Illinois has one of the highest unemployment rates in the country. Here’s why

Illinois’ unemployment rate has dropped from its pandemic high of 16.5% to 6%, federal job numbers show, but the state’s jobless rate is still among the highest in the country — a trend that existed even before COVID-19 struck, federal labor data shows.

As the state, like the rest of the nation, continues to recover from a quick but powerful downturn at the start of the pandemic, Chicago — the state’s economic engine — once again plays a role in those higher unemployment numbers as the tourism and the hospitality industry struggle to bounce back, says Dan Black, a labor economist and professor at the University of Chicago’s Harris School of Public Policy.

“Part of it probably has to do with the industry composition — so tourism is not back of course,” he said. “I think restaurants are still struggling with the pandemic so I know the data’s not doing well there.”

The “Great Resignation,” defined at least in part by people leaving jobs without another lined up, has played a role, particularly in those industries that tend to pay less and put workers face-to-face with the public as the pandemic wears on. What’s more, Black and other experts say, job seekers don’t necessarily have the skills that align with open positions.

“It’s a little perplexing because you keep reading these stories about employers not being able to find workers, but at the same time you have all these people who can’t find jobs,” Black says.

At 6% unemployment in October, the most recent data available for states, Illinois was above the national unemployment rate of 4.6% that month. (It has since fallen to 4.2%.) Illinois also ranked among the highest when compared to other states, but fared better than New York whose jobless rate was 6.9% and Nevada and California, which tied for the highest unemployment rate in the country at 7.3%.

On the other end of the scale was Nebraska, which beat everyone with 1.9% unemployment.

States with higher unemployment numbers tend to have major metro areas with diverse populations, says Phillip Braun clinical professor of finance at Northwestern University’s Kellogg School of Management. Longtime hiring disparities have meant that Black unemployment is higher than average, experts say. Nationally, the unemployment rate among Black residents was nearly 2 percentage points higher than the overall average at 6.7%.

“And these dense, insulated population areas like LA, New York, Chicago — they all have higher unemployment,” Braun notes.

Chicago’s unemployment rate, which includes data from Joliet and Naperville, stood at 5.4% in October, according to preliminary labor department data. The jobless rate was even higher in the nation’s two other largest cities: Los Angeles area’s unemployment numbers stood at 7.8% while New York City’s jobless numbers stood at 9.4%.

Illinois’ jobless rate has been consistently higher than most states for at least the last five years — and just above the national average since at least the 1990s. In 2016, the state ranked in the bottom 10 with a 5.9% unemployment rate while the national average was 4.9%, according to U.S. labor data. That trend has largely continued up to now.

The University of Chicago’s Black says part of the reason for that is Illinois’ reputation as a high tax state — a turnoff to would-be employers who could very well snap up local job-seekers, while Braun again says that higher unemployment among Black residents is a long-standing issue.

While Illinois and Chicago officials have touted falling unemployment numbers, particularly this year, Northwestern’s Braun predicts the rapid decline will level out.

“So we’ve had really strong economic growth — that’s why the unemployment rate has fallen so quickly. But that’s gonna start tapering off,” he told the Tribune, noting that rising consumer prices will cause a cool-down. “So the rate and decrease in Illinois and Chicago’s unemployment rate is going to slow.”

Neither Gov. J.B. Pritzker’s office nor the Illinois Department of Employment Security responded to a request for comment.