* Paul Merrion asks, “Why is Illinois unemployment so high?”…

Illinois always has been one of the last states to suffer from a recession and one of the last states to recover, but this is getting ridiculous.

Nearly five years after the recession ended nationwide, the Illinois unemployment rate is 8.4 percent, third worst in the nation… The rate is now almost 2 percentage points above the national average… Since November 2010, when the Illinois unemployment rate was 9.6 percent—just two-tenths of a point above Indiana and the national average—only New Mexico has seen a smaller decline in its unemployment rate, compared with where it was. Indiana’s rate is down 3.5 percentage points since then, while Michigan, which started higher, is down 4.1 percentage points. […]

Income taxes went up in January 2011, precisely when Illinois started to diverge from most other states that saw steady improvement in their unemployment rates.

* As Merrion points out, quite a few people believe that the 2011 income tax hike is the main culprit. We’ve all seen charts like this before…

* But there’s also this chart which tracks employment levels…

However, as Andrew Crosby and David Merriman of the U of I’s Institute of Government and Public Affairs note…

Illinois still tracks below ROM after January 2011; however, this difference is no longer statistically significant. One of several possible explanations for the diverging trends in employment is noted by Illinois’ Commission on Government Forecasting and Accountability (COGFA). COGFA notes Illinois has a “growing number of part - time workers that now has reached a record high.” If these part - time workers get a second part - time job, they could be double - counted by CES.

Correct. That probably isn’t a reliable chart.

* Bill Testa at the Federal Reserve Bank of Chicago read that U of I report and then tested some theories…

Illinois’s slow recovery may have more to do with its industrial structure. […]

Illinois’s mix of industries, while similar in some respects to those of other Great Lakes states, differs as well. It is possible that the small differences in job growth between Illinois and its neighbors are due to its somewhat different industry mix rather from disinvestment and a reluctance to hire in the state. […]

As an analytic exercise, I further ask how the Illinois economy would have fared 1) if it had the same industry composition as the four other Great Lakes states combined and 2) if its industries had the same job growth rates as those in the other states.

The chart…

* So, we’d have been much better overall with that hypothetical. The big difference between Illinois and the rest of the Great Lakes is the prominence of manufacturing and the type of manufacturing…

What are some of the industry mix differences that are notable between Illinois and other Great Lakes states? The large professional and financial services employment base in the Chicago area has already been noted. Further, in relation to other states, Illinois is now much more services oriented overall rather than goods producing. Manufacturing’s share of employment for 2013 clocks in at 11.4 percent of private sector payroll jobs in Illinois, versus 16.4 percent for the other four states. […]

And within manufacturing, Illinois tends to lean more toward food processing and farm, construction, mining machinery relative to the other Great Lakes states. In contrast, while there are important auto assembly operations in the Bloomington–Normal and Rockford areas of Illinois, as well as important links to the automotive supply chain throughout the state, Illinois’s ties to the automotive industry are much less prominent than those of Michigan, Indiana, and Ohio.

We simply need to do better.

* But after all that, Testa buries this extremely important fact…

Nonetheless, even payroll employment trends suggest that Illinois is underperforming when examined on an industry-by-industry basis. Accordingly, recent changes in public policies that influence the investment climate, such as tax rate hikes, cannot be ruled out entirely, though such policy effects are unlikely to be exerting such a large and immediate effect. [Emphasis added.]

Economists are loathe to point to local taxes as being to blame for business decisions. But Illinois’ tax and budget crises are almost universally known and derided here, particularly among the corporate types (hence Rauner). There are other factors as well, including our notoriously high workers’ comp costs.

The underperformance in growth on an industry-by-industry basis is striking. Even if we had the same employment mix here, we’d still be behind.

* Then again, let’s go back to Merrion for two other important points to keep in mind…

“In fact, one could argue that the economy would be in worse shape had the tax hike not occurred, since the reduction in public-sector jobs and subsequent ripple effect would have been much larger,” says Aaron Smith, a regional economist at Moody’s Analytics Inc., an economics consulting firm in West Chester, Pennsylvania. “Of course, consumer spending would also have been stronger due to more discretionary income, but I don’t think the tax hike is a valid cause of the hiring slowdown in other industries.” […]

Despite claims that Illinois employers are freaked out by higher taxes, public-sector job losses account for a significant portion of the unemployment rate. Six of the nine occupations in Illinois losing the most jobs in 2011 were teachers and other government workers, according to Economic Modeling Specialists International, a labor market data analysis firm based in Moscow, Idaho.

