Pritzker’s strict COVID-19 policies slowed Illinois’ job recovery

Bryce Hill

Director of Fiscal and Economic Research

Bryce Hill

Jim Royal

Research Intern

Jim Royal
February 23, 2022

Pritzker’s strict COVID-19 policies slowed Illinois’ job recovery

A new Fed report shows strict COVID-19 policies and enhanced unemployment benefits likely contributed to Illinois’ sluggish recovery from the pandemic recession.

Twenty-one states now have lower unemployment rates than they did before the COVID-19 pandemic, but not Illinois.

Not only is the state’s unemployment rate far higher than before the pandemic, Illinois is seeing the eighth-weakest recovery in the nation with nearly 30% of jobs still missing relative to their 2020 peak.

A new report published by the Federal Reserve Bank of St. Louis suggests Illinois’ COVID-19 lockdowns and its use of federally funded, enhanced unemployment benefits have likely contributed to the state’s slow recovery.

According to the report, three key factors appear to influence a state’s recovery: its industry makeup, lockdown severity and reliance on federally funded unemployment insurance benefits.

The slowest-recovering states had the highest shares of leisure and hospitality workers prior to the COVID-19 pandemic. These service industries were hit hardest, both because of state-mandated business closures and the reluctance of consumers to travel and interact in person. States where more of the workforce was employed in these vulnerable industries were likely to lose more jobs in total and recover more slowly than other states.

In Illinois, just 10.2% of workers were employed in leisure and hospitality prior to the pandemic in January 2020, below the national average of 11.1%, U.S. Bureau of Labor Statistics data shows. The size of Illinois’ leisure and hospitality industries does not seem to be a main reason for its slower-than-average recovery.

While Illinois’ leisure and hospitality industries were not particularly large before the pandemic, they did experience a much more severe recession than their counterparts in other states. Illinois lost 31.7% of its leisure and hospitality jobs between December 2019 and December 2020, a steeper decline than Midwestern states except Minnesota and Michigan. Now, Illinois’ leisure and hospitality industry remains the least recovered of any Midwestern state: seventh-worst in the nation, having only recouped 68% of jobs lost at the pandemic’s start.

This sluggish recovery is partly because of Illinois’ strict COVID-19 policy response. Illinois, Minnesota and Michigan – the Midwestern states where leisure and hospitality workers fared the worst – were among the quickest to adopt COVID-19 restrictions and imposed more of them over time than other states in the region.

Whatever health benefits they may have produced, Illinois’ lockdown policies likely slowed the state’s employment recovery. The Federal Reserve’s work also implies Illinois’ implementation of enhanced and extended unemployment benefits may have slowed it down as well.

Last year, the federal government provided funding to states to increase the amount of unemployment benefits paid out by $300 per week for each recipient. The fastest-recovering states all ended these increased benefits months before the official expiration date in September 2021. In all, 25 states did so. Illinois, like the slowest-recovering states, did not terminate the benefits before they expired by federal law.

At the time, industry groups in Illinois raised concerns increased unemployment benefits would delay some workers’ returns to the labor force by reducing their financial incentive to look for work. The extra benefits did not include any job search requirements.

As economic outlooks improve elsewhere in the nation, unemployment in Illinois remains relatively higher. Just one of its 16 metropolitan areas has recovered the jobs it lost in 2020. Even where labor market conditions are improving, Black Illinoisans have been left out of the state’s recovery.

The rosier trajectories of the recoveries in the 21 states which have returned to pre-pandemic unemployment rates indicate this unfortunate reality might have been avoided had different policy decisions been made.

Regardless, Illinois’ road to recovery will be difficult given that Illinoisans are leaving the state at record rates. With people leaving, there are fewer customers and potential workers to help the state get back to its pre-COVID employment levels.

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