Only 1 Illinois metro area has recovered COVID-19 job losses
Illinois’ lagging pandemic recovery continued across its cities in July. Only 1 metropolitan area has recovered from the pandemic.
Illinois added 31,200 jobs from mid-June through mid-July, marking the 14th consecutive month of job gains for the state, but the recovery remains slower than it should be.
July jobs growth was spread across only eight of the 15 metropolitan areas that contain parts of Illinois, according to data released Aug. 25 by the U.S. Bureau of Labor Statistics. While the largest numeric increase came from the Chicago-Naperville-Arlington Heights metro, which added 15,900 jobs, the largest percentage increase came from the Davenport-Moline-Rock Island metro area, which grew payrolls by 0.75%, or 1,400 jobs during the month.
Other metros to grow during the month were Elgin, which added 1,300 jobs; Rockford grew payrolls by 900 positions; Champaign-Urbana gained 800 jobs; Lake County-Kenosha County payrolls expanded by 500 jobs; while Kankakee added 100.
Danville payrolls remained unchanged during the month.
Meanwhile, five metros lost jobs in July. Peoria, Carbondale-Marion, Decatur, Bloomington, and Springfield payrolls each declined by 100 jobs.
The St. Louis and Cape Girardeau metro areas – which are predominantly located outside of Illinois – had differing levels of success in July. While St. Louis payrolls increased by 3,300, there was no increase in jobs in Cape Girardeau.
Despite continued growth in payrolls as a whole, Illinois is still missing 88,600 jobs relative to pre-pandemic levels, with the missing jobs being spread across every metro area. As of July, only Bloomington has recovered from early 2020 job losses.
Only 89% of 2020 job losses have been recouped statewide since the recovery began, less than any neighboring state except Wisconsin. However, some areas of the state have fared better than others. Carbondale-Marion, Springfield, Lake County-Kenosha County, Chicago-Naperville-Arlington Heights, and Davenport-Moline-Rock Island have each regained more than 90% of the jobs lost in early 2020, outpacing the state as a whole.
Meanwhile, St. Louis, Cape Girardeau, Rockford, Elgin, Peoria, Decatur, Champaign-Urbana, Danville, and Kankakee are all trailing the Illinois recovery. The recovery continues to be particularly sluggish in Kankakee, which has only recovered 39% of the jobs it lost in 2020 at the pandemic’s start.
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 8.5% from a year ago, the bureau reported on Aug. 10. As payroll growth accelerates, 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 that 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 88,600 jobs and the unemployment rate is the highest in the Midwest. 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 in a recession 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. Now, homegrown hot dog superstar Portillo’s wants to expand, but won’t do so in 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 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.