Discuss.

       

102 Comments - Soccermom - Monday, May 12, 14 @ 12:18 pm: Good for Merrion to underscore the huge role that public sector job loss is playing in our unemployment rates. - Steve - Monday, May 12, 14 @ 12:21 pm: There are better places in America to add jobs or start a new business. Why would someone build a factory in Illinois when they can do it in a right to work state like Indiana? Yes,why? - wordslinger - Monday, May 12, 14 @ 12:22 pm: Just anecdotal stuff from my usual haunts, the financial exchanges continue to shed jobs as communications advances make support jobs unnecessary. And you sure don’t see all the cranes and hard-hat workers in the greater Loop like you did before the real estate crash. - Nieva - Monday, May 12, 14 @ 12:24 pm: Farming in Illinois provided a large job base in the past. Now with mega farms and mega equipment those jobs are fewer. Farmers can do a thousand acres with the same man power that it took to farm 50 acres. - Almost the Weekend - Monday, May 12, 14 @ 12:25 pm: =Despite claims that Illinois employers are freaked out by higher taxes, public-sector job losses account for a significant portion of the unemployment rate.= This was going to happen eventually, Illinois has the most units of local government compared to any other state. I wonder if IL still is number one in this category. If not more downsizing needs to happen, and it is not a good sign for the unemployment in Illinois. It is unsustainable to have so many local units of government. - Chicago Gun Owner - Monday, May 12, 14 @ 12:27 pm: Beyond taxes there is something far more sinister at work here - byzantine regulation and lack if transparency. The rules are so complex nobody understands them and it’s easy tobrun afoul of them. Thus we have sitting lawmakers doing proprty tax reduction businesses on the side and connected “expediting” companies to get Chicago permits. The perception is the game is rigged for insiders, and this drives much business to other states. - W - Monday, May 12, 14 @ 12:29 pm: The anti-government chickens are coming home to roost. Illinois was recession proof because the top employer was government. It provided a more stable (and often better paying) base for local economies than private sector jobs which are constantly in flux. After Blagojevich severely cutting the public workforce, and Quinn cutting it further (particularly downstate), we’re feeling the impact. Recovery will be slow because the public employee workforce hasn’t rebounded to previous levels. This is a good example of how ideological blockagage and mindless slogans about government not creating jobs hurts the state economy. Government is the biggest employer outside the Chicago area. Being anti-tax means being anti-jobs. - Rich Miller - Monday, May 12, 14 @ 12:31 pm: ===. Illinois was recession proof because the top employer was government.=== You are formally nominated for stupidest comment of the week. Apparently, you missed both the early 1980s and the post 9/11 crash. - Anon - Monday, May 12, 14 @ 12:32 pm: It’s not just high workers’ comp taxes. Property taxes are onerous for business, both because they are higher here than in most other states and because they are owed regardless of whether the business makes a profit in a given year. Of course serious property tax relief will never occur unless and until IL reforms how it funds public education, shifting from primary reliance upon property taxes to state taxes. - Loco Government - Monday, May 12, 14 @ 12:32 pm: I’m less concerned about how many units of government there are and more about the overall spending between all governments, state and local. It is not by its nature unsustainable. In fact, I could argue just as well that it is unsustainable to have the consolidation that some people seem to long for. - Joe M - Monday, May 12, 14 @ 12:34 pm: ==Farming in Illinois provided a large job base in the past. Now with mega farms and mega equipment those jobs are fewer. Farmers can do a thousand acres with the same man power that it took to farm 50 acres. == That phenomenon has been going on for quite some time - decades, and may not be much of an influence on Illinois’ recent unemployment trends. - Union Man - Monday, May 12, 14 @ 12:34 pm: Why would anyone want to teacher in Illinois if they could find a job elsewhere! With pension status in limbo why is this such a surprise. My wife is a teacher and many of her colleagues are telling their children who are preparing for careers in education, that they better seek employment anywhere but Illinois. One gal told her kids she’d disown them if they stayed in Illinois. And she’s not kidding. Both my children took jobs out of state because of the way the state is trying to default on her pension promise and taxes in general. - Fight Fair - Monday, May 12, 14 @ 12:36 pm: AtW: This Census table shows that in 2012 (most recent count), Illinois had just under 7,000 governments. Pennsylvania and Texas