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*** UPDATED x1 *** Budget office: Tax hike not causing layoffs

Tuesday, Aug 23, 2011

* After falling for 16 straight months, Illinois’ unemployment rate has risen each of the last three months. Could January’s income tax hike have caused this? Nope, says the governor’s budget office

Kelly Kraft, a spokeswoman for Quinn’s budget office, said there is “no connection” between the tax increases and the unemployment increase.

Others aren’t so sure

Shattuck said the tax increase, and Illinois’ overall business climate, are part of the uncertainty employers hate.

“That’s why there are so many businesses hoarding cash; they want to be able to pay the bills,” Shattuck added.

We actually gained 1,100 manufacturing jobs in July, according to the state. Mining, information and financial activities jobs all rose as well.

One reason the unemployment rate kept rising is that 5,500 government jobs disappeared in July. “Trade, Transportation, & Utilities” jobs dropped by 7,900 and “Leisure and Hospitality” jobs fell by 6,700. We also lost 4,300 construction jobs and 4,100 jobs in “other services.”

* But the reality is, the people who run most businesses are not exactly flaming liberals, and they ain’t happy

A company based in the south suburbs is expected to announce Tuesday that it is relocating, taking 250 Illinois jobs to Indiana.

After 96 years in Blue Island, the Modern Drop Forge Co. is reportedly moving 30 miles east to Merrillville, Ind.

“The taxes are very high and Illinois is not friendly to business anymore,” said one employee with the company.

Sources say Indiana Gov. Mitch Daniels will announce Modern Drop Forge Co., which makes precision tools and metal components, including for Harley Davidson motorcycles, is the latest Illinois company to be lured away by lower taxes and business costs.

* Indiana has been particularly aggressive at recruiting our companies

The Hoosier State’s Economic Development Corp. launched its “Illinnoyed” campaign, putting 15 billboards up along the state line. It also had an online advertising campaign through Crain’s Chicago Business; EDC spokeswoman Katelyn Hancock said she was told it was the third-most successful online campaign in Crain’s history.

Thirteen businesses representing about 1,000 jobs have committed to moving from Illinois to Indiana this year as a result of the marketing campaign, she said, and she expects more to come.

“Our efforts are still being reaped,” she said. “It takes a long time to relocate.”

Indiana’s unemployment rate also clicked up a bit in July, but its rate is 8.5 percent, a full point below ours.

…Adding… With a hat tip to a commenter

Over the year, 24 states experienced statistically significant changes in employment, 23 of which were increases. The largest increase occurred in Texas (+269,500), followed by California (+189,600), New York (+106,600), and Ohio (+74,100). The only state with an over-the-year statistically significant decrease was Indiana (-28,300). [Emphasis added.]

Illinois gained 51,100 jobs in the same period.

* Meanwhile

Archer Daniels Midland Co. is closing a soybean processing facility in Galesburg immediately.

Decatur-based ADM issued a statement late Monday confirming the facility would close, according to WGIL Radio. The closure will cost Galesburg 31 jobs.

ADM says it expects a number of those jobs to be transferred to a different facility.

Oy.

It’s been one hit after another for that town.

* Back to taxes

Shattuck said this summer’s legislative hearings into Illinois’ business climate may provide enough stability to convince employers in Illinois to start hiring.

“We’re trying to come up with ways to advance the business climate without costing the state any money,” Shattuck said. “But if we’re going to lower the tax increase that means other incentives have to go away. But which ones?”

*** UPDATE *** From a press release…

Mayor Rahm Emanuel announced today that EMC Corporation will open a new office and add 200 new jobs in Chicago over the next two years, as the city’s technology sector gets an added boost from a leading provider of information infrastructure and cloud computing technology.

“I am pleased to announce that EMC has decided to open a new office here in Chicago, and to create 200 important jobs for Chicagoans,” said Mayor Emanuel. “EMC is a global leader in information technology, and will drive forward Chicago’s technology economy and presence in this space.”

The new office in Chicago is expected to be open by the end of the first-quarter 2012, and will support EMC’s numerous Chicago-based customers.

