The Great Recession and Illinois Employment Trends
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The Great Recession had a severe impact on employment in Illinois, with non-farm employment declining by 337,000 jobs. While unemployment has fallen since 2010, employment has yet to return to pre-recession levels and remains higher than the national average. Certain sectors like manufacturing, retail, and construction were hit hard, while others like healthcare and education grew. Metropolitan areas dependent on manufacturing struggled most, though areas like Chicago have seen stronger recovery. Future job growth is projected in sectors like professional services, healthcare, transportation, and replacing retiring manufacturing workers.
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The Great Recession and Illinois Employment Trends
- 2. Background • The recession that began in January 2008 was the steepest economic downturn since the Great Depression of the 1930s. It has been referred to as “The Great Recession” because of its severity and the length of its duration. • Although the Great Recession officially ended in June 2009, employment in Illinois has yet to return to the levels achieved before it began. • In many areas of the State unemployment remains at record levels despite gains in employment. • This presentation explores Illinois employment trends during the Great Recession and since. It also looks at the relationship between recent employment trends and the State’s industrial structure. 2
- 3. Unemployment Trends Monthly Rate 1980 ‐ 2013 2.0 4.0 6.0 8.0 10.0 12.0 14.0 UnemploymentRate Illinois U.S. Note: Data is not seasonally adjusted. Source: U.S. Bureau of Labor Statistics, 2013. Recession 3
- 4. Still Waiting for Recovery? • Since peaking in the first quarter of 2010 the Illinois unemployment rate has declined steadily, but remains higher the national average. • Some of this can be attributed to a contraction in the labor force. Since the end of the recent recession, the labor force has declined by 130,000. • Non‐farm employment declined 337,000 during the recession. Since the recession ended in June 2009 it has remained relatively stable, but has yet to experience sustained growth. • The number of unemployed has fallen by 128,000 since the recession ended, but is still nearly twice the average of the past decade. 4
- 5. Still Waiting for Recovery? • Employment has not yet returned to pre‐recession levels despite moderate growth in State and national GDP. • The employment decline experienced during the recent recession was similar to the 1981‐82 recession and, so far, is following a slow path to recovery. • For example, 47 months after the end of the 1981‐82 recession, employment had increased 7.6%. • In contrast, 47 months after the end of the recent recession employment is essentially unchanged. 7 17 9 9 19 17 58 34 62 0 20 40 60 80 January 1980 to July 1980 July 1981 to November 1982 July 1990 to March 1991 March 2001 to November 2001 December 2007 to June 2009 Months The Duration of Past Recessions and Recovery Periods in Illinois Return to Pre-Recession Level Duration of Recession* * The duration of recessions are determined by the Business Cycle Dating Committee at the National Bureau of Economic Research. Sources: National Bureau of Economic Research; U.S. Bureau of Labor Statistics, 2013. 47 & counting… 5
- 6. Employment Changes in Illinois Comparison of Industry Sectors • More than three‐fourths of the jobs lost during the recession were in the manufacturing, professional and business services, and retail trade sectors. • While manufacturing and business and professional services have made a significant recovery, retail and other sectors remain weak. • The educational services, health care and social assistance and leisure and hospitality sectors were the only ones that added employment during the recession and are continuing to do so. 6 -5.7% 0.0% -13.7% -15.2% -6.6% -10.4% 3.4% -9.5% -8.0% -5.9% -7.4% -10.1% 0.5% 2.8% 3.2% 0.4% -0.6% 2.7% 9.3% -14.3% 2.0% 4.4% -0.6% -0.4% 7.1% -6.1% 1.2% -2.2% 13.1% 11.2% 6.8% 5.0% -2.0% -4.5% -20% -10% 0% 10% 20% Total Non-Farm Employment Mining and Logging Construction Manufacturing Wholesale Trade Retail Trade Utilities Transportation and Warehousing Information Finance and Insurance Real Estate and Rental and Leasing Professional and Business Services Educational Services Health Care and Social Assistance Leisure and Hospitality Other Services Government Percent Change in Employment June 2009 - June 2013 Dec. 2007 - June 2009 Source: U.S. Bureau of Labor Statistics, 2013.
