Illinois Great Recession

Recently, the Illinois House of Representatives Finance Committee has heard testimony from several agencies regarding the fiscal health of the state as well as economic development results. Due to Illinois poor business investment and economic climate, it is a top priority to figure out exactly what makes other states more competitive and attractive.

A recent report was released by the Illinois Department of Commerce and Economic Opportunity (DCEO) claiming that Illinois created, 64,300 jobs from May 2013 to December 2013. Illinois was ranked the number one for creating private sector jobs among four other competitive Midwestern states. (click on picture to enlarge)

Job Chart

Governor Quinn shares DCEO’s rosy outlook for job creation and economic development. The Governor proclaimed in his State of the State Address, “We have turned the corner from the Great Recession;” however, the ugly truth is Illinois has 110,000 fewer jobs than when Quinn became governor, 39,000 more unemployed and the 4th highest unemployment rate in nation, at 8.7%.  According to the Bureau of Labor Statistics (BLS), in January 2009, Illinois employed 6,066,592.  BLS reported on November 2013, 5,955,711 Illinois are employed.

This hypothetical upturn, claimed by DCEO and the Governor, does not match the reality of the cold hard facts.  Illinois is only recovering some jobs.  If we were growing jobs at the same pace as Wisconsin we would have added almost 100,000 at the same time.

Illinois employment numbers remain sluggish since the “Great Recession” and there is little projected hope on the horizon for a change in pace from policy, research and financial institutions.  Moody’s Standard and Poor’s ranked Illinois 50th in projected job growth, the worst rate of job growth of any state in the country for 2014, at 0.98%.  Illinois has maintained the highest unemployment rate in the Midwestern region for two years.

States are encouraged to re-evaluate tax structures, business incentives and programs to examine any weaknesses or flaws that may impair competitiveness. Tax incentives are frequently used by states to compensate for burdensome regulatory barriers and harsh tax policies.  Rather than review the overall effectiveness of current business and tax incentive policies and regulations; Illinois handpicks specific worthy businesses and corporations.  This current operational policy creates an unstable tax environment.  Unstable tax environments and burdensome regulations do not entice economic development and job growth.

The Commission on Government Forecasting and Accountability reports that lower paying sector job opportunities are on the rise, while higher paying jobs like construction, manufacturing and technology are migrating out of the state.  This is very troublesome in respect to state revenue and jobs. Illinois will face difficult challenges in the future with growth in base revenues if employment levels remain stagnant and income levels remain low.

Iowa lawmakers are deliberating a proposal to cut corporate income taxes in half for small business owners.  Wisconsin is pursuing $630 million in tax cuts and measures that will lower income taxes by $1.7 billion over the next 10 years.  While surrounding states are making legislative modifications to increase business job growth and development and reduce taxes; Illinois considers making its 2011, 67% tax increase permanent, and raising taxes through a progressive tax.

Illinois must follow suit with other Midwestern states.  We must seek to reduce or eliminate personal income taxes, fix the high costs of workers compensation, reduce business taxes to encourage growth, and reduce spending and free giveaways.  In addition, we must invest in education at all levels and demand results. There exist grave disparities between Illinois business climate and other Midwestern states.  Illinois cannot continue to fall behind and maintain a perception of a poor business climate.  The future of our state’s quality of life depends on how we react.

The below chart identifies weekly wage earnings for the top 11 job sectors.  Illinois is gaining jobs in the lower paying employment subsectors and losing jobs in the positions that increasingly pay more in weekly earnings.  Lower paying wages equate to less income tax revenue for the state. (click on picture to enlarge)

Ranking Employment Chart