In Friday’s release on state employment and unemployment, there are both positives and negatives for Illinois. On the positive side, Illinois had the 4th-largest decline in the unemployment rate over the past year and now has a lower unemployment rate than states like Georgia, Texas, and California. On the negative side, Illinois had the 9th-worst job growth over the year.
What are the causes of high African-American unemployment, particularly in Illinois? What policies and economic phenomena make a statistical impact on reducing unemployment among African Americans? Continue reading “Podcast: Reducing African-American Unemployment”
Illinois now has the highest unemployment rate in the nation, tied with only Alaska. In the month prior to Governor Rauner assuming office – when Illinois had an operating budget – the state’s unemployment rate was 6.0%, compared to a national rate of … Continue reading Illinois Has the Highest Unemployment in the Nation
Labor economists have explained that lower job turnover is one of the reasons why raising the minimum wage has very little impact on employment, contrary to classical economic theory. A higher minimum wage makes it easier for employers to recruit … Continue reading Prevailing Wage States Have Fewer Job Separations in Construction
Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at http://www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI. Efforts to create local “right-to-work” zones would have negative impacts on workers and the economy in … Continue reading Local Right-to-Work Zones Would Weaken the Illinois Economy
Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at http://www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI. Illinois added the fourth-most jobs and saw the largest unemployment rate decline in America last year, according … Continue reading Illinois Added the Fourth-Most Jobs in 2014
On May 20, 2014, ILEPI Policy Director Frank Manzo IV was a panelist on WTTW’s Chicago Tonight with Ted Dabrowski discussing the pros and cons of raising the minimum wage in Illinois. Manzo supported raising the minimum wage to $10.00 per hour while Dabrowski has endorsed abolishing Illinois’ minimum wage altogether. Here is a link to the segment, and below is additional information on the effects of raising the minimum wage in Illinois.
Should we raise the minimum wage to $10 an hour?
The Illinois economy is still recovering from the Great Recession. The unemployment rate is about one and a half percentage points lower today than it was one year ago. But the recovery has seen an ongoing rise in income inequality in the labor market. To partially offset the income gap– independent of any action (or nonaction) at the federal level– Illinois should raise the minimum wage to $10 an hour.
In 2012, 1 million of the state’s 6 million workers earned less than $10 an hour. Of these one million low-wage earners, 57 percent were female, 45 percent were nonwhite, and 60 percent worked full-time (35 hours a week or more). In a study co-authored with the University of Illinois, ILEPI found that raising the minimum wage to $10 would increase worker income by $2 billion for these low-wage workers and lift 60,000 to 100,000 Illinois residents above the poverty line, reducing reliance on government programs and lowering costs to taxpayers. These workers would then spend that new income back in the economy, resulting in $7 billion in new economic output, and either a very small drop or a very small gain in employment. Thus, in Illinois, a state where the cost of living is higher than the national average, a raise to $10 would be beneficial to the economy. See the full report here [pdf].
Why does the minimum wage have a stimulative impact? What about economic theory which says it reduces jobs?
We know that reality is, unfortunately, far more complex than economic theory. Research shows little to no discernible impact of the minimum wage on employment. Most estimates on the supposed reduction in jobs are between zero percent and less than a fraction of a percent— it would be a false representation of economic research to suggest otherwise. We also know that poorer Americans spend higher shares of their incomes in the economy than richer Americans. One 2009 study by the Federal Reserve Bank of Chicago found that “spending increases substantially after a minimum wage hike.” For every $1 increase in the minimum wage, families with a minimum wage earner raise spending by $744 to $869 per year.
Isn’t the minimum wage a job killer for small businesses? Continue reading “ICYMI: ILEPI on Chicago Tonight Discussing Minimum Wage”
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). 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: Continue reading “About That… Addressing Illinois Unemployment”