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 Last year was the worst year for jobs in Illinois’ history and
no sector of the economy was hit harder by COVID-19 and state-mandated
mitigation measures than the leisure and hospitality industry.
In Illinois the industry lost 40% more jobs during 2020 than the nation as a
whole. Broader analysis revealed the industry lagged the nation even before the
pandemic.
Nationally, and within Illinois, the leisure and hospitality sector grew
employment faster than nearly any other. However, the gap between sector
employment growth in Illinois and the rest of the nation widened during the past
two decades.
From the end of 1999 through the end of 2019, the U.S. leisure
and hospitality industry grew employment by 43.4%. Illinois’ leisure and
hospitality industry grew employment by only 29%. The national economy added
leisure and hospitality jobs at a 50% faster rate than in Illinois.
Illinois’ leisure and hospitality industry did grow substantially faster than in
other Midwestern states, with nearly all of the job gains coming from the
Chicago metropolitan area. Those jobs were likely driven by growth in tourism.
This was welcome news because other sectors of Illinois’ economy lagged among
Midwestern states, leading to significant underperformance in total job growth
during the past two decades. Then, the COVID-19 pandemic and state-mandated
lockdowns ravaged the state’s economy.
From December 2019 to December 2020, Illinois lost 198,100 (-31.7%) leisure and
hospitality jobs, the third worst in the Midwest, behind only Minnesota and
Michigan. Unsurprisingly, the Midwest states that performed
among the worst for leisure and hospitality employment were the states that
still have the most severe mitigation protocols. Likewise, states that have less
severe restrictions have seen significantly smaller drops in leisure and
hospitality employment.
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There may be some hope for Illinois’ immediate
recovery of the leisure and hospitality industry, with COVID-19
vaccines being dispersed and indoor dining resuming statewide.
Still, Illinois has a painful economic recovery ahead and will need
to reform impediments to the economy that were causing jobs to lag
the rest of the nation prior to the pandemic.
Unfortunately for already-struggling Illinoisans,
rather than pursuing spending reforms, Gov. J.B. Pritzker is
continuing to pursue new taxes. While the governor has, at least for
the coming year, given up hopes of raising the state’s income tax,
he is now promoting closing $932 million in “loopholes” to raise
more revenue. The move was decried by the Illinois Chamber of
Commerce and Republicans because Pritzker is not closing unfair
“loopholes,” but rather trying to take back a deal he made early in
his term for key tax incentives and deductions intended to create
jobs.
Pritzker recently failed to get the lame duck legislature to cancel
a pandemic recovery tax credit for small businesses that would have
taken from $500 million to $1 billion more from them as they
struggle. Pritzker has vowed to pursue the money again in March with
the new legislature.
Contrary to the governor’s wishes, it is imperative lawmakers work
to avoid the harm to businesses and jobs that tax hikes would
create. Economists argue against raising taxes during a recession.
Instead, Illinois can improve its finances and continue to provide
core services mainly by implementing constitutional pension reform.
The Illinois Policy Institute is offering that along with other
fiscal fixes that can offer overburdened Illinois taxpayers a path
to declining debt, lower taxes and more effective state government.
Illinois needs its labor markets to improve so they can create more
jobs, not to pass more taxes that cost the state more jobs.
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