Mr. Peter Bernstein, RCF Vice President
pbernstein@rcfecon.com, 312-431-1540 ext. 1515
Government and Private Sector Employment in Illinois and Other States
It is no secret that public pension costs are a main reason behind the fiscal problems facing the state of Illinois. In addition, it has been found that Illinois has more local government units than any other state in the union. Therefore, it could be presumed that Illinois must have a high number of state and local government employees relative to the state’s overall employment level. But analysis by RCF Economic & Financial Consulting finds that this is not the case. Surprising, perhaps shockingly, Illinois ranks 44th in the country in its share of state and local government employment; in only six other states do government employees represent a smaller part of the workforce than in Illinois. In 2019, 12.2 percent of Illinois employees worked for state and local government, well below the average state share of 14.2 percent.
Source: U.S. Bureau of Labor Statistics and RCF Calculations, data from 2019
Illinois’s relatively low level of government employment is not a recent development. The state has long had a lower than average share of government employment, dating back to at least the early 2000s. [The increase in the government share of employment during the Great Recession was driven by a big drop in private sector employment during those years.]
Percent of Workforce Employed by State and Local Governments
Source: U.S. Bureau of Labor Statistics and RCF calculations
Source: U.S. Bureau of Labor Statistics and RCF calculations, data from 2019
The obvious flip side of having a relatively low share of government employees is that Illinois has a high level of private sector employees compared with other states. In 2019, Illinois had 422 private sector employees per 1,000 residents, ranking 8th in the nation in this statistic.
Our analysis suggests that Illinois’ pension problems are not the result of a high level of government employees within the state, either today or over the past 20 years. Moreover, the fiscal troubles facing Illinois do not appear to have had a major impact on the state’s ability to maintain a high level of private-sector employment.
