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A new survey found 11% of Illinois’ small
businesses plan to lay off employees in September, the second-highest percentage
among states surveyed.
Responses to Alignable’s monthly hiring survey show a majority of U.S. small
business owners are no longer seeking new employees, including 60% of
entrepreneurs in Illinois who said they have a hiring freeze.
Nearly half of these small businesses reported hiring earlier in 2022, but
reversed course because of decades-high inflation, rising payroll costs and
reduced revenues. Illinoisans will be among those most impacted, said head
researcher Chuck Casto.
“Illinois is second only to Florida in having the highest layoff rate,” Casto
told the Center Square. “Eleven percent of the small businesses say they are
planning layoffs as early as this month. With all of the numbers going up in
terms of people not hiring, that really is quite a sign that people are scaling
back.”
Researchers found fewer than a quarter of small businesses reported fully
recovering financially from the worst years of COVID-19, with 51% generating
half of their pre-pandemic monthly earnings.
A majority of respondents said payroll costs increased by at least 50% for
employees since COVID. Alongside higher rent and energy expenses, business
owners told researchers hiring new workers is just too expensive.
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While small businesses create 69% of all new jobs in Illinois, the state was
ranked last in the nation in 2021 for growth in high propensity businesses
applications, or companies the IRS deemed more likely to create jobs.
Illinois also ranked third-worst in the Midwest for business formation rates in
2021 despite receiving the 1oth highest number of business applications in the
nation, and the most in the region. More than 92% of applications to start
businesses were denied.
Illinois’ status as the third-most regulated state in the U.S. has made it
harder for small business owners to enter the market during the pandemic and
create jobs to address record unemployment.
If Illinois hopes to recover the 88,000 jobs still missing from before the
pandemic, state leaders should simplify the state regulatory code to ensure more
applications result in new employers. They should also start paying attention to
the state’s lousy reputation for fostering business.
And voters should take a hard look at the first question on their Nov. 8 ballot,
Amendment 1.
Amendment 1 would enshrine permanent power for government unions in the state
constitution, which could mean higher taxes, higher costs and potentially costly
litigation for business owners. It will also mean higher taxes to satisfy
greater union demands, which will further stifle new business and hiring.
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