* Related…

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* Survey: Small raises for salaried workers in 2012: After increasing salaries by 2.6 percent this year and last year, companies are planning a 2.8 percent bump in 2012, benefits and human resources consultancy Towers Watson reported Monday.

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* Landmarks Illinois leader stepping aside Nov. 1

* Fitch Downgrades N.J. Bond Rating: New Jersey has skipped or greatly reduced its payments into the pension fund, contributing to the unfunded liability. The new law requires the state to make its payments, which currently total more than $3 billion a year, but is phasing the requirement in over seven years. This year’s pension payment, one-seventh of the total, was about $500 million.

* S&P replaces president after U.S. downgrade

- Posted by Rich Miller        


20 Comments
  1. - Anonymous - Tuesday, Aug 23, 11 @ 10:37 am:

    Any time a south suburban business leaves for Indiana, you can’t overlook the issue of race. The business owner is probably white. The south suburbs have become increasingly black. It’s just white flight, but in the business context.


  2. - Retired Non-Union Guy - Tuesday, Aug 23, 11 @ 10:38 am:

    RE New Jersey pension payment ramp up … sounds like one of the failed Illinois plans. Guess we’ll have to check back in 7 years from now to see how well that works out for them.


  3. - Cincinnatus - Tuesday, Aug 23, 11 @ 10:44 am:

    “Shattuck said this summer’s legislative hearings into Illinois’ business climate may provide enough stability to convince employers in Illinois to start hiring.”

    Yes, some hearings to provide a plan to create a framework for the possibility of forming a commission to provide non-binding recommendations will surely cause a major spike in hiring.

    What is this guy smoking?


  4. - Retired Non-Union Guy - Tuesday, Aug 23, 11 @ 10:48 am:

    Don’t have empirical data I can point to but I’ve seen suggestions that business owners at the national level are just going to sit on their hands and wait it out until after the next national election. As Rich points out, businessmen are mostly conservative and they seem to want to see a change in administration. So business has no reason to make things better now …

    And a change at the national level won’t necessarily help Illinois; any pickup in economic activity would most likely be offset by the loss of federal pork barrel / subsidies, leaving us in pretty much the same mess we have now, spending more than we take in.


  5. - Shore - Tuesday, Aug 23, 11 @ 11:00 am:

    Illinoyed-that’s all they’ve got?


  6. - Fed up - Tuesday, Aug 23, 11 @ 11:09 am:

    Let’s see today’s business story include. Lime energy moving headquarters to North Carolina, ADM closing an Illinois soybean plant, and Illinois 3rd from bottom in country for new building permits. Yeah Soyboy is doing an excellent job.


  7. - Ahoy - Tuesday, Aug 23, 11 @ 11:19 am:

    “businessmen are mostly conservative and they seem to want to see a change in administration.”

    Mainly true, but business owners are not that political. If they can make money, they’re going to invest regardless of administration. Right now they are fearful because of uncertainty. Some of the uncertainty is due to the market and other issues outside of government control. However, some of the uncertainty is due to federal issues such as the new rules on healthcare that are coming down the pipe over the next few years as well as proposed rules being floated by the EPA and other federal agencies.

    Then in our State we have no plan to fix the budget mess (more uncertainty), a Governor who appears to be completely clueless and unable to handle things in a rational manner. We also have a business climate that is generally regarded as unfriendly to business. This climate includes taxes (local & state) workers comp costs, unemployment insurance and a legal system that appears benefits trial lawyers.

    You can debate the merits of each issue and weather they actually exist or not, but that is the belief of a lot of business owners, aka the people who employ people. As long as they believe their investments are not safe at this time, we are going to have a hard time with job growth.


  8. - wordslinger - Tuesday, Aug 23, 11 @ 11:28 am:

    Indiana wishes it had Illinois’ economy. Talk about an ankle-biter. Daniels was a grownup in the Reagan Administration, now he’s just another Fox News sycophant.

