stated in the IDES report. “The surveys have shown a great deal of fluctuation over the past year; seeing how the numbers develop over the long-term should make the trend clear.”

Other areas hit hard in August include:

  • Financial activities (-2,600)
  • Educational and health services (-1,900)
  • Construction (-1,700)
  • Other services ( -1,400)
  • Trade, transportation and utilities (-800)

August is the fourth consecutive month that Illinois’ workforce has contracted. The unemployment rate decreased 0.3 percent percentage points to 5.5 percent in August from 5.8 percent in July, due entirely to 19,000 unemployed people dropping out of the workforce.

August’s numbers continued the downward job trend seen in May, June and July’s IDES reports. Illinois’ toxic manufacturing environment and workforce drop-out as the summer moving season heats up are the two main drivers of this negative trend. Illinois has the worst-in-the-region out-migration crisis, and a large portion of those who leave Illinois do so in the summer.

“Illinois residents continue to drop out of the workforce at a concerning rate, driven out by the steady loss of jobs and anemic growth,” stated DCEO Director Sean McCarthy in the IDES report. “If our state enacted the structural reforms necessary to get Illinois growing at the national rate, we could create 200 new jobs every day and put Illinois back to work. Instead, the state lost 8,200 jobs and nearly 20,000 people gave up looking for work.”

In contrast, other Rust Belt states have been experiencing a manufacturing resurgence. Michigan has made the strongest manufacturing comeback with over 600,000 manufacturing jobs and growing. In 2015, Michigan gained 11,300 manufacturing jobs while Illinois lost 6,200. So far in 2016, Michigan has added over 10,600 manufacturing jobs as Illinois has lost 8,000 and counting.

While Illinois residents and businesses flock to greener pastures, neighboring states are faring better. Illinois’ five-year out-migration loss was 3.3 percent, according to the U.S. Census Bureau. However, the regional average of neighboring states for five-year out migration loss was only 1.4 percent.

Part of the remedy to Illinois’ recession-like job-losses and ongoing out-migration crisis is a series of pro-growth reforms. By reforming Illinois’ costly worker’s compensation system, nation-high property taxes, outdated tax system, and implementing a Right-to-Work policy like Michigan, Illinois can halt the outflow of factory jobs and join in the region’s manufacturing revival.

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