Small businesses led Illinois’ COVID-19 jobs recovery
Small Business Saturday offers a reason to be extra thankful: businesses with fewer than 20 employees were the only ones to grow payrolls since COVID-19 hit.
Illinoisans have an extra reason to “shop small” on Nov. 26, Small Business Saturday: “mom and pop” shops are leading the state’s job recovery from the COVID-19 economic downturn and deserve a “thank you.”
Businesses with fewer than 50 employees create the vast majority of net new jobs in Illinois, according to data from the U.S. Census Bureau. These businesses accounted for 64% of net job creation in Illinois from 2010-2019, prior to the COVID-19 pandemic. They added more than 309,000 jobs in the recovery from the Great Recession.
Not only does Illinois rely heavily on small shops for job creation, but these businesses have been the most resilient since the onset of COVID-19, when state-mandated lockdowns wreaked havoc on the state’s economy. Businesses with fewer than 20 employees are the only firms to see jobs grow since 2020.
These businesses were the least likely to lay off employees during the pandemic-induced economic downturn. Employers with fewer than 20 employees only saw their payrolls shrink by 3% at the onset of COVID-19. Meanwhile, larger employers laid off more than 9% of their workforce across the board.
Illinois’ smallest businesses have proven to be among the most resilient and consistent job creators in the state for more than a decade despite facing massive obstacles from the COVID-19 pandemic and government policies.
Illinois’ business tax environment is among the worst in the region and declining relative to other states. Specifically, Illinois’ second-highest in the nation property taxes and the state’s unemployment taxes remain major hindrances to the state’s business tax climate.
Now, Illinois businesses will pay even higher unemployment insurance taxes to the federal government as a penalty for the state failing to pay down the $1.4 billion Unemployment Insurance Trust Fund deficit. Elected leaders could have avoided these penalties by using American Rescue Plan Act dollars to eliminate the deficit.
With businesses facing an automatic tax hike, Illinois lawmakers should make eliminating the Unemployment Insurance Trust Fund deficit one of their top priorities. This is especially important as concerns grow over whether the nation is slipping into another recession. Fitch Ratings is expecting a recession by the second quarter of 2023. It stated a recession is likely to be similar to the 1990-1991 recession, which lasted nine months, but is also expected to be milder than the one from 30 years ago. A recent Bloomberg Economics model projects there is now a 100% chance of a recession in the next 12 months.
If a recession comes as expected, Illinois will need its strongest job creators – small businesses – strong to help the state recover. Just like the state’s shoppers should thank their local retailers this Small Business Saturday, politicians should do the same.