Illinois is ready to boom. That is the single most important fact about Illinois’ jobs climate and economy as a whole.
However, Illinoisans have been held back by policy errors that have plagued the state for decades, especially since the Great Recession. Policy errors are causing tremendous pain for Illinoisans, but that pain can be alleviated through the correct policy prescriptions.
With the proper policy framework, the state will come back to life and lead the Midwest. Here are the top 10 facts that should inform that framework:
1) The claims of an Illinois comeback are a myth
Illinois has had the worst recovery from the Great Recession in the U.S. From January 2008 – July 2014, Illinois has 290,000 fewer people working and 170,000 fewer payroll jobs, the worst of any state.
2) The 2011 tax hikes were a historic policy mistake, and a major reason why Illinois is hurting
In the first year of recovery, Illinois was ranked fifth in the Midwest for job creation. Then came the 2011 tax hikes, which slammed the breaks on Illinois job creation.
3) Since the tax hikes, Illinois has fallen to last in the Midwest for job creation and last in the nation for overall recession recovery
The obvious solution to this policy error is to allow the tax hike to sunset as scheduled in January 2015.
Over the long term, Illinois will experience tremendous benefits once the state moves toward eliminating the state income tax altogether.
4) Food-stamp enrollment has outpaced job creation by a nearly 2-to-1 ratio since the state’s jobs recovery began
Simply put, the Illinois economy is not doing enough for families that need to put food on the table.
5) Today, there are the same number of people working in Illinois as there were in 1998
The number of payroll jobs is at the same level today as it was in 1998. This reflects that the state has created no new work opportunities in 16 years, on net.
6) Illinois can begin to foster entrepreneurship and eliminate cronyism in one move
There are three prohibitive taxes and fees that hit entrepreneurs right when they invest in Illinois and start their business – the death tax, the franchise tax and high fees for limited liability companies.
The state can repeal all three and make up the lost revenue by defunding the Department of Commerce and Economic Opportunity, or DCEO. The DCEO is the agency that doles out taxpayer money in the form of tax credits and other incentives to politically connected businesses – a bad economic scheme and immoral one at that.
Such a move would level the state’s economic playing field, encourage entrepreneurship and curtail out-migration.
7) Illinois’ manufacturing sector has had by far the worst jobs recovery in the Midwest
Only 16 percent of the manufacturing jobs Illinois lost during the recession have been recovered. Two policy issues speak directly to this issue: Right to Work and workers’ compensation.
As it is, manufacturers don’t even consider Illinois for locating new factories, and local manufacturers regularly hop the border for Indiana. Reforming the state’s workers’ compensation system and giving workers the freedom to choose whether to join a union would put Illinois back on the map as a destination state for manufacturers.
8) Illinois has the worst employment rate for youth workers and black men in the Midwest
Fewer than half of all adult black men are working, and youth employment is at historic lows.
The Great Recession showed that when Illinois’ economy struggles, the pain is felt by the most vulnerable – youth and minority workers. In addition, Illinois has the highest minimum wage in the Midwest.
9) Occupational licensing is another policy issue that keeps young people and minorities out of work
Illinois has some of the nation’s most absurd licensing restrictions, which have little to no effect on public safety.
Illinois’ licensing restrictions are a painful barrier to entry for the state’s low-income entrepreneurs and professionals, including barbers, hair braiders and cosmetologists.
10) Energy production will help Illinois boom
Unfortunately, the state has slow-walked the rules-writing and permitting process surrounding fracking, a process by which oil and gas reserves are exposed and extracted from shale deep beneath the earth’s surface. Thousands of jobs have been lost, and millions in tax revenue has been delayed because of the state’s regulatory ineptitude.
Counties in southern Illinois have some of the highest unemployment rates in the state. They will benefit tremendously from energy production – in the same way that workers in North Dakota have, where the booming economy has caused the effective minimum wage to shoot up to $17 per hour.
So will the rest of the state, as local energy production will drive down the cost of business for manufactures in Illinois.
11) Illinois’ “real” unemployment rate is in the double digits
However, this has been hidden by Illinois’ overwhelming workforce dropouts, and older workers staying on the job.
When an unemployed worker stops looking for work, he is no longer counted as unemployed. Illinois’ workforce has shrunk by more than 220,000 since the recession began, while the state’s working-age population has shot up by 300,000.
If you simply add back the 220,000 people who dropped out of the workforce, the state’s unemployment rate is 9.9 percent. And adding just one-third of the 300,000 people who entered Illinois’ working-age population puts the jobless rate at 11.4 percent.
These are conservative estimates that assume very low willingness to work among new entrants into the state’s working-age population, and doesn’t account for part-time workers who want to work full time.
What’s most important about Illinois’ economy is that all the pain points can be identified and fixed. The table is set for policymakers to embrace a pro-growth agenda and get the state back to work again.
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