The blame game: Illinois’ unemployment rate jumps to 9.1 percent

For the third straight month, Illinois' unemployment rate climbed. More than 9.1 percent of Illinoisans are now unemployed, a full percentage point higher than the national average of 8.1 percent, according to the Bureau of Labor Statistics.

by Ted Dabrowski
When Illinois was wooing Orascom to locate its $1.4 billion fertilizer plant within its borders, the state was like an overzealous lover at the doorstep: complete with an oversized bouquet, chocolates and an engagement ring. It smacked of desperation.

The company saw right through it. Orascom CEO Nassef Sawiris acknowledged that while Illinois’ deal was “richer,” he was “quite concerned, honestly, with Illinois’ budget. We didn’t feel like Illinois at this stage was the right place for us…so we decided to locate on the other side of the river.”

Orascom’s decision not to bring jobs to Illinois shouldn’t be surprising given the state’s failed finances, its nearly broke pension system and its dysfunctional government.

The Illinois Department of Employment Security, or IDES, sees things differently: its most recent labor report blamed the national environment for Illinois’ worsening employment picture. Illinois unemployment rate is rising, and IDES failed to attribute the problem to its own state’s shortcomings.

For the third straight month, Illinois’ unemployment rate climbed. More than 9.1 percent of Illinoisans are now unemployed, a full percentage point higher than the national average of 8.1 percent, according to the Bureau of Labor Statistics. Even worse, the state’s unemployment rate is rising just as the US rate seems to be stabilizing.

Sadly, Illinois’ unemployment rate is now the ninth highest in the nation, with nearly 600,000 Illinoisans looking for work. Only eight states have unemployment rates higher than Illinois and none of those are our neighbors.

A deeper look at Illinois’ numbers reveals an even bleaker unemployment picture in Illinois. Since May, nearly 33,000 people that have disappeared from the labor force altogether (the labor force is made up of the employed and the unemployed actively looking for work). If those people, many of whom have given up looking for work, are added back to the labor force, Illinois’ August unemployment rate becomes a stark 9.5 percent.

But while Illinois’ employment performance worsened when compared to the regional and national figures, IDES chose to spin the employment data release in this way:

…the economic uncertainty caused by Congressional inaction threatens this recovery. Waiting to the last minute to make serious decisions unnecessarily undermines consumer and business confidence and hinders economic growth.

IDES makes no mention of the state’s failed policies affecting the investment decision-making process of firms like Orascom. Here is what the IDES report should have reported as factors contributing to higher unemployment in Illinois:

• Illinois’ lawmakers failed to act on pension reform this year, leading to an immediate credit downgrade by S&P in August. That action followed Moody’s designation of Illinois as the worst credit risk in the nation earlier this year. These downgrades undermine consumer and investor confidence in Illinois, with each Illinois household now responsible for a $51,000 share in the state’s ballooning debt total.

• Expectations of higher Illinois taxes are worrying businesses and hiring managers. Last year’s massive tax hike was a failure and a drag on the economy. Now Gov. Quinn is embracing the next multibillion dollar tax hike. He unabashedly told the Huffington Post that Illinois needs a progressive income tax when he said, “That’s one of my goals before I stop breathing and I sure hope we can get that done in Illinois. Sooner rather than later.”

• Union monopoly control of government services continues to drive up costs and block spending reforms across the state. That union power was evidenced last week by Mayor Emmanuel’s agreement to spend hundreds of millions to appease the striking Chicago Teachers Union, despite CPS’ $1 billion budget hole next year. A lack of spending discipline and government’s total disregard for taxpayers will dampen economic growth until union powers are curtailed and reforms implemented.

The recent IDES report is evidence that the current government and its agencies refuse to speak the truth about the problems facing Illinois. Fortunately, investors, rating agencies and businesses are catching on.

Last year the government’s desperate tax carve-outs were enough to keep Sears, CME and other big companies from leaving Illinois. This time around, Orascom’s rejection of the state’s overtures means the spending party is nearing its end.