Illinois’ delay in paying its bills could contribute the state’s high unemployment

SPRINGFIELD, Ill. — Illinois’ delay in paying vendors could be directly impacting the state’s economy. That’s according to a researcher behind a new report from MIT and Harvard.

A recent MIT Sloan School of Management and Harvard Business School study shows that when the federal government expedited its payments to small vendors from 30 to 15 days, it spurred on job creation significantly.

Researcher Jean-Noel Barrot said their findings can be applied to Illinois’ problem of backlogged bills.

“So now if you’re thinking delays in terms of months or years of payments, then you would think that the effect on jobs might be very severe,” Barrot said.

The Illinois Department of Central Management Services said it is working through the stopgap budget passed in June to line up vouchers to send to the comptroller. The comptroller said her office is prioritizing payments to vendors who have gone all year without payment.

Barrot said the study’s findings can shed light on Illinois’ unemployment problems.
“It seems that by not paying these small businesses, the state of Illinois might actually pull back job creation quite significantly, at least if you extrapolate our findings to the situation in Illinois,” Barrot said.

State officials say a drop in the labor force participation rate is partly responsible for Illinois’ unemployment rate dropping two-tenths of a percent to 6.2 percent in June. The rate remains higher than the national average of 4.9 percent.