Experts Debate The Reasons Behind Illinois’ High Unemployment

May 13, 2014  |  

Illinois, one of the last states to fall victim to a recession and one of the last states to recover, has the third worst unemployment rate in the nation. Even five years following the recession, the unemployment rate there is a high 8.4 percent–almost two percentage points above the national average. (Rhode Island and Nevada, in that order, are the states with the worse unemployment rate.)

In January 2009, unemployment was 8.0 percent, just above the national average but it later climbed to 11.4 percent before slowly dropping.

“Illinois’ stubbornly high unemployment is the result of several factors, including the severity of the state’s housing slump, which has badly hurt the construction industry. The decades-long decline in manufacturing has continued, while neighboring states like Indiana and Michigan have a larger share of the rapidly improving auto industry, the only part of the sector that is rebounding,” reports Crain’s Chicago Business. Retail and financial sector jobs in Illinois are still on the decline while these industries have recovered nationwide.

A “temporary” tax hike hasn’t prompted companies to do more hiring. Some say there is a connection between tax hikes and unemployment. In January 2011, income taxes went up.

“We started to see that correlation way back then,” says Ted Dabrowski, vice president of policy at the Illinois Policy Institute, a nonprofit conservative think tank. “There wasn’t any way to prove causation six months in, but it’s persisted, it doesn’t go away, we continue to have that two-point gap. We think the tax hike is a huge factor.” The Democrats supported the tax hike.

Actually, public-sector job losses in Illinois account for a significant portion of the unemployment rate rather than private sector jobs, countering the argument that the tax hike had a huge negative impact. Six of the nine occupations in the state losing the most jobs in 2011 were public school teachers and other government workers, found the Economic Modeling Specialists International. The fast-growing occupation in 2011 was temporary workers. And by 2013, there were 50 percent more temp workers in the state than in 2009.

The Quinn administration last year requested that the federal Bureau of Labor Statistics, which compiles unemployment statistics, to double check its calculations. According to Quinn, a government survey of firms’ payrolls showed more jobs. The discrepancy could be because there are people holding down two jobs to make ends meet.

Without any definitive answer to what’s causing the state’s jobs problem, it appears that a mixture of the recession, the recovery and the industry landscape are taking a toll on the state. Are you in Illinois? What are you seeing?

[via Crain’s Chicago Business]

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