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Forum Post: The Illinois jobs crisis

Posted 1 year ago on April 23, 2013, 4:31 p.m. EST by Cvacca (-24)
This content is user submitted and not an official statement

Laugh all you want about Texas Gov. Rick Perry's campaign to recruit businesses from Illinois to the Lone Star State. We don't know whether Perry will succeed in prompting a commercial exodus from the Land of Lincoln to the land of droughts, fire ants and deadly fertilizer-plant explosions. Yet Perry's stunt is another serious wake-up call for Illinois politicians and the inhospitable business climate they've created.

Perry can boast to Illinois business leaders of a Texas unemployment rate that has fallen to 6.4 percent. That's an excellent barometer of his state's economic health. By contrast, the unemployment rate in Illinois is at 9.5 percent and, as the latest report from the federal Bureau of Labor Statistics indicates, it has been rising over the past year. In March, this state lost 17,800 jobs from the previous month.

That is no laughing matter.

The economic recovery in Illinois remains terribly weak. Our state has failed to make a strong comeback from the Great Recession that ended four years ago, in June 2009. We are falling further behind not just Texas, but practically every other state — including states such as Indiana that can make stronger arguments for luring Illinois businesses relatively short distances.

Only Nevada has a higher unemployment rate than Illinois. But even that Nevada rate, 9.7 percent, has fallen almost 2 percentage points in the last year. Nationwide, the jobless rate is 7.6 percent.

The Illinois jobs crisis reflects a widespread lack of confidence in the ability of this state's leaders to manage public finances. The failure to address out-of-control public pension costs is the biggest single factor. But the reasons for business to be skeptical about the future of Illinois go beyond that elephant in the room:

State government is insolvent, unable to pay bills as they come due. It has no viable plan for fixing its biggest financial problems. A 2011 income tax increase, including a 67-percent rise in the rate individuals pay, betrayed that lawmakers would rather raise revenue than slash spending. And some legislators are plotting to make that supposedly temporary tax increase permanent. Disintegrating credit ratings mean that Illinoisans pay high interest rates — a waste of hundreds of millions of dollars every year — to buyers of state bonds.

Any employer who stays in Illinois can reasonably expect to be soaked through excessive future taxes for whatever fixes belatedly arrive. Any employer who considers moving here has to include the potential for more tax hikes in his or her calculation. And no one can be confident that public services will continue in their current form as public-pension obligations at every level of government continue to consume ever-more tax dollars.

Not all of Illinois' problems are unique. Nationally, the anemic recovery confounds many economists: When a central bank injects more than $2 trillion into the economy, as the U.S. Federal Reserve has done, economic activity is supposed to skyrocket — at least according to the mainstream theories about monetary policy. The big concerns under such a scenario are runaway inflation and the creation of asset bubbles, not years of sluggish growth. Yet incredible amounts of monetary stimulus have left many Americans feeling as if the recession never ended. Businesses aren't investing and hiring at the pace that was expected, given rock-bottom interest rates and ample cash. Uncertainty about government policies, tax burdens high on that list, has undermined business confidence.

The uncertainty in Illinois is greater than in any other state because our leaders have failed to take action that would halt the downward spiral. In rough terms: Had Illinois reformed its pension system after Rod Blagojevich left the governorship four years ago, lawmakers arguably could already have saved enough in pension costs to pay off the state' backlog of bills. Going forward, the prospects for state spending on schools and other priorities wouldn't be as bleak.

The failure of Illinois pols to confront their problems more with lip service than with solutions helps to explain why Illinois has underperformed the Midwest in job creation. Example: Michigan suffered as much as any nearby state during the recession, but the revival of the domestic auto industry has whittled down its unemployment rate to 8.5 percent. The Midwest generally is doing better than the country as a whole: Unemployment across this region — even factoring in Illinois' high jobless rate — stands at 7.4 percent.

With Illinois lagging so badly, it's no wonder Perry is on the growing list of governors intent on poaching employers here. His $80,000 ad campaign is hard to miss, and its boast that Texas is more pro-business than is Illinois unfortunately rings true. On Tuesday, he's slated to speak at the BIO International Convention in Chicago — a big biotechnology gathering that draws thousands of business-savvy participants from around the world.

Wake up, Springfield. In the competition for job creation, many states are winning. Illinois? Illinois is losing.

25 Comments

25 Comments


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[-] 1 points by shoozTroll (17632) 1 year ago

The Texas death crisis.

http://www.uppitywis.org/blogarticle/making-killing-texas-style

Yay death!!! Yay profit from said death!!!

[-] 1 points by Narley (280) 1 year ago

Do you really believe this is only in Texas?

