As the nation tries to recover from a COVID-19 pandemic economy, Illinois is among the states holding back the nation’s economic recovery.
Illinois saw the country’s 13th worst economic slump, with gross production shrinking over 11 percent during the pandemic.
One problem that hampers recovery is the labor shortage. A MoneyGeek study found that only 14 states fully recovered to employment levels above February 2020, a month before the World Health Organization declared COVID-19 a global pandemic.
The study showed that as of July this year, the red and blue states regained the same percentage of jobs lost since the -ril 2020 low. However, blue states like Illinois lost more jobs than red states at the beginning of the pandemic, making it harder for them to regain jobs to pre-pandemic levels.
“Blue states have really started to create jobs and open up a lot more now that vaccines are more widely available, and red states have started a little earlier,” said MoneyGeek spokesman Doug Milnes.
With prices likely to continue to rise in the coming months, and higher energy costs expected to contribute, Federal Reserve Chairman Jerome Powell’s repeated claim that high inflation is temporary could be tested.
Illinois State University professor George Waters said the supply chain disruption could be blamed.
“Absolutely, I think that’s the main thing,” said Waters. “All the stories you hear about supply chain problems that can drive up prices for individual goods sharply in the short term.”
The disrupted supply chain has resulted in shortages of goods, delays in the sale of supplies, and skyrocketing inflation, which is now the top concern of small businesses for the second consecutive month.
“The supply chain is definitely to blame, and it is getting worse every month, adding to other issues like labor shortages,” said Chuck Castro, Alignable’s head of news, public relations and research.
Castro added that 70% of Illinois companies reported that labor shortages were really hindering their recovery, slightly higher than the national percentage.
Orphe Divounguy, chief economist at the Illinois Policy Institute, said there would have been a move in law in 2021 that will continue to weigh on the state’s economy.
“The governor has raised business taxes on his most recent budget, which will not help the recovery,” said Divounguy.
Divounguy said there were warnings of a skilled labor shortage prior to the pandemic and now many of the people returning to work are becoming lacking the skills needed to survive in a post-COVID-19 digital economy.