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 In January 2022, the unemployment
rate for prime working-age Black Illinoisans was 11.1% compared to just 6.1% on
average in the United States, according to data from the Current Population
Survey. The unemployment rate of white Illinoisans was nearly at the U.S.
average for white Americans. Furthermore, the gap between whites and Blacks in
Illinois was almost 8 percentage points.
Attributing this gap to racial discrimination would be misleading because it
does not account for other factors that are linked to employment. For example,
if white workers live closer to cities where the jobs are located, or if they
have higher levels of education on average, then we would expect white workers
to find themselves unemployed less often than Black workers.
When we compare similar individuals, we learn Black Illinoisans are 6 percentage
points less likely to be employed than white Illinoisans. The U.S. average
racial employment gap between Black and white Americans is 2.2 percentage points
for job seekers.
Illinois’ unemployment gap predates the pandemic
In 2019, while the U.S. economy was thriving and the national Black unemployment
rate fell below 6% for the first time ever, Illinois’ Black unemployment rate
stood at 7%. Even then, there was no difference between white unemployment rates
in Illinois and the U.S. average. The gap between the Illinois’ Black
unemployment rate and the average unemployment rate of Black Americans already
existed.
While the COVID-19 pandemic disproportionately hurt the
employment chances of Black workers compared to white workers, the gap increased
even more for Black Illinoisans than other Black Americans.
Bad economic times disproportionately hurt Black workers more than white workers
Historically, Black workers have faced a comparatively higher risk of job loss
at the first sign of economic downturn. A tight labor market tends to reduce the
racial and ethnic unemployment gaps. This is because stiffer competition for
workers among employers raises the cost of discrimination.
In 2021, there were on average 1.1 job openings for every job seeker in the U.S.
Illinois barely managed 0.9 job openings per job seeker. That’s less than one
job per job seeker, meaning there weren’t nearly enough jobs for unemployed
Illinoisans.
A tighter labor market could help improve outcomes for Illinois’ Black
population. Higher job opening rates and persistent labor shortages in other
states are contributing to more Blacks finding work in those states.
Longer unemployment durations for Black workers will do lasting damage to
Illinois’ economy because higher joblessness among Black Illinoisans represents
lost production, forgone investments and reduced economic potential.
How to spur job creation in Illinois
Research shows labor market institutions affect job creation and productivity
growth. Labor market institutions that favor growth include portable pension and
health insurance plans, and individualized and flexible wage-setting.
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The evidence supports that limiting government intervention in labor markets and
constraints on government union collective bargaining agreements lead to higher
employment opportunities and higher productivity growth.
Illinois has the third-highest regulatory burden in the U.S., which means there
are higher costs associated with forming businesses and creating jobs.
Illinois is also highly unionized, and cumbersome public-sector collective
bargaining agreements, as well as the state’s constitutional public employee
pension protection, mean spending and tax policy cannot quickly adapt to reflect
changing economic conditions.
The state’s constitutional public employee retirement protection has already
resulted in skyrocketing pension costs, crowding out core government services
and other necessary investments.
For example, the state could do more to close skills gaps by expanding its
Monetary Award Program grants that are available to Illinois residents with
financial needs.
Most MAP grant recipients are low-income Black or Hispanic students whose
parents never graduated from college.
Research shows an additional $2,000 in MAP grants increases the likelihood the
recipient finishes a 4-year degree by 4 percentage points. MAP grants also raise
the annual wages of recipients after graduation.
Although MAP grant recipients receive on average 25% more funding than they did
20 years ago, MAP spending as a share of general funds expenditures has
decreased.
This election year, Gov. J.B. Pritzker is proposing to increase MAP funding by
36%. While this a step in the right direction, it is still $42.4 million short
of what MAP spending would have been had the program’s share of government
spending remained at its fiscal year 2001 level.
The economic cost of racial and ethnic inequality
Government spending not only reveals politicians’ true priorities, but it also
has consequences for the state’s economy. Investments that help to close racial
gaps in labor market outcomes should be the priority because these persistent
gaps in opportunity come with a huge economic price tag – not just for those who
are being sidelined, but for all Illinoisans.
Research shows racial and ethnic inequalities have cost the U.S. economy $51
trillion in lost economic output in the past 30 years. From labor alone, the
losses add up to $22.9 trillion since 1990.
Although racial unemployment gaps in the labor market persist, investments in
Black students and workers coupled with policies that lower barriers to entry
and reward productive market activity will be the first steps toward improving
the lives of Black Illinoisans. |