- 7. Employment Changes in Illinois Comparison of Metropolitan and Non‐Metropolitan Areas • The Chicago and Rockford metro areas lost the largest number of jobs during the recession, but have had strong growth since then. • Although other downstate metro and non‐metro areas experienced fewer job losses, post‐recession growth has been weaker. • Areas with a greater dependence on manufacturing and construction industries seem to have struggled the most during and after the recession. -5.7% -6.2% -3.7% -2.9% -8.3% -7.0% -4.3% -4.3% -4.4% -6.0% -11.5% -0.2% -4.0% 2.7% 3.6% 2.2% 3.3% 2.6% 0.0% 2.8% -4.7% 1.4% 3.4% 3.9% 0.6% 0.0% -15% -10% -5% 0% 5% State of Illinois Chicago Metropolitan Division Lake County-Kenosha County Bloomington-Normal Champaign-Urbana Danville Davenport-Moline-Rock Island Decatur Kankakee-Bradley Peoria Rockford Springfield Non-Metro Areas Percent Change in Employment June 2009 - June 2013 Dec. 2007 - June 2009 Source: U.S. Bureau of Labor Statistics, 2013. 7
- 8. Opportunities for Job Growth Professional and Business Services • Despite significant job losses during the recession, this sector has rebounded strongly, adding 103,000 jobs since June 2009. • Professional and business services currently represents 15% of non‐farm employment in Illinois. • Much of the employment growth in this sector is concentrated in the Chicago metro area and several downstate metro areas. • The areas of the greatest projected job growth through 2020 include employment services (20,200 jobs), computer systems design (19,900 jobs), management, scientific and technical services (17,300 jobs) and services to buildings and dwellings (14,300 jobs). 8
- 9. Opportunities for Job Growth Healthcare • Healthcare was one of the few sectors that experienced employment growth through the recession, adding 15,600 jobs (a 2.5% increase). • The industry continued its strong performance, growing by 5.4% or 31,500 jobs since June, 2009 and it is projected to add 56,000 jobs between 2013 and 2020. • The Illinois population is aging rapidly and with life expectancy of seniors increasing, the demand for healthcare services will continue to grow creating more jobs opportunities. • The effect of the Affordable Care Act passed in 2010 remains to be seen, but its impact on employment will be dramatic. 9
- 10. Opportunities for Job Growth Manufacturing • The recent trend toward “re‐shoring” of some manufacturing activities holds significant job creation potential. • The looming demand for workers to replace retiring “Baby Boomers” will be the primary source of job openings in manufacturing over the next decade. • Over 8,500 new production workers per year will be needed to replace retiring workers through 2020. The replacement demand will also be strong for managerial, professional and technical positions. • However, a higher level of training and skills will be needed to work with more complex production technologies (e.g., robotics, 3D printing and nanomanufacturing). 10
- 11. Opportunities for Job Growth Transportation and Warehousing • Illinois is a central hub of the North American road, rail, inland waterway and air transportation networks, giving it a significant competitive advantage in transportation and distribution activities. • Transportation and warehousing accounts for a relatively small share of total employment in the State, but has grown steadily in the past two decades. • Despite slow economic growth and fluctuating fuel costs, employment has rebounded since the recession, growing by 7.1% or 16,200 jobs since June, 2009 and is projected to add 13,500 jobs between 2013 and 2020. 11
- 12. Keys to Future Employment Growth • Restore state and local government finances. • Re‐shoring higher value‐added manufacturing activities. • Demand for replacement workers as “Baby Boomers” retire will be the primary source of job openings. • Demand for healthcare and related services to the elderly (especially housing, travel and recreation) will continue to grow as the population ages. • Continued growth in domestic energy production (especially natural gas). • Transportation and logistics infrastructure. • Innovations in education and worker training. 12