    Google “Mitch Daniels phony jo numbers” and here’s the top hit. http://www.wthr.com/story/12066021/reality-check-indiana-job-numbers-dont-add-up

    It’s hard to have a capitalist economy when there’s no capital. You would think that the Masters of the Universe could find some middle ground between no lending at all and lending the same subprime mortgage buck at a 50-1 ratio. Especially when they’re borrowing money from the Fed for nothing.


  9. - bored now - Tuesday, Aug 23, 11 @ 11:43 am:

    ahoy: i’m not sure who you’ve been talking to, but you make it sound like most business owners invest their own money. which hasn’t been my experience. the lack of private investment in the economy is pretty clearly due to the inability of businesses to borrow. this is a national problem, has nothing to do with state taxes (don’t businesses in indiana pay more taxes?) and this is especially true for small businesses…


  10. - Bigtwich - Tuesday, Aug 23, 11 @ 11:58 am:

    Well, if I read this right,
    http://www.bls.gov/news.release/laus.nr0.htm

    from July 2010 to July 2011, Illinois gained 51,100 jobs and Indiana lost 28,300. I guess that proves Indiana needs to raise taxes.


  11. - Niles Township - Tuesday, Aug 23, 11 @ 12:10 pm:

    The company leaving to Indiana is slicing jobs as part of the move. They are hurting financially, and doing all they can to cut expenses, including laying off many employees. They will be much smaller when they reopen across the border. Still a loss, but one needs to know the facts, not the hyperbole.


  12. - 47th Ward - Tuesday, Aug 23, 11 @ 12:58 pm:

    Regarding the EMC corporate office, one of the things they said attracted them to Chicago was a young and well trained workforce. They didn’t mention taxes or regulation, and even said they weren’t getting any financial incentives to move in here. They did the announcement at DePaul, which shows that businesses weigh a lot of factors when moving, and a steady supply of smart employees is as big a factor as anything else.


  13. - wordslinger - Tuesday, Aug 23, 11 @ 1:07 pm:

    Warren Buffett, CST, August 15

    –Buffett said he knows many of the mega-rich well, and most wouldn’t mind paying more in taxes, especially when so many fellow citizens are suffering. He also said he has yet to see anyone shy away from investments because of tax rates on potential gains, even when rates were much higher in the mid-1970s, 1980s and 1990s.

    “People invest to make money, and potential taxes have never scared them off,” he said.–


  14. - Louis G. Atsaves - Tuesday, Aug 23, 11 @ 1:20 pm:

    Did I get this straight? The newly appointed “interim director” of the Illinois State Lottery voted in favor of the private company which will run it, and had a job lined up with them to boot?

    Did I get this straight? I thought this stuff was outlawed through a series of legislative changes and ethics laws?


  15. - CircularFiringSquad - Tuesday, Aug 23, 11 @ 1:42 pm:

    Could someone tell Capt fax this tax hike cause job loss is a IL Policy Institute fable and we don’t report their nonsense anymore?


  16. - JustMe - Tuesday, Aug 23, 11 @ 2:37 pm:

    According to the underlyng chart linked in the BLS report, 27,000 of the 28,300 net jobs lost by Indiana were government jobs.


  17. - Ahoy - Tuesday, Aug 23, 11 @ 4:58 pm:

    Bored Now,

    First off, there are still businesses that invest their own money. Secondly, it is harder to get a loan, it is not impossible.


  18. - TwoFeetThick - Tuesday, Aug 23, 11 @ 5:45 pm:

    =27,000 of the 28,300 net jobs lost by Indiana were government jobs=

    So, in other words, they don’t count? I bet they counted pretty big time to those who lost them.


  19. - JustMe - Tuesday, Aug 23, 11 @ 7:33 pm:

    I was responding to the implication that people seem to be drawing that the Indiana economy is being runs significantly worse than other states’ economies. The Indiana private sector apparently held its own despite the anti-stimulus activity of cutting back the public sector.


  20. - TwoFeetThick - Wednesday, Aug 24, 11 @ 9:16 am:

    Got it. Thanks for clarifying.


Sorry, comments for this post are now closed.


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