were next in line, each with about 4,900: http://www2.census.gov/govs/cog/2012/formatted_prelim_counts_23jul2012_2.pdf - Bill White - Monday, May 12, 14 @ 12:37 pm: Fewer units of local government does not translate to fewer public sector employees. Also, despite incessant chirping, Illinois already has very few public sector workers per capita http://www.governing.com/gov-data/public-workforce-salaries/states-most-government-workers-public-employees-by-job-type.html - anon - Monday, May 12, 14 @ 12:37 pm: “In fact, one could argue that the economy would be in worse shape had the tax hike not occurred, since the reduction in public-sector jobs and subsequent ripple effect would have been much larger,” Just wait until the ripple effect of all the pension cuts (state and local) kicks in. With otherwise middle class retirees being pushed to the poverty level or barely above, they won’t be buying anything but the necessities. - RNUG - Monday, May 12, 14 @ 12:37 pm: FWIW, I used to plan for a 1 - 1.5 yr lag going in and a 1.5 - 2 yr lag coming out of a recession when doing projections at my former state job. So I give this this analysis a lot of credibility because a lot of people ignored that aspect of it. He’s right about the different industrial mix and the partial shift to more of a service economy … but service economies usually recover a bit quicker and we’re not seeing that. One thing I have to wonder about is if we are still seeing a bit of hangover from the 2002 and 2004 government retirements. Between them, they took something like 15K people out of the full time state workforce … and it’s easier for the retired to pull in and hunker down, not spending much money, when they feel the economic environment isn’t good. The flip side of that are the number of people who would have normally retired by now but have been hanging on to their jobs the last few years because they don’t see a secure economic future. I have a sibling who could retire now but the uncertain future has them hanging on … and I’m sure there are more people out there like that. If the older workers don’t move out of full time work, there is no place for anyone to move up or in. The various bits … more part time jobs, lower government employment overall, increased taxes, and older workers clinging to their jobs … may well add up to the difference between IL and everywhere else. - Chicago Bars - Monday, May 12, 14 @ 12:40 pm: ====You are formally nominated for stupidest comment of the week.==== LOL. Stupidest comment of the week would be a heck of a Friday feature on CapFax… - Bill White - Monday, May 12, 14 @ 12:40 pm: @Fair Fight Texas still has more public sector employees per 10,000 population than Illinois http://www.governing.com/gov-data/public-workforce-salaries/states-most-government-workers-public-employees-by-job-type.html === Reducing the number of governments doesn’t necessarily mean fewer employees. For example, I don’t see how merging a park district with a village will save employees. And merging school districts would mean fewer superintendents but more assistant superintendents. - Ghost of John Brown - Monday, May 12, 14 @ 12:40 pm: It was correctly pointed out above that one reason relates back to the tax increase, but it goes deeper than that. Even with the tax increase the State’s fiscal house is not in order and not even close. With that in mind, how are we supposed to look at the future? A businessman that looks at expanding here could correctly surmise that even more pressure to raise taxes in the future is coming. It’s the perception that it’s broke and it doesn’t look like it’s going to get fixed any time in the near future. - Sue - Monday, May 12, 14 @ 12:42 pm: For anyone complaining about the shrinking public sector- wake up and say hello to the pension problem- all units of government are suffering from the pension issue- as more dollars go to pay retirement benefits, the State, along with all other taxing districts is forced to reduce active headcount to reduce costs- the pensions(and to a lesser extent- retirement health care) are forcing these reductions in payroll. Absent a significant fix to the benefit side- all public employers will continue to reduce their active workforces- the municipalities are screaming for pension relief because they recognize that the ability to provide ongoing services(police,teachers, fire, etc) is compromised by the increased costs associated with their retirement obligations- Illinois will continue to lose employment opportunities until the State does something to give employers and families looking to relocate confidence that the future will be better here then in other competing localities. Anyone thinking the answer to the pension crisis is higher taxes is simply misguided - Bill White - Monday, May 12, 14 @ 12:45 pm: The link I’ve posted indicates that only 3 states have fewer public sector workers per 10,000 population than Illinois - Michigan, Arizona and