Illinois only added 3,600 jobs in October, a drastic drop in job growth coming amid persistent inflation and rising recession fears. Unemployment led the nation.
Illinois’ unemployment rate ticked up one-tenth of a percent to 4.6% in October, the highest in the nation for a second month and nearly a percentage point higher than the national rate of 3.7%.
Illinois added just 3,600 jobs in October, significantly fewer than in September and the fewest jobs added during 2022. Job growth continued for the 17th consecutive month.
Leading the month’s job growth was the trade, transportation and utilities sector with 2,800 jobs added; leisure and hospitality added 2,300 jobs; both professional and business services along with manufacturing added 1,800 jobs each; the educational and health sector added 1,100 jobs; construction and other services gained 900 and 800 jobs, respectively; while financial activities added 300 jobs for the month.
The main driver of the state’s lackluster job growth for October was the government sector, as it saw a monthly decline of 8,100 jobs. The information sector was the only other sector to lose jobs, declining by 100 for the month.
Mining payrolls remained unchanged for the seventh consecutive month.
Despite nearly a year and a half of sustained job growth, Illinois’ unemployment rate remains the highest in the nation, tied with Nevada. The state tends to struggle to recover from economic downturns compared to the rest of the nation, as it did after the Great Recession.
Illinois’ recovery has also been hindered by Gov. J.B. Pritzker’s COVID-19 policies, which were more severe than other states and disproportionately hurt workers in the leisure and hospitality sector. Pritzker has continued to extend emergency powers throughout the pandemic, recently issuing his 36th COVID-19 disaster proclamation.
Illinois’ restrictive pandemic policies and use of federal enhanced unemployment benefits likely resulted in a sluggish recovery of pandemic job losses. During the pandemic, 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. Those concerns appear to have been justified given the state’s slow recovery from the pandemic and its highest in the nation unemployment rate today.
The state’s sluggish recovery from the pandemic is putting the state in a precarious position as economic uncertainty and recession fears continue to increase. Illinoisans suffered more than most Americans during the Great Recession and since the state still hasn’t recovered from the pandemic, it remains vulnerable to suffering more severely than other states once again should a recession occur.
The Federal Reserve continues to take measures to fight inflation, recently raising interest rates by 75 basis points again while pledging more hikes are on the way. It is expected to raise rates by another 75 basis points again in November. Despite months of rate hikes, inflation has remained stubbornly high at 8.2%, fueling further uncertainty about the future of the economy.
Warning signs of an impending recession continue to mount. Credit rating agency Fitch is expecting a recession by the second quarter of 2023. They say it is likely to be similar to the 1990-1991 recession, which lasted nine months, but is also expected to be milder than the one from 30 years ago. A recent Bloomberg Economics model projects there is now a 100% chance of a recession in the next 12 months.
Given its struggle to recover jobs lost during the pandemic, Illinois is in a difficult position heading into what may now be an inevitable economic downturn. Illinois governments already have less flexibility in their budgets and spending on vital services, which will be especially needed during a recession, has largely been crowded out by pension obligations. The state is also facing a $1.3 billion unemployment trust fund deficit that raises questions about how much assistance could be provided to Illinoisans who lose their jobs and about whether it would result in higher taxes for businesses.
The results could be catastrophic for Illinois, whose businesses and residents are already fleeing the state. Tyson foods became the fifth major company to announce its departure from the state, joining Boeing, Caterpillar, Citadel and Highland Ventures in relocating employees and operations out of Illinois. A record exodus driving population decline threatens to prevent the state’s economy from ever returning to pre-pandemic employment levels.
Illinoisans are already struggling with the high costs of inflation, heavy tax burden, and enormous debt. A recession would sink the state’s job gains and mean more cuts to services that have already been crowded out by huge pension debts and poor spending habits. Without reforms to policy, Illinois will likely again struggle to recover its jobs should a recession occur, ensuring Illinois workers are again hit harder than workers in other states.
