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ILLINOIS HAS HIGHEST
UNEMPLOYMENT RATE IN NATION
Illinois Policy Institute
A new report from the Illinois Department
of Employment Security shows Illinois gained 5,400 jobs in April, but
the state’s unemployment rate ticked up to 6.6 percent, tied for highest
in the U.S.
Illinois added 5,400 payroll jobs in April, and the unemployment rate
rose to 6.6 percent from 6.5 percent according to data from the Illinois
Department of Employment Security. The state’s unemployment rate rose
due to an increase of 9,700 Illinoisans who are unemployed. Illinois now
has the highest unemployment rate in the country, tied with Alaska.
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 These headlines may seem contradictory – how can jobs be up at the same time
unemployment is rising? The answer: There aren’t enough job opportunities for
everyone who wants to work. As a result, the number of unemployed people
increases even as the number of employed people also increases. Furthermore, the
payroll jobs count and unemployment rate come from separate surveys: the Bureau
of Labor Statistics’, or BLS’, household survey and business survey.
In addition to reporting Illinois’ modest gain of 5,400 jobs in April, BLS
revised Illinois’ March job gains down to 12,400 from 14,700. The significant
sector gains in April occurred in professional and business services (+7,600),
along with education and health (+2,600), while the largest losses were in other
services (-2,300) and financial activities (-2,200). Construction and leisure
and hospitality each shed 1,400 jobs.
Illinois’ workforce and unemployment rate
Interestingly, the number of Illinoisans who count themselves as employed also
increased by 15,800 in April, according to the BLS household survey data.
Illinois’ unemployment rate hit a post-recession low of 5.8 percent in July
2015, and has since risen to 6.6 percent, tied with Alaska for highest in the
nation. It is notable that Illinois’ unemployment rate has risen dramatically as
the workforce has been growing quickly, and household employment gains have also
been strong.
Here’s what’s happened: In January 2015, the labor force began growing for the
first time in eight years. That growth has accelerated rapidly since July 2015,
so that after years of shrinking, Illinois’ workforce is suddenly getting close
to the size it was before the Great Recession.
But while the workforce has grown by 166,000 people since July, 102,000 are
additional people who are working, while 64,000 are people who are unemployed.
Even though the number of working people has grown, the number of unemployed
people has increased enough to significantly drive up the unemployment rate.
The size of the labor force has risen in surrounding states, but in none so
significantly as in Illinois. Given the timing, this could be related to
Illinois’ budget gridlock. Families affected by the impasse might be entering
the workforce to find another source of income.
Illinois payroll jobs have increased by 40,000 since July 2015, when the state
budget stalemate started, which accounts for some of the employment growth.
Another possible contributor on the employment side is the explosive growth in
the number of ridesharing drivers (who are counted as self-employed, not payroll
jobs) that has occurred during this time. Many of the ridesharing drivers might
have been previously detached from the workforce. There are undoubtedly other
sources of employment as an increasing number of Illinoisans seek to earn
income, but too many people are still unable to find job opportunities.
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 Regional comparisons
Illinois is in the middle of the pack compared with surrounding
states for its jobs growth rate so far in 2016. Although it is early
to make annual gain comparisons, Missouri (+1.2 percent) has had a
surprisingly strong first four months of the year, followed by
Michigan (+1.0 percent) and Wisconsin (+0.7 percent). Illinois has
had a 0.6 percent jobs growth rate for the first four months of
2016.
On the manufacturing front, Illinois is down 400 jobs on the year.
Most surrounding states have shed manufacturing jobs year-to-date,
with Michigan alone gaining a substantial 9,100 factory jobs. Ohio
has the most significant loss, down 8,700 jobs on the year. The
year-to-date divergence between Ohio and Michigan is unusual given
that the two states are both heavily weighted toward the auto
sector, though this year-to-date view is too short a time period to
draw any definitive conclusions.
How Illinois can make the ground fertile for more job creation
Illinois’ unemployment rate is significantly higher than those in
surrounding states, as it has been for many years. The recent
increase in Illinois’ unemployment rate reflects the fact that a
growing portion of Illinoisans who are seeking work are unable to
find it.
Major policy differences are affecting economic outcomes between
Illinois and surrounding states. For example, for industrial jobs,
Illinois is uncompetitive on workers’ compensation costs, property
taxes and Right-to-Work laws.
Generating strong jobs growth takes time and requires reform. The
stronger long-term jobs growth and lower unemployment rates in
surrounding states have unfolded after those states have fixed the
industrial policies that continue to hamper Illinois. There is not a
route to strong jobs growth and sustained economic recovery without
addressing the state’s structural uncompetitiveness on industrial
policies and overly burdensome tax and regulatory policies. Illinois
must freeze property taxes, and institute spending reforms to make
the property-tax freeze sustainable.
Monthly jobs growth has been about the same through the course of
Gov. Bruce Rauner’s term as it was the year before the governor took
office. However, the labor force has expanded significantly,
especially since July 2015. Too many of those joining the labor
force cannot find good job opportunities, which drives up the
unemployment rate. The state needs broad structural reforms to
strengthen Illinois’ economy and bolster job opportunities so that
Illinois families can then enjoy the fruits of their hard work.
TAGS: BLS: Bureau of Labor Statistics, jobs, unemployment
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