 Illinois’ August jobs report, released Sept. 20 by the federal Bureau of Labor
Statistics, or BLS, reveals the human cost of Illinois’ anti-growth tax and
regulatory policies. When taxes and regulations thwart entrepreneurs and small
businesses in Illinois, the pain is felt by unemployed workers who are left
jobless or forced to seek work in other states. Illinois is not seeing nearly
enough new investments or expansion plans, especially in the manufacturing
sector. The result is that hard-working Illinoisans are left with fewer job
opportunities and more reasons to leave the state. The August jobs report shows
a dramatic loss of manufacturing jobs and continued workforce dropout.
Illinois lost 4,400 manufacturing jobs in the month of August, according to the
BLS report. That makes August the worst month for manufacturing job losses since
2009, when Illinois’ job numbers slid during the Great Recession. The state’s
unemployment rate fell to 5.5 percent in August from July’s 5.8 percent, but
this was due entirely to the fact that 19,000 unemployed Illinoisans dropped out
of the workforce. In fact, workforce dropout is the same reason Illinois’
unemployment rate dropped to 5.5 percent in August from 6.6 percent in April.
Illinois’ workforce contracted by 100,000 people over the summer.
The majority of Illinois’ economic sectors experienced job losses in August,
resulting in a total net job loss of 8,200 across sectors. Losses were steepest
in manufacturing (-4,400), financial activities (-2,600), education and health
services (-1,900), and construction (-1,700). Sectors that experienced gains
included leisure and hospitality (+3,400) and professional and business services
(+2,000).
The household portion of the BLS survey revealed another month of significant
workforce dropout in August, with the state’s labor force contracting by 22,100
people on the month. Workforce dropout is the only reason Illinois’ unemployment
rate dropped to 5.5 percent in August from 5.8 percent in July. Of the people
who left the labor force, 19,400 were formerly unemployed, and 2,800 were
formerly employed. And workforce dropout alone drove Illinois’ unemployment rate
to to 5.5 percent in August from 6.6 percent in April. Over the summer months,
Illinois lost 100,000 people from its labor force.
While Illinois’ workforce dropout continued over the summer months, it is also
likely related to working-age Illinoisans leaving the state during the summer
moving season. Both BLS and IRS data already show that Illinois is losing
working-age adults to other states; a shrinking summer workforce is consistent
with people relocating during the moving season. Illinois’ workforce contracted
by 8,500 in May, 35,300 in June, 33,000 in July and in 22,100 August.
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 Regional comparisons
The majority of Midwestern and surrounding states are down
manufacturing jobs on the year, and Illinois’ loss of 8,000
manufacturing jobs is the worst of all states in the region. The
downturn in factory work among these states could be a sign of a
broader economic slowdown, given that economic downturns often begin
with losses in manufacturing and industrial work.
The overall jobs picture also looks weak across Midwestern and
surrounding states. Illinois is running slightly worse than middle
of the pack among peer states, up by 34,500 jobs for the first eight
months of 2016. Taking into account the different sizes of the
economies in the region, this puts Illinois behind Missouri,
Michigan, Wisconsin, Minnesota and Iowa, but ahead of Ohio, Indiana
and Kentucky in 2016.
The longer view looks much dimmer for Illinois, especially on the
manufacturing jobs front. Illinois has had the worst manufacturing
jobs recovery in the region: The Land of Lincoln has seen its
manufacturing jobs increase by less than 3 percent since the end of
the Great Recession. Meanwhile, the states around Illinois have seen
manufacturing jobs growth of between 6 and 38 percent over the same
time period.
Less than a month before the dismal August jobs report came out,
Illinois Manufacturers’ Association CEO Greg Baise laid out the case
for how Illinois government is driving business out of Illinois, and
the policy changes manufacturers need to see to invest with
confidence in Illinois. Baise included the following:
- Spending reform to put Illinois’ fiscal house in order,
including state constitutional pension reform
- Tax reform, including lower property taxes, elimination of
the estate tax, and the removal of the harmful pyramiding of the
sales tax on business inputs
- Comprehensive workers’ compensation reform to bring costs in
line with those in surrounding states
- Closing the skills gap with more training programs to create
a pipeline of manufacturing talent
Many of the specific solutions Baise proposed fit within the
categories of spending reform, structural tax reform, and regulatory
reform. This three-pronged policy approach would help cultivate
better job creation and economic growth over the next few years and
would restore confidence in the state. The last major reform Baise
would like to see – an increased focus on industry and trades in
Illinois’ education system – would result in a greater supply of
skilled workers prepared for an expansion of manufacturing in the
state.
It’s time for policy leaders to seriously consider the advice of
industrial leaders like Baise. Years of politicians ignoring the
perspective of job creators has pushed Illinois workers into the
stream of residents fleeing the state.
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