About That… Addressing Illinois Unemployment

Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI.

Today the Bureau of Labor Statistics published its monthly “Regional and State Employment and Unemployment” report. At 8.9 percent, the Illinois unemployment rate is 4th highest in the nation, behind only Nevada (9.3 percent), Rhode Island (9.2 percent), and Michigan (9.0 percent[1]). Since September 1, the Illinois unemployment rate has fallen by 0.3 percentage points, the number of unemployed individuals has declined by 22,436 individuals, and the number of residents with a job has increased by 16,079.

These numbers raise two important issues. First, in the absence of the government shutdown of October 1 to October 16, the Illinois unemployment rate would have been lower, likely by a tenth of a percentage point. Second, compared to the U.S. unemployment rate of 7.3 percent (which ticked up in part due to the government shutdown), the Illinois rate remains significantly elevated.

On October 1, 2013, ILEPI published a report in which we asked, “Who are the unemployed in Illinois?” Our analysis was based on monthly CPS-ORG data and was adjusted to the levels of September 1, 2013 when the Illinois unemployment rate was 9.2 percent and 602,000 residents were out of work. We found that the unemployed are disproportionately male, young, and African-American and Latino/a, although white workers still constitute a majority (53.9%) of the unemployed. Those with lower levels of education are also overrepresented in the unemployment pool, but there were still 109,000 unemployed individuals with at least a bachelor’s degree in Illinois.

Additionally, particular industries had also been hit harder than others. 16.8 percent of all construction workers were out of work and the arts and entertainment services (15.5 percent), accommodation services (15.2 percent), and food services (14.2 percent) industries all followed. In total, workers from just five industries made up over half of all unemployed workers in Illinois. Although at 5.2 percent, the combined education, health, and social services sector had an unemployment rate well below the state’s average, it was the most frequent industry of previous employment in the unemployment pool, at 76,000 workers. 71,000 individuals from the professional, science, and management services sector were also out of work as well as 63,000 construction workers, 61,000 retail trade employees, and 59,000 food services workers are unemployed in 2013.

Given that Illinois’ unemployment rate only slightly declined since the end of August and that the pool of unemployed workers remains at 580,000 residents, it seems likely that around 60,000 workers are still unemployed in each of those five industries today.

Illinois workers need sensible, “high-road” policy solutions that spur the state economy, pay long-term dividends, and reduce unemployment in these sectors.

First, Illinois needs to increase infrastructure investment. To update and improve the state’s deteriorating infrastructure to meet the needs of the state’s current and future population and to address the short-term problems of construction unemployment and weakened consumer demand in local economies, the state must escalate public infrastructure spending. In Illinois, raising nonresidential construction employment by 1,000 workers actually generates 669 additional jobs and $104.2 million in new economic activity in other industries that would not otherwise occur. Of these 669 jobs, the four other industries with the largest amounts of unemployed workers increase employment most:

  • the retail sales industry grows by 114 jobs,
  • the architectural and engineering (professional) services sector adds 63 jobs,
  • the food services industry increases by 51 jobs, and
  • 26 jobs each are created in private hospitals and the “offices of health practitioners” such as doctors and dentists (health).

Second, to foster sustainable, long-term economic success, the state must amplify spending on merit-based grants to students, commit to keeping the cost of college tuition low at the public universities, and invest in and expand early childhood education programs.  For workers who are unemployed right now, especially middle-aged and minority residents, the state needs to expand those worker retraining and apprenticeship programs that have proven to be effective. Investing in people has a far greater long-term impact on the economy than the zero-sum “smokestack-chasing” of businesses through transitory tax incentives or credits.

Third, even though Illinois governments continue to face budgetary conditions that limit their ability to provide services, they actually need to find a way to increase internal investment in people and infrastructure beyond the amounts to which they are already committed. With fewer resources, governments should turn to the business community to help make up the shortfall. Governments should not altogether turn their operations over to the private sector; instead, governments should utilize public-private partnerships to expand their work for the public interest and accomplish goals which, given current finances, would not be achieved if they were to go it alone. Once again, temporary tax incentives to businesses often lack accountability and transparency, with promises of job creation either broken or unverified. Public-private partnerships, on the other hand, bring the business community in as stakeholders and allow for consistent follow-up so that both the private sector and the public sector are held accountable to the public.

By promoting these three policies, Illinois would be committing to high-road solutions for the state’s population which productively grow the economy and put residents back to work.

[1] NOTELike Indiana, right-to-work has not had a positive effect on Michigan’s unemployment rate. Michigan’s unemployment rate at the end of March 2013 was 8.5 percent. Unemployment has jumped by 0.5 percentage points to 9.0 percent in October 2013, and the number of unemployed has increased by 26,718 persons. Michigan’s RTW law went into effect on March 28, 2013.

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