[-] 0 points by shoozTroll (17632) 1 year ago

To be sure, they are attempting to spread libe(R)tarianism elsewhere, but Texas is indeed unique in it's total adherence to Galtism.

http://www.nakedcapitalism.com/2013/04/john-galt-kills-texans-in-massive-fertilizer-plant-explosion.html

[-] 1 points by Narley (280) 1 year ago

That's an opinion piece. The truth is the cause of the blast has yet to be determined. Be patient, they'll figure it out.

[-] 0 points by shoozTroll (17632) 1 year ago

Ah yes, don't read or understand a thing until the Texas good old boy libe(R)tarian network, finds a way to blame it on Mooslims.

There was NO excuse for storing that level of those compounds in a populated area.

None at all.

[-] 2 points by Narley (280) 1 year ago

So, can you say for sure that Texas regulations are more lax than anywhere else?

[-] 0 points by shoozTroll (17632) 1 year ago

Yup.

Perry brags about it and so did Bush.

[-] 1 points by Buttercup (1067) 1 year ago

'Texas is more pro-business than is Illinois' - Quick. Everyone! Move here!

http://www.dailykos.com/story/2013/04/19/1203241/-The-wonder-of-libertarian-zoning-laws-West-Texas-edition?detail=email#

This is what Texas pro-business 'freedom' looks like. Free to get vaporized by a couple hundred tons of ammonium nitrate.

http://usnews.nbcnews.com/_news/2013/04/20/17838304-red-flag-texas-plant-had-1350-times-amount-of-chemical-that-would-trigger-oversight

[-] 1 points by shoozTroll (17632) 1 year ago

Not to mention the amount of those jobs that pay minimum wage, or even less if salaried on commission.

I mentioned the "negligent terrorism" of that explosion, including the willful non reporting, and it was ignored.

I hope you do better.

[-] 0 points by Cvacca (-24) 1 year ago

On April 1, 2013, a 24-year-old man was shot and killed on South Eberhart Avenue on the South Side of Chicago, Ill. The man was the 73rd homicide victim and the 39th victim under the age of 25 in Chicago this year.

[-] 1 points by Buttercup (1067) 1 year ago

I'm pretty certain that by most objective measures, Texas has a higher per capita rate of gun violence than Illinois.

The whole idea of one state actively and aggressively trying to cannibilize jobs from another state is totally assinine. Fucked up on multiple levels.

[-] 1 points by Nader (74) 1 year ago

Gun violence is much higher in urban areas than rural redneckish areas even though everyone in the later is carrying.

And I second Cvacca's question - what is wrong with states competing for jobs?

[-] 1 points by Buttercup (1067) 1 year ago

Oh my gosh. Ok. For starters, it tends to depress wages. Second, in many cases, in an effort to be business friendly - states offer lower tax rates, tax breaks or subsidies. Which in turn starves revenue for public services. Which becomes a downward spiral of other states offering subsidies or tax breaks. Which starves revenue for public services. Then states can't pay their bills. Does this sound familiar at all? States in financial trouble? Some of which must be made up for by the Federal government.

All the while China is cleaning our clock paying slave wages while our middle class gets hollowed out, states can't pay their bills and public services being starved.

So gee I don't know. What's wrong with states competing for jobs? Nothing I guess. Except it's cannibilistic, ultimately all of those tax breaks and subsidies starves public services and we're no better for it is all.

http://tpmdc.talkingpointsmemo.com/2012/02/the-map-that-proves-red-staters-use-the-safety-net-too.php

[-] -1 points by Cvacca (-24) 1 year ago

So to make it clear, you don't want wage competition. You understand that the purpose of economies is to produce and allocate goods. If inputs into that production declines in cost, then the price goes down and people can buy more "goods" They are called goods not bads.

States are in financial trouble not because of revenue but expenses.

[-] 3 points by jrhirsch (4714) from Sun City, CA 1 year ago

States are in fiancial trouble because the lower and middle classes don't have a surplus of money to spend, so tax revenues suffer. Look at this video and ask yourself where the benefits of increased productivity are really going.

http://www.google.com/url?sa=t&source=web&cd=1&ved=0CEQQtwIwAA&url=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DQPKKQnijnsM&ei=__R6UdfNCOX12wXV1oHYBw&usg=AFQjCNEQd6BjZ5SFYHGMUe27kvjCMELuew&sig2=1kkcDV0itwNoTVFzr7anLQ

[Removed]

[-] 2 points by Buttercup (1067) 1 year ago

I'm aware of how the process works.

What you are talking about is productivity. Producing the same amount of goods or services at a lower price. There is no economic law that says that productivity will lead to overall higher standards of living.

Wage competition is useful as a means of controlling inflation to keep wages from rising faster than productivity or output. But the opposite is happening. Wages are stagnant while productivity is rising.