Nevada. But yes, let’s slash taxes and lay off even more public sector workers, and drive the IL unemployment rate even higher. - Almost the Weekend - Monday, May 12, 14 @ 12:46 pm: =It is not by its nature unsustainable. In fact, I could argue just as well that it is unsustainable to have the consolidation that some people seem to long for= Unsustainable can you please go in detail besides just making a generalized statement, with no research or details. Especially after Rich gave a great summary and analysis of this article. I’m not talking about privatization, but the need to be more efficient. Illinois has 868 school districts, more than any other state. And these school districts pay ridiculous compensation packages for principals and superintendents, often forcing local school districts to compete against each other. As a result less money goes to students, teachers, textbooks, etc. I’m sure Illinois would be fine with 500 school districts, which I think is still about 200 too many. - Union Man - Monday, May 12, 14 @ 12:46 pm: ====I have a sibling who could retire now but ====My wife is one of them!! Plans on working 5 additional years just because of the pension uncertainty!! Her school district could hire 2.5 new teachers for what they pay her!! Thanks Springfield for nothing. I did the same, retired after 36 years but went back to work under another pension system. Work until 70 and then double dip!! Only way to make in in Illinois. - Bill White - Monday, May 12, 14 @ 12:51 pm: School district consolidation would reduce the number of superintendents but increase the need for assistant superintendents. Most people also like the idea of locally controlled neighborhood schools. - Judgment Day (on the road) - Monday, May 12, 14 @ 12:57 pm: “Despite claims that Illinois employers are freaked out by higher taxes, public-sector job losses account for a significant portion of the unemployment rate. Six of the nine occupations in Illinois losing the most jobs in 2011 were teachers and other government workers, according to Economic Modeling Specialists International, a labor market data analysis firm based in Moscow, Idaho.” Ah, there’s a solution here. We hire more public sector workers, just don’t pay them, and no benefits. Problem Solved!!! After all, didn’t say anything about “paid” work. Or maybe Pat Quinn could appoint Squeezy as “Employment Czar”. Yeah, there’s the ticket. Btw, just as a thought - read this article from MIT Technology Review. The State of Illinois ought to be all over this (see http://www.technologyreview.com/news/527056/the-next-startup-craze-food-20/) with our Universities. The Univ. of IL already has a $4-5 mil fundraising effort for a Food Science Pilot Plant (which is exactly what the MIT article is talking about). Be nice if we could be at least even in the game instead of always being behind the curve. - Fight Fair - Monday, May 12, 14 @ 1:00 pm: – “Just wait until the ripple effect of all the pension cuts (state and local) kicks in. With otherwise middle class retirees being pushed to the poverty level or barely above, they won’t be buying anything but the necessities.” – – “But yes, let’s slash taxes and lay off even more public sector workers, and drive the IL unemployment rate even higher.” – Can we all agree that a dollar in higher taxes to support the public sector is a dollar removed from employers / employees / retirees in the private sector? We can like or dislike spending more on the public sector, but we can’t pretend that doing so creates no consequences for people in the private sector. It does: They have less money to spend, to hire, to invest in Illinois businesses. - Walter Mitty - Monday, May 12, 14 @ 1:03 pm: Bill You are absolutley correct… The reality will be do they like locally controlled public schools or less in taxes. A K-12 unit district is far more cost effective and educationally sound with curriculum development. Again, only if we are talking about schools in the “black”…Not the way that has been discussed in the past. Forcing a viable district to assume the debt of another floundering school district… - Bill White - Monday, May 12, 14 @ 1:06 pm: = Can we all agree that a dollar in higher taxes to support the public sector is a dollar removed from employers / employees / retirees in the private sector? = No. This is factually wrong. - Arizona Bob - Monday, May 12, 14 @ 1:10 pm: @Bill White =Texas still has more public sector employees per 10,000 population than Illinois= Bill, that number only measures DIRECT public employees. What happens in Illinois is that with our ridiculously early public pension retirement packages, retirees come back to do their old jobs, at significantly higher cost to the taxpayers, as “consultants” and “contract” workers to the government. Earlier I posted about a manitenance manager who retired from a $100K per year job on Friday, then came back on Monday, while being paid his full pension, through a consulting company