After two months of heavy jobs
losses, Illinois employment grew by 3,400 jobs in October, according to the
Illinois Department of Employment Security.
The gains came from manufacturing (+1,600); trade, transportation and utilities
(+2,800); education and health services (+2,200); and financial activities
(+1,400). This marked two consecutive months of job creation in Illinois’
manufacturing sector, especially welcome news as October was “manufacturing
The trade, transportation and
utilities sector also made a remarkable comeback in October, since the sector
had lost 4,900 jobs since January 2017.
Does this mean Illinois’ economy is healthy?
It’s tempting to believe October’s jobs gains are a sign of a healthy Illinois
economy. Another measure that seems positive on its face is Illinois’
unemployment rate, which has seen a year-over-year decline.
But Illinoisans shouldn’t rejoice just yet.
Unemployment counts the number of job seekers. A decrease in the number of
unemployed would spell good news if that decrease had been caused by an increase
in the number of people finding work. Instead, more Illinoisans abandoned their
job search and left the state than the number of individuals who found a
suitable job in 2017. More than 97,800 individuals have left Illinois’ labor
force since January 2017.
Additionally, Illinois has the slowest income growth in the nation, according to
the Bureau of Economic Analysis.
October jobs growth is certainly welcome news. But it should be viewed in a
larger context of a sluggish state economy.
Why is Illinois’ economy shrinking?
Since 2013, the state’s population has declined by an average of 30,000
individuals each year.
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The Paul Simon Public
Policy Institute cites taxes as the No. 1 reason people give for
wanting to leave Illinois.
Economists find that higher taxes – the “push effect” – dominate the
pull effect from lower taxes at a potential destination. The fact
that the push effect dominates means individuals run away from tax
increases. Illinois’ budget crisis is well known, and expectations
over future tax increases are running people out of town – not to
mention the actual tax hikes state lawmakers passed this summer.
Before that record-breaking tax hike, Illinoisans already saw a
higher share of their income go to income and property taxes than
residents of every neighboring state.
As higher-earning individuals continue to leave Illinois, those who
can’t afford to move are left to bear the burden of a fiscally
irresponsible, bloated government sector. That means higher income
and property taxes for Illinoisans who can least afford it.
How to improve labor market prospects and grow incomes in 2018
To stop the bleeding of the state’s labor force, one of the most
important actions the General Assembly can take is to calm
Illinoisans’ fears of further tax hikes. Lawmakers can achieve this
by enacting a suite of spending reforms – including pension reform
and comprehensive property tax reform.
The high cost of doing business in Illinois, excessive regulations
and the threat of more tax hikes as the state struggles with $9
billion in unpaid bills and more than $250 billion in pension debt
will keep new businesses from settling in Illinois until reforms are
In order to reverse Illinois’ outmigration problem in the long term,
state leaders must reduce the cost of government while taking
material steps to improve Illinois’ business climate. Positive
monthly jobs reports shouldn’t be such a rarity.
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