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 Twenty-one states now have lower unemployment rates than they did before the
COVID-19 pandemic, but not Illinois.
Not only is the state’s unemployment rate far higher than before the pandemic,
Illinois is seeing the eighth-weakest recovery in the nation with nearly 30% of
jobs still missing relative to their 2020 peak.
A new report published by the Federal Reserve Bank of St. Louis suggests
Illinois’ COVID-19 lockdowns and its use of federally funded, enhanced
unemployment benefits have likely contributed to the state’s slow recovery.
According to the report, three key factors appear to influence a state’s
recovery: its industry makeup, lockdown severity and reliance on federally
funded unemployment insurance benefits.
The slowest-recovering states had the highest shares of leisure and hospitality
workers prior to the COVID-19 pandemic. These service industries were hit
hardest, both because of state-mandated business closures and the reluctance of
consumers to travel and interact in person. States where more of the workforce
was employed in these vulnerable industries were likely to lose more jobs in
total and recover more slowly than other states.
In Illinois, just 10.2% of workers were employed in leisure and hospitality
prior to the pandemic in January 2020, below the national average of 11.1%, U.S.
Bureau of Labor Statistics data shows. The size of Illinois’ leisure and
hospitality industries does not seem to be a main reason for its
slower-than-average recovery.
While Illinois’ leisure and hospitality industries were not particularly large
before the pandemic, they did experience a much more severe recession than their
counterparts in other states. Illinois lost 31.7% of its leisure and hospitality
jobs between December 2019 and December 2020, a steeper decline than Midwestern
states except Minnesota and Michigan. Now, Illinois’ leisure and hospitality
industry remains the least recovered of any Midwestern state: seventh-worst in
the nation, having only recouped 68% of jobs lost at the pandemic’s start.
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This sluggish recovery is partly because of
Illinois’ strict COVID-19 policy response. Illinois, Minnesota and
Michigan – the Midwestern states where leisure and hospitality
workers fared the worst – were among the quickest to adopt COVID-19
restrictions and imposed more of them over time than other states in
the region.
Whatever health benefits they may have produced,
Illinois’ lockdown policies likely slowed the state’s employment
recovery. The Federal Reserve’s work also implies Illinois’
implementation of enhanced and extended unemployment benefits may
have slowed it down as well.
Last year, the federal government provided funding to states to
increase the amount of unemployment benefits paid out by $300 per
week for each recipient. The fastest-recovering states all ended
these increased benefits months before the official expiration date
in September 2021. In all, 25 states did so. Illinois, like the
slowest-recovering states, did not terminate the benefits before
they expired by federal law.
At the time, industry groups in Illinois raised concerns increased
unemployment benefits would delay some workers’ returns to the labor
force by reducing their financial incentive to look for work. The
extra benefits did not include any job search requirements.
As economic outlooks improve elsewhere in the nation, unemployment
in Illinois remains relatively higher. Just one of its 16
metropolitan areas has recovered the jobs it lost in 2020. Even
where labor market conditions are improving, Black Illinoisans have
been left out of the state’s recovery.
The rosier trajectories of the recoveries in the 21 states which
have returned to pre-pandemic unemployment rates indicate this
unfortunate reality might have been avoided had different policy
decisions been made.
Regardless, Illinois’ road to recovery will be difficult given that
Illinoisans are leaving the state at record rates. With people
leaving, there are fewer customers and potential workers to help the
state get back to its pre-COVID employment levels. |
