Small Business Saturday offers one reason to be especially grateful: Businesses with fewer than 20 employees have been the only ones to increase their payrolls since the outbreak of COVID-19.
Illinois residents have an additional reason to “shop small” on November 26, Small Business Saturday: “mom and pop shops” are leading the state’s job recovery from the COVID-19 economic downturn and making a profit “Thanks very much”.
According to data from the US Census Bureau, companies with fewer than 50 employees create the vast majority of Illinois’ net new jobs. These companies accounted for 64% of Illinois’ net job creation from 2010-2019 before the COVID-19 pandemic. They created more than 309,000 jobs in the recovery from the Great Recession.
Not only does Illinois rely heavily on small businesses for job creation, but these businesses have also been the most resilient since the outbreak of COVID-19, when state-mandated lockdowns devastated the state’s economy. Companies with fewer than 20 employees are the only companies to see job growth since 2020.
These companies were the least likely to lay off employees during the economic downturn caused by the pandemic. Employers with fewer than 20 employees saw their payrolls drop by just 3% at the start of COVID-19. Meanwhile, larger employers have laid off more than 9% of their workforce across the board.
Illinois’ smallest businesses have proven to be the most resilient and consistent recruiters in the state for more than a decade despite facing massive obstacles from the COVID-19 pandemic and government policies.
Illinois’ business tax environment is among the worst in the region and is declining compared to other states. In particular, Illinois’ second-highest property tax in the country and the state’s unemployment tax remain major obstacles to the state’s corporate tax climate.
Now Illinois companies are paying even higher unemployment insurance taxes to the federal government as punishment for the state’s failure to pay back the $1.4 billion unemployment insurance trust fund deficit. Elected leaders could have avoided those penalties by using dollars from the American Rescue Plan Act to eliminate the deficit.
As corporations face an automatic tax hike, Illinois lawmakers should make eliminating the unemployment insurance trust fund deficit one of their top priorities. This is especially important as concerns mount over whether the nation is slipping into another recession. Fitch Ratings expects a recession by the second quarter of 2023. It indicated that a recession is likely to be similar to the 1990-1991 recession, which lasted nine months, but is also likely to be milder than 30 years ago. A recent model from Bloomberg Economics projects there is now a 100 percent chance of a recession in the next 12 months.
If a recession hits as expected, Illinois will need its strongest job creators — small businesses — strong to help the state recover. Just as state shoppers should thank their local retailers this Small Business Saturday, politicians should do the same.