You make the false presumption that productivity gains are being fed back in to the productive economy as a positive feedback. The evidence shows otherwise. Productivity gains disconnected from wages 30 years ago.

http://www.epi.org/publication/ib330-productivity-vs-compensation/

Someone got those productivity gains. And we know that those 'gains' didn't go to the average worker or to the productive real economy.

http://www.cbpp.org/cms/index.cfm?fa=view&id=3629

http://www.nytimes.com/imagepages/2006/04/09/business/businessspecial/20060409_PAY_GRAPHIC.html

Those gains went elsewhere. Producing rent-seeking behavior and the financialization of the economy. This is highly unproductive and dangerous to the real economy.

You presume that these productivity gains will go back into the productive real economy reinforcing a positive feedback loop. It won't.

Because wages are disconnected from productivity. It's not a sustainable situation.

http://www.businessinsider.com/adam-smith-our-record-high-profit-margins-are-a-sign-the-us-is-going-to-ruin-2012-6

[-] 1 points by Cvacca (-24) 1 year ago

According to the US Census in 2009 Illinois had a murder rate of 8.4 vs. 5.4 per 100,000 people in Texas.

What is wrong with one state wooing another state's companies? People react to incentives and of course they are going to go where the after tax rate of return is the highest.

[-] 3 points by Buttercup (1067) 1 year ago

2010 FBI crime stats, Texas gun murders 3.2 v Illinois 2.8. Overall murders in Texas 5.0 v 3.5. There's some angry people there.

http://www.fbi.gov/about-us/cjis/ucr/crime-in-the-u.s/2010/crime-in-the-u.s.-2010/tables/10tbl20.xls

http://en.wikipedia.org/wiki/Gun_violence_in_the_United_States_by_state

'What is wrong with one state wooing another state's companies?' - It depresses wages and starves government of revenue. States competing by lowering tax rates, offering tax breaks and tax subsidies starves state government of revenue for public services. This is why states can't pay their bills. Some of which has to get made up for by the Federal government. States that go light on their taxation have to be paid for by everyone else. And corporations reap all of the benefits. That's what's wrong with it.

http://tpmdc.talkingpointsmemo.com/2012/02/the-map-that-proves-red-staters-use-the-safety-net-too.php

[-] 0 points by Narley (280) 1 year ago

I’m pretty sure Texas gun crime and gun violence is much lower than just Chicago alone, not including the rest of the Illinois. Probably half the Texas population carry a concealed handgun. Also, legislation has been submitted to allow open carry guns. It’ll be like the old west, everyone walking around with a six-shooter on their hip.

[-] -1 points by Builder (4202) 1 year ago

I thought you had to mix fuel oil with ammonium nitrate to make it explode.

[-] 1 points by grapes (2864) 1 year ago

Ammonium nitrate has both fuel (ammonia made using hydrogen) and oxidant (nitrate). Rearrangement of its structure by a trigger ignites it to release nitrogen and steam, all of which are gases, unlike the crude Boston Marathon bombs.

[-] 1 points by grapes (2864) 1 year ago

The U.S. had plenty of experience with fertilizer explosions. The 'Manhattan Project' was moved far inland from Manhattan to Los Alamos after the huge fertilizer explosion (due to German sabotage) in New York harbor during World War II. Oklahoma City bombing was carried out with fertilizer. Beware of the artificial product to fill in what the Texas Instrument cannot piss. It feeds billions indirectly and demands human sacrifices from the unwary ones or the 'freedom fighters', whether business or terrorist.

[-] 0 points by Builder (4202) 1 year ago

I just looked it up.

The salt form of the fertiliser will become liquid when heated to a certain temperature, and if contained (as it was) it will become highly volatile, and requires only a slight shock to detonate.

There's been several similar explosions in fertz plants all over the world, some of them in Australia.

[-] 1 points by grapes (2864) 1 year ago

The Haber process is truly a Faustian bargain with Mephistopheles, a very Germanic innovation that sustains the lives of billions of people and demands human sacrifices repeatedly from accidents and wars largely made possible by the production of nitrates.

[-] 0 points by Narley (280) 1 year ago

As a Texan. I think Rick Perry is an asshole. I don’t think he’s a crook, but he manipulates Texas government with impunity. Perry and his cronies control the state.

Also, Texas does have a good economy. More jobs, less unemployment, less taxes and a better business climate. About a month ago Perry went to California to solicit companies to move to Texas. When New York passed new gun laws, the Texas Lt. Governor David Dewhurst published some internet ads targeting New York companies to move to Texas and “enjoy more freedom, carry a gun and pay less taxes”

So, I don’t like Perry, but I give credit where credit is due. Perry is aggressive on making sure the budget is balanced, taxes are low and Texas is good for business.