Brian's Column 9-26-14

We’ve seen some pretty good unemployment numbers in recent days and months. A Chicago Tribune article reported on September 18 that Illinois unemployment was down from 6.8% in July to 6.7% in August. A tenth of a percent in a month isn’t a huge decline, but if you consider where we were last August, at 9.2%, that’s a huge drop. In fact, it’s the largest year-over-year decline Illinois has seen since 1984. And, we’re just 0.6% above the national unemployment rate (6.1%), which is pretty good for us. In August alone, we added 13,800 jobs, according to the Illinois Department of Employment Security website, with the Leisure and Hospitality industry leading the pack at 5,000 jobs created, the Trade, Transportation, and Utilities industry right behind them with 4,300 jobs created, and Professional and Business services in third with 3,300 jobs created. While a few industries did lose jobs, those 13,800 jobs we gained finally gave our state a positive net gain in jobs for 2014.

Overall, those numbers look good for the state, don’t they? But before we assume Illinois is starting to make a brilliant comeback, let’s make sure we have all the facts.

First, a key factor in the unemployment rate numbers is labor force participation. If workers leave the workforce and our labor force participation rate shrinks, unemployment will drop—and, to put it bluntly, that’s not a good thing. In August alone, our workforce shrank by 19,000 laborers which brought the total dropout rate for the last five months to 82,000. Gary Burtless, a Brookings Institute economist quoted on Watchdog.org, said that “Illinois has mirrored the country as a whole in this regard. . . . The rate may technically be going down, but that doesn’t mean more people are working.” Many, including the Director of Illinois Department of Employment Security Jay Rowell, attribute the shrinking workforce to baby boomer retirement. Retirement aged folks are not included in the labor force participation rate, however; only working age people (16-64) are. That shrinking workforce, then, is not due to baby boomers retiring in droves. Working age people are leaving the workforce simply because they can’t find a job. Here’s the thing that scares me: our labor force participation is at a 35 year low—under 65% of working age people are actually working—that’s fewer people working or looking for work than were working or looking for work in the middle of the recession. That’s not what economic recovery looked like after the Great Depression nor after any recession we have been through since. And here’s the even scarier thing: for every one job created, two more Illinoisans enroll on food stamps, according to an Illinois Policy article.

Second, and related to the labor force participation rate is that fewer prime age workers are working than ever before. In fact, seniors are the only demographic that has seen an increase in laborers because they simply “can’t afford to retire,” according to a USA Today study cited on IllinoisMirror.com. Youth workers (16-24), prime age workers (25-54), and male minority workers have seen a significant drop in employment rates, according to an Illinois Policy article:


  • Youth workers: - 8.4%, only 26.3% currently hold jobs
  • Prime age: -4.3%
  1. Only 59.4% of 20 to 24 year olds currently hold jobs
  2. Between 76% and 77% of 25 to 54 year olds currently hold jobs (pre-recession was in the mid eighties).
  • Latino men: -8.7%, around 70% to 75% hold jobs
  • Black men: -10%, fewer than 50% hold jobs

While the shrinking youth worker participation rate can be explained away by education, the drop in participation of those older than high school or even college leaves me scratching my head.

Let me leave you with a quote and a question. First, the quote—Milton Friedman in Chapter III of his book Capitalism and Freedom said that “the Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.” Last, the question—what can the state of Illinois do and what can the citizens and prime-age workers of Illinois do to remedy the shrinking workforce participation rate? I got a novel idea…..What if we reduce personal, corporate and property taxes, lower workers compensation rates, lower the fees to start a business, reduce fraud in entitlement programs and cut government spending?

As always, you can reach me or Sally at 815/232-0774 or email us at repstewart@gmail.com. You can also visit my website at www.repbrianstewart.com or follow me on Facebook, Twitter, and Google Plus.


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