Frank Manzo, an economist with the Illinois Economic Policy Institute, joined the America’s Work Force Union Podcast to share details about recent federal cuts and freezes impacting the state. Manzo outlined the potential ripple effect these cuts will have on Illinois jobs, household affordability and overall economic health, warning that the consequences could be devastating for both public and private sectors.
Manzo explained that the cuts and freezes, effective since the beginning of 2025, have resulted in approximately $8 billion in lost federal funding and increased costs for Illinois, with employment expected to decline by 86,000 jobs by 2029. These reductions will hit the private sector the hardest, as skilled construction jobs, energy and infrastructure projects, public transit and even grocery store positions are at risk. He said that while the intention may be to “shrink government,” the reality is a shrinking job market, especially in fields that rely on federal investment.
Next, Manzo highlighted Illinois's role as a donor state, meaning it consistently contributes more in federal taxes than it receives back in expenditures and investments. With Illinois getting only about 90 cents for every dollar sent to Washington D.C., the state is already at a disadvantage. Manzo noted that if Illinois were treated comparably to its neighboring states, it would receive billions more annually. Instead, he said federal policy changes have exacerbated the gap, and the new losses will make it even harder for Illinois to maintain services and jobs.
Finally, Manzo addressed the broader economic impact, revealing that Illinois’s economy is expected to shrink by $10 billion as a result of these cuts. This contraction will also reduce state tax revenues by over $1 billion, partly due to changes that favor corporations and a decline in overall economic activity. Manzo said that while some efforts are underway at the state level to mitigate the pain—like budget adjustments and legal strategies—the prospects are bleak unless federal policies are changed. His report serves as a stark warning to Illinois lawmakers, residents and workers about the urgent need for action.
For more from Manzo and the impact of federal cuts on Illinois’ working class, listen to the America’s Work Force Union Podcast.
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