The Illinois Unemployment Misconception

About one year ago, we published an article called “The Illinois Wage Misconception” briefly detailing Illinois’ appearance of a strong average wage statistic. In reality, the high average wage was a false generalization. The finding’s foundation was built on the fact that the small percentage of high-end wage earners simply averaged more wages than other regional states’ high earners did. This specific finding balanced and further hid the usually low wages of a majority of Illinois workers. This wage dichotomy, or conflict, created an “illusion” of a high average wage for all of Illinois Workers.

This article discusses another Illinois economic misconception that is easily hidden by broad statistical generalizations. This misconception, or “illusion” is the State of Illinois’ lowest unemployment rate in nearly a decade of 4.6%. On face value, this record low unemployment rate would likely equate to an increase in both employment opportunities as well as employed individuals throughout the State. However, in Illinois, this is unfortunately not the case.

What is seemingly a state economic success is actually an indication of a deeper issue. The out migration of the Illinois labor force. The path towards low unemployment has not been unemployed workers seeking out and finding new jobs, but rather giving up on finding work altogether. So, simply stated, as unemployed workers quit looking for jobs altogether they are no longer included in the unemployment statistic. Therefore, as motivated job seekers go down, so does the State’s overall average unemployment rate. So the central statistic missing from this equation is the State’s active labor force. If the active labor force goes down alongside the unemployment rate, it becomes easy to surmise that decreasing unemployment signals economic distress rather than success.

Over the last ten years, from May 2007 to May 2017, Illinois has a total of 230,000 individuals leave active labor force and completely end their search for work. Interesting, over the same time frame, neighboring Wisconsin’s labor force is up 70,000 and Indiana’s labor force is up 130,000. Although not regionally adjacent, Texas has seen a labor force increase of 2 million over the last ten years. So it seems three basic conclusions can be made from these labor force statistics, (1) Illinois’ political quagmire has created an unmotivated workforce that is likely causing them to simply give up on searching for work, (2) those individuals who are motivated to work are moving elsewhere to find employment (neighboring states such as Indiana and Wisconsin), and (3) until Governor Bruce Rauner and the Illinois Congress can solve it’s budget crisis and began to dig itself out, these trends are more likely to continue than they are to dissipate.

While problems are easily identified, solutions to those problems take a certain type of courage by politicians that is not based on political leanings, but rather on what is best for the citizens of the State, despite which side of the aisle you sit at. The financial and social burdens are only growing, and to this point, the solutions being proposed are simply not keeping up.

While local leaders and economic stakeholders cannot control or often even predict the actions taken in Springfield, they do have the ability to make a difference in their community, no matter how small it may appear. First, it is absolutely critical to maintain regular contact with community employers. Engaging in economic development retention techniques allows the community to understand the needs of  local business and industry, and help both the community and the business plan for the future.

In some cases,  local business and industry may be planning an expansion of operations that could range from an additional 1-2 employees all the way to a multi-million dollar expansion and 20-40 new employees. With this type of information in hand, local stakeholders can reach out to area community colleges and universities to engage in curriculum discussions to help fill the future needs of the communities employers. While I am simplifying these often arduous conversations down to a few sentences, making a difference can happen locally, you simply have to take the first step.

Source: Illinois Policy Institute

Author: Regional Link

Economic Development Planner