where the taxpayers were charged over $300,000 per year for doing the same job. One of my neighbors had a high profile job in curriculum development in CPS, and she retired at about her full salary after “end of career bumps”. The clouted incompetent they hired to replace her was a major disaster, but they couldn’t fire her because of her political sponsor, so they brought back my neighbor as a a “consultant” to do her replacement’s job at a much higher rate…while she was getting her public pension. I could write a book about how “public employees” who retire are taken care of, especially at suburban schools and municipalities. One mediocre principal in my old Palos neighborhood got a raise from $104K to $180K for a position they created, “assistant superintendent for facilites” a job that previously paid $75K to a “Maintenance Manager” that actually knew what he was doing. He retired at a ridiculous pension, then the district hired him back as a “Construction manager” at over $100/hr even though he had absolutely no qualifications for the job.They also paid for his air fare to his South Carolina beachfront villa and paid him per diem while he was back in Illinois. Besides the point that waste, corruption and mismanagement is rampant in Illinois public education, there’s a tremendous amount of public work done in Illinois that doesn’t register as a “public employee” job. Don’t buy those “low number of public employee” ratio fabrications in public ed. The money’s being doled out to cronies and people doing public work, it just isn’t categorized as being done by a “public employee”. Any poster here know if this also happens at state agencies? - VanillaMan - Monday, May 12, 14 @ 1:13 pm: I’ll go at this backwards. Why did businesses select Illinois for locating? The reasons Illinois became a must-locate state in the US is because of its location. When the US made things, it needed to move those things. Illinois is in the middle of the US, like a giant transcontinental rest stop - 500 miles from South Beloit to Cairo. If you needed to move stuff by water - we are in the middle, sitting on the Gulf of Mexico/North Atlantic continental divide, (Summit Illinois, anyone?). If you needed to move stuff by rail - we are in the middle. If you needed to move stuff by air - we are in the middle. Being in the middle built Illinois. It is why Illinois is/was home to the major food manufacturers, whether it be by hoof or by can, whether it be frozen or dried, whether it be needing to hit Kansas City still fresh and frozen, and whether it be needing to hit Dallas or Minneapolis. Chicago was in the middle. Remember Chicago the convention capital? We were in the middle, we were where everyone could go to from either coasts. We didn’t moves, so what happened? Illinois didn’t move, but people did. The center of the US population is shifting away from Illinois. American manufacturing shifted from building in the US, to building in China. We get our food stuffs from god knows where half the time. Flowers and grapes from Chile? How much stuff is made in the US anymore? But that isn’t all. See that big tower? It used to be home to the largest department store in the entire Earth. Sears, along with every other catalog business moved through Chicago and was home in Illinois. What happened to them? Online. We went online. Thanks to instant communications, I don’t need to have my headquarter for financial institutions in Chicago. I don’t need to fly through O’Hare to get to a meeting anymore. Business success isn’t connect to location, location, location - anymore. So, the US state famous for being in the middle is not rebounding because just like any middleman - a middleman state like Illinois - isn’t needed as much as it once was. We are not a scenic state. We have no ocean front property. We have no mountains. Our summers are too hot and humid and our winters are too cold and snowy. Illinois was where people made money to raise a family and build a career. Illinois is where things were at, so that it can make it to other markets across the US. That has changed. - Steve - Monday, May 12, 14 @ 1:18 pm: For all those out there who think business climate doesn’t matter. Here’s the nice end result of what Texas got instead of California or Illinois (who wasn’t even considered). Here’s a quote from a Forbes article: There’s a lot for any state to like in landing Toyota’s headquarters. The average salaries for the 4,000 jobs in Plano will be in the six figures, sources said, far more than manufacturing wages — meaning that Toyota’s Texas employees will have plenty of income to spread around. http://www.forbes.com/sites/dalebuss/2014/04/29/its-not-about-incentives-toyotas-texas-move-is-a-corporate-culture-gambit/ So, when Pat Quinn or Jan Schakowsky tells you how horrible things are in Texas ask yourself is it better to make $47,000 in Illinois and pay a state income tax or zero state income tax in Texas? - Grandson of Man - Monday, May 