Small business growth lags in the Land of Lincoln according to a recent report by Paychex, which puts Illinois last in hourly and weekly wage growth among small businesses.
Paychex’s Small Business Watch showed over the last 12 months Illinois’ hourly wage grew 1.7% and weekly wage grew 0.85%. That’s compared to neighbor and national leader Missouri, which grew its hourly wage 4.09%.
Illinois Chamber of Commerce President and CEO Todd Maisch said a preliminary impression of the data suggests Illinois’ reaction to the pandemic may be to blame.
“Illinois could have opened up its economy sooner and consequently been closer to the national average in terms of growth,” he told the Illinois Radio Network
Maisch cautions however against drawing too many conclusions from the last six months of data.
“This is the kind of thing where we’re going to need to look back a year from now, even 18 months from now and get a better feel for what states did and what was the impact on their economies,” he said.
Job growth in Illinois is also low compared to other states.
Over the last 12 months, Illinois’s job growth was measured at 1.91% as compared to other states like North Carolina who saw growth at 7.06%.
Illinois’ slow job growth is a result of the current worker shortage, according to Maisch. That shortage is the biggest problem facing Illinois’ small businesses right now, he said.
Maisch points to the supplemental federal unemployment benefit as a primary cause behind the shortage.
“That added benefit – which again is not $300 a month, it’s $1200 a month – is definitely a dampening impact on people willing to return to the workforce,” he said.
Gov. J.B. Pritzker recently reiterated that Illinois will keep the benefit through September. Maisch said that is a mistake.
“They should take a closer look at ending the unemployment benefit—the added, extra unemployment benefit,” he said.
Maisch said that Missouri ended that federal benefit June 12.
“Anecdotally, I will tell you that we hear from employers over there that it has made a big difference in terms of being able to find people willing to work,” he said.
Pritzker recently proposed creating a cash incentive to entice Illinoisans back to work. Maisch said that is unlikely to work.
“Paying people to return to the productive workforce is something that is not only going to create perverse incentives, but second, it’s really going to undermine small business confidence in their government,” he said. “Basic question: ‘I’ve got a job at a good wage. Why should I be paying higher taxes to pay someone to take my job?’ It’s just the wrong approach and we hope that the governor doesn’t go that route.”
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