Illinois Economy: Jobs, Wages, and Cost of Living

Illinois has one of the largest state economies in the United States, usually ranked around fifth, and Chicago is one of the most important business cities in the country. The Illinois economy is a mix of finance, transportation, manufacturing, and agriculture — broader than most people give it credit for, and shaped heavily by the geography of the Midwest.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the Illinois economy?

For example, Illinois's recent state GDP has run around $1.0 trillion, according to the Bureau of Economic Analysis. Population is roughly 12.5 million, per the U.S. Census Bureau. The Chicago metro area accounts for the majority of the state's population and an even larger share of its economic output.

The biggest industries

A few sectors carry most of the Illinois economy:

• Finance and insurance — Chicago is a world center for futures and options trading through the CME Group, plus a large banking and insurance sector.
• Manufacturing — Illinois remains a top-five manufacturing state, with strong machinery, food processing, and chemicals industries.
• Transportation and logistics — Chicago is the rail hub of North America, and O'Hare is one of the busiest airports in the world.
• Agriculture — Illinois is one of the country's largest producers of corn and soybeans.
• Healthcare and education — major hospital systems and universities employ huge numbers of workers across the state.
• Tech and professional services — Chicago has a growing tech and consulting workforce, including a sizable startup scene.

Jobs and wages

State labor data is published by the Illinois Department of Employment Security, with national-level numbers from the Bureau of Labor Statistics. For example, Illinois unemployment has typically run a little above the national average, partly because of the state's large manufacturing base, which is more cyclical than service work.

Illinois has been raising its minimum wage on a scheduled path. The statewide minimum is well above the federal floor, and Chicago and Cook County have their own higher local minimums. Tipped workers and youth workers have separate, lower rates.

Taxes in Illinois

Illinois has a flat state income tax, meaning everyone pays the same percentage on income regardless of how much they earn. This is unusual — most states with an income tax use brackets like the federal system.

The state sales tax rate is 6.25%, but local additions in Chicago and Cook County push the combined rate well above 10% in many parts of the city, among the highest in the country. Property taxes are also high, especially in the Chicago suburbs.

State tax forms and rules live at the Illinois Department of Revenue. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in Illinois is roughly average overall, but it varies sharply between the Chicago area and downstate. Chicago itself has high property and sales taxes but mid-range rents compared to other major metros. Downstate cities like Springfield and Peoria are well below the national average.

The federal government tracks region-specific Consumer Price Index data through the BLS Midwest region, and HUD publishes Fair Market Rents for every county at HUD User.

How does the Illinois economy fit into the national picture?

Illinois sits at the geographic and logistical center of the country, which is why so many railroads, highways, and air routes pass through Chicago. That makes the state's economy especially sensitive to national trade and freight flows. When U.S. manufacturing or shipping slows, Illinois feels it. When agriculture has a strong year, downstate Illinois benefits.

Population and migration

Illinois's population has shrunk slightly in recent years, with more residents leaving for other states than moving in. That puts the state in a different category from fast-growing Texas and Florida. The U.S. Census Bureau tracks the year-by-year numbers. Slower population growth has effects on tax revenue, school enrollment, and housing demand, all of which feed back into the state budget.

Agriculture and the rural economy

Outside the Chicago metro area, Illinois is a serious farm state. It is consistently among the top producers of corn and soybeans in the country, and farm income drives a large share of downstate small-town economies. Federal data on farm prices and rural conditions lives at the USDA Economic Research Service. When global crop prices swing, downstate Illinois feels it well before Chicago does.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the Illinois Department of Revenue for the most current data.