12, 14 @ 1:27 pm: “Why would someone build a factory in Illinois when they can do it in a right to work state like Indiana? Yes,why?” Indiana’s per capita income has fallen over the years and is now ranked 38th. A reason cited in the article I’m posting is because of the decline of high-paying manufacturing jobs. Ironic, isn’t it? http://www.indystar.com/story/news/politics/2014/03/26/indianas-per-capita-income-ranks-th-among-states/6934411/ The state’s unemployment rate does not appear to have been very much affected by the 2011 income tax increase: http://www.deptofnumbers.com/unemployment/illinois/ Our unemployment rate has dropped almost a point since last year, but that’s small consolation for our struggles. - Anon - Monday, May 12, 14 @ 1:28 pm: AZ You say public employees are too expensive, but when the jobs are contracted out, it’s even more expensive. So do you prefer privatizing government jobs or not? - OneMan - Monday, May 12, 14 @ 1:28 pm: VM… Good point as always… - Steve - Monday, May 12, 14 @ 1:33 pm: - Grandson of Man - The border war is here. Illinois is the sicking duck, make no mistake, especially since their public pension problems have no easy answer. http://www.forbes.com/sites/rexsinquefield/2014/03/21/border-war-with-indiana-will-be-major-issue-in-illinois-governor-race/ - Bill White - Monday, May 12, 14 @ 1:34 pm: = What happens in Illinois is that with our ridiculously early public pension retirement packages, retirees come back to do their old jobs, at significantly higher cost to the taxpayers, as “consultants” and “contract” workers to the government. = Do you have any evidence that this type of abuse is worse in Illinois than elsewhere? Should we stamp this stuff out? Absolutely yes. But if you think charter schools are immune to this type of waste and abuse, can I sell you a bridge? - Ghost - Monday, May 12, 14 @ 1:37 pm: === There are better places in America to add jobs or start a new business. Why would someone build a factory in Illinois when they can do it in a right to work state like Indiana? Yes,why? == And its far cheaper to build a factory in china with no right to work laws and no minimium wage. So your point is the best thing for Illinois and the united states is an entire citizenry living at poverty level to fuel the wealth of the one or two people who own everything? For the second year in a row, Hoosiers ranked fifth nationally in personal bankruptcies, at 7.1 people per 1,000 residents. (Illinois came in 11th.) Indiana’s median family income is just 86 percent of that of the rest of the country. those living in poverty in Indiana has risen to 14.7 percent, Illinois WITH higher unemployment comes in at 13.7 % Median family income in IL is 56,853, Inidana it is 48,374. nationally it is 53,046 So yes Indiana is increasing its poor and impoverished with its right to work laws. If your goal is to turn the USA into an impoverished 3rd world, right to work laws are the way to go. - DuPage - Monday, May 12, 14 @ 1:46 pm: @ArizonaBob1:10 The examples you give, even if accurate, are but a small number of exceptions. All of them also seem to be high ranking management insiders with political connections. These examples in no way represent the vast majority of public employees. - Grandson of Man - Monday, May 12, 14 @ 1:46 pm: “The border war is here.” In some ways, we’re winning it, like in Chicagoland corporate investment deals. Indiana was hit in an article about corporate investment as being a state that attracts lower-paying jobs. We’re not going down the right to work path in Illinois, unless it’s done by the U.S. Supreme Court. “There’s a lot for any state to like in landing Toyota’s headquarters. The average salaries for the 4,000 jobs in Plano will be in the six figures, sources said, far more than manufacturing wages — meaning that Toyota’s Texas employees will have plenty of income to spread around.” What about Vermont and Minnesota? Vermont’s unemployment rate was 3.4% in March 2014, and Minnesota’s was 4.8%, much better than Wisconsin, a place to which some try to negatively compare us. - anon - Monday, May 12, 14 @ 1:56 pm: “Can we all agree that a dollar in higher taxes to support the public sector is a dollar removed from employers / employees / retirees in the private sector?” And for every dollar removed, you receive more than a dollar of services as study after study has shown that Illinois government employees work for below market compensation even with pensions factored in. Freeloader, you can’t get something for nothing. Stop blaming the employees and look at the corruption tax with all of the spending on corporate welfare. - Steve - Monday, May 12, 14 @ 2:04 pm: - Ghost - So your point is the best thing for Illinois and the united states is an entire citizenry living at poverty level to fuel the wealth of the one or two people who own everything? Ghost, you are funny. Guess what right to work state, with no state income tax, and much cheaper