July 2017 Monthly Briefing
ECONOMY: ILLINOIS FACING SHRINKING LABOR FORCE
Edward H. Boss Jr., Chief Economist
In Chicago Tribune’s Business section of July 21st was a headline “Illinois has more jobs but fewer workers.” On the surface this seems incongruous, but can be explained by noting that the labor force, employment, and unemployment rate are derived from one source, the Household Survey, while the jobs used come from another, the Establishment Series. While the two employment sources generally trend in the same direction, there are times when the employment figures diverge.
The larger in numbers is the Household series that surveys from a sample that reflects the entire civilian noninstitutional population based on responses to questions on work and job search activities of each person 16 years of age and over classified as employed, unemployed, or not in the labor force. The job numbers in the Establishment series cover non-farm payroll employment. The data are derived directly from employment records and, therefore, considered harder data. Even so, this measure also has flaws. Most jobs come from new small businesses and it takes some time before they would show up in the data and there can be double counting for those who have more than one job.
In conclusion, while Illinois’ unemployment rate has fallen to 4.7% in June from 5.9% a year earlier, much of the decline is due to a sharp drop in the labor force and population losses. Illinois’ unemployment rate compares poorly with the dynamic improvement in the Midwest. Of the 15 states comprising the Midwest, only 2 states, Kentucky and Ohio had higher rates of 5.1% and 5.0%. Four states had unemployment rates in the 3.8% - 4.7% range, with Illinois at the top of that range, while 9 states had unemployment rates in a range of 2.3% - 3.4%.
REVENUE: JULY RECEIPT GROWTH REFLECTS HIGHER INCOME TAX RATES AND OTHER CHANGES
Jim Muschinske, Revenue Manager
Overall general funds revenues increased $235 million to begin FY 2018. In addition to beginning to reflect the recently enacted higher income tax rates per P.A. 100-22, receipts include the Fund for Advancement of Education and Commitment to Human Services Fund in the definition of general funds per P.A. 100-23. Previously, the funds, which receive monies from the income tax via a distribution formula, were considered non-general funds and removed from net income taxes. Also reflected are requisite amounts from net income taxes that are now being directly deposited into the Local Government Distributive Fund rather than flowing through the previous distribution process [less 10% of LGDF funds which remain in the GRF in FY 2018]. Similarly, a small portion of monthly sales tax receipts will be directly receipted into various transportation funds, rather than deposited into the GRF and subsequently disbursed.