Illinois is a Mess

Bryce Hill Senior Research Analyst Illinois Policy Institute  Via E-mail

 

Illinois lost 423,300 jobs during 2020, a history-making drop with nearly half of the losses in the leisure and hospitality sector thanks to repeated COVID-19 restrictions. The state saw 6.9% of its jobs evaporate, the worst year on record. Jobs losses were felt in every sector of the state economy, except for construction employment which saw a December surge that recouped the year's losses.

Leisure and hospitality jobs were hurt the most, losing 198,100 (-31.7%) jobs during the year, nearly half of all job losses, the Illinois Department of Employment Security reported. Suffering the next largest job losses was the mining sector, which lost 1,000 (-12.3%) jobs; the information sector shed 9,100 (-9.5%) jobs; educational and health services payrolls declined by 58,300 (-6.1%); other services payrolls dropped by 17,200 (-6.7%); government lost 48,700 (-5.9%) jobs; manufacturing jobs fell by 23,100 (-4.0%); professional and business services lost 35,600 (-3.8%); financial activities shed 9,800 (-2.4%) jobs; and trade, transportation and utilities lost 23,400 (-1.9%) jobs. The newest data from mid-November to mid-December shows Illinois' final full month of 2020 saw 2,500 (-0.04%) jobs lost, marking the second consecutive month of job losses. Meanwhile, the national economy also stalled in December, shedding 140,000 (-0.1%) jobs, the first month of national job losses since April.

Hardest hit during the past month in Illinois was the leisure and hospitality sector, which lost 40,900 (-8.8%) jobs during the first full month of the reinstated ban on indoor dining. Only two other sectors of Illinois' economy shed jobs in December: the information sector lost 1,300 (-1.5%) of its jobs, while "other services" payrolls shrank by 800 (-0.3%). Some sectors of the state economy continued to recover in December. Construction added 8,300 (+3.8%) jobs; mining gained 200 (+2.9%) jobs; professional and business services payrolls increased by 13,000 (+1.5%); trade, transportation and utilities grew by 10,100 (+0.9%) jobs; educational and health services added 4,500 (+0.5%) jobs; manufacturing gained 2,400 (+0.4%) positions; financial activities grew jobs by 1,400 (+0.3%); and government added 600 (+0.1%) jobs. Although it looks like there may be some hope with a COVID-19 vaccine being dispersed, Illinois still has a painful economic recovery ahead. Making matters worse for already-struggling businesses, Gov. J.B. Pritzker is continuing to pursue new taxes, even after voters soundly rejected his progressive income tax hike Nov. 3. The governor has suggested he may now be in favor of raising the state's flat income tax 20% or closing "loopholes" to raise more revenue. He 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. As the state's economy continues to struggle with the COVID-19 downturn, and to a much greater extent than the rest of the nation, 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. There is also the additional possibility of the state receiving federal aid by reforming state finances, if Congress adopts the Taxpayer Protection Act. Instead of just throwing more money at pension debt and deficits, constitutional pension reform and the Taxpayer Protection Act would offer overburdened Illinois taxpayers a path to declining debt, lower taxes and more effective state government. The measures would build a more sustainable recovery rather than posting more historic job losses.