housing overtook Illinois in median household income??? http://www.rebootillinois.com/2014/04/02/uncategorized/michael-lucci/texas-overtakes-illinois-household-income/3186/ - Formerly Known As... - Monday, May 12, 14 @ 2:13 pm: An excellent post, Rich. Terrific job of balancing contrasting data from multiple, detailed stories and pulling the most important points all together into one post for us. Thanks. - anon - Monday, May 12, 14 @ 2:17 pm: The bias or ignorance of journalists about the South Side / south suburbs is again evident. How can you list major automotive plants in Illinois and forget Ford’s assembly plant in the South Side and Ford’s parts manufacturing plant in south suburban Chicago Heights? - Bill White - Monday, May 12, 14 @ 2:23 pm: - Steve The Reboot Illinois links you cite merely link to another Reboot Illinois article. That said, the US Census for 2012 shows Texas at $51,926 versus $51,738 for Illinois or $188 per year. Nonetheless, I don’t think Rick Perry should take credit for God placing massive shale oil deposits underneath West Texas http://www.bizjournals.com/houston/news/2014/05/12/even-low-prices-may-not-slow-texas-shale-oil.html - Generation X - Monday, May 12, 14 @ 2:23 pm: This is part of the solution: http://m.policymic.com/articles/89165/colorado-s-marijuana-sales-keep-seeing-green Jobs Check Revenue Check Fewer Crimes/Incarcerations Check - Grandson of Man - Monday, May 12, 14 @ 2:25 pm: “Ghost, you are funny. Guess what right to work state, with no state income tax, and much cheaper housing overtook Illinois in median household income???” I don’t know where the article cited gets its statistics, but here are 2012 U.S. Census data that show Illinois beating Texas in all household sizes. Check out the “State Median Income by Family Size (1 year)” hyperlink. We are beating Texas in all household sizes ranging from 2-7 or more person families. http://www.census.gov/hhes/www/income/data/statemedian/index.html Other data I’ve seen show that Illinois is beating Texas as far as personal and household income. - Federalist - Monday, May 12, 14 @ 2:26 pm: @Arizona Bob, Your comment: Bill, that number only measures DIRECT public employees. What happens in Illinois is that with our ridiculously early public pension retirement packages, retirees come back to do their old jobs, at significantly higher cost to the taxpayers, as “consultants” and “contract” workers to the government. This certainly does happen but seem to be overwhelmingly anecdotal in you observations. Is this a real game changer in terms of employment data for the purposes of this study? I doubt it. But if you can provide firm data on this I would love to see it. Otherwise, it is just one step above heresay. - Bill White - Monday, May 12, 14 @ 2:27 pm: Fracking is a major driver of the booming Texas economy: http://www.usnews.com/opinion/economic-intelligence/2014/02/19/shale-oil-brings-big-wealth-to-texas - Arizona Bob - Monday, May 12, 14 @ 2:28 pm: @Bill white =But if you think charter schools are immune to this type of waste and abuse, can I sell you a bridge?= Only if it’s a toll bridge somewhere in Manhattan!LOL Seriously, Bill, I’ve gotten to know a number of people in Chicago charters over the years (I had to fix some up)and many are from the public ed bureaucracy. Quite a few also seem to be on public pensions.Just about all of the upper managment has some deep political connection. The point here isn’t charters, it’s whether we can accurately say that in Illinois we have fewer people working providing public SERVICES, not classified as “public employees”, than in other states. I know its annecdotal, but from being closely involved with public K-12 and university education in Illinois, and somewhat in Arizona, I can say it’s much more prevalent here because of the deeply ingrained patronage entitlement culture. If I can find any data on “outsourced” public employees in Illinois, I’ll be sure and post it. It’s real and expensive scam on the taxpayers. - Arizona Bob - Monday, May 12, 14 @ 2:39 pm: @DuPage =All of them also seem to be high ranking management insiders with political connections. These examples in no way represent the vast majority of public employees.= You may be surprised, DuPage. A few years ago teachers couldn’t come back as substitutes once they took a pension, but the GA changed that so that teachers could “double dip” by “retiring” then going right back to their school system for up to 90 school days per year, roughly half the school year. They were typically given preference for getting a lot of days because the more sub days you taught, the higher the daily rate that was paid. This led to a lot of English teachers being put in long term math sub assignments as was the case for one of my kids, and it was a disaster for her. I know for facility work (building engineers, custodians etc.) outsource maintenance companies hired retired 143s, usually on full pension, to do the work of a previously hired “public employee”. I honestly don’t know the extent of this scam of retiring and then taking an outsourced job back in public education, but I know it isn’t just the big shots who get this kind of swag. Anyone know if this is happening in IDOT, CDOT, ISBE or any other state or local agencies? - Bill White - Monday, May 12, 14 @ 2:53 pm: Arizona Bob, this is a legitimate question: = Can we accurately say that in Illinois we have fewer people working providing public SERVICES, not classified as “public employees”, than in other states. = However, to the extent this problem exists, increased privatization would seem to make things worse not better. Reducing the compensation of public sector workers (salary, pension, benefits) would also make this problem worse, not better. - Bill White - Monday, May 12, 14 @ 2:56 pm: PS - Arizona bob, I am not saying you are correct when you say outside private sector contractors are a major cause of bloated budgets, I merely cannot refute the assertion at the moment. But again, the underlying point stands - Illinois has fewer public sector worker per capita than 46 other states. Only MI, AZ and NV have fewer. - Demoralized - Monday, May 12, 14 @ 3:07 pm: @Arizona Bob: Hiring back people on contract was prevalent after the big ERI in 2002 (I think that’s when it was), but the reason for that is that such a large number of people retired there was literally nobody doing the jobs. In my experience the hiring back of people on contract doesn’t happen nearly as often now. And would you please stop bad mouthing public employee pensions because it’s getting really old. YOu seem to be bitter. - Cook County Commoner - Monday, May 12, 14 @ 3:17 pm: The Bureau Of Labor Statisitics is scheduled to publish its monthly Regional and State Employment and unemployment numbers on Friday, May 16. Illinois’ unemployment rate has been slowly trending downwards, but it will be interesting to see if the rate of improvement picks up any speed. - OneMan - Monday, May 12, 14 @ 3:25 pm: The thing is corporate office deals in Chicago, really don’t help the unemployed as much…. Because the folks who work at the corporate office tend to be professionals, a lot of them in field (like IT) with lower unemployment rates. As much as I like more job opportunists for folks like me, more opportunities for folks like me is not going to go real far in fixing Illinois’ unemployment issues. - OneMan - Monday, May 12, 14 @ 3:26 pm: Also IMHO Illinois should cut it’s LLC fee significantly. - Anonymous - Monday, May 12, 14 @ 3:34 pm: - Bill White, Not sure where you got your Census figures showing Texans so close to Illinoisans in income. Household income 2008-2012: Illinois: $56,853 Texas: $51,563 Per capita income 2008-2012: Illinois $29,519 Texas: $25,809 http://quickfacts.census.gov/qfd/index.html# - Bill White - Monday, May 12, 14 @ 3:41 pm: See the first line under “Historical” Median Household Income by State - Single-Year Estimates http://www.census.gov/hhes/www/income/data/statemedian/ Using weighted averages, IL is still well ahead of Texas, however Texas is rising fast and my numbers were for 2012 only. In any event, high wage jobs associated with fracking shale oil appear to be one significant driver of the Texas boom - not Hayek’s economic theories. Texas also received more federal spending per capita than Illinois and has more state employees per capita than Illinois. - Arizona Bob - Monday, May 12, 14 @ 3:43 pm: @Dem =And would you please stop bad mouthing public employee pensions because it’s getting really old. YOu seem to be bitter.= Any reasaonable person who sees the that excessive and unnecessary pension program is destroying the state SHOULD be bitter, Dem. I calls ‘em likes I sees ‘em. Make the case that the current public pension system is in the public interest considering the costs and other more vaulable things on whic the public dollar could be spent. I haev yet to see a reasonable argument stating why our current public pension system is good policy and in the interest of the children adn taxpayers. The only defense I’ve heard is that “you promised!”, but little definse about why thesse generous benefits were good public, not political, policy. - Bill White - Monday, May 12, 14 @ 3:44 pm: Correction - using multi-year averages - not weighted averages. - wordslinger - Monday, May 12, 14 @ 3:46 pm: The energy boom a main driving force in the national economy right now. We’re not tapped into that. –The heart of the US energy boom is Williams county, in the northwestern corner of North Dakota, which saw a 10.7 per cent jump in the number of residents between July 2012 and July 2013, the fastest increase in the nation, compared with the US average of under 1 per cent. The top 10 counties in terms of population growth included one other in North Dakota, as well as three in Texas, two in Utah, one in Louisiana, and one in South Dakota – all areas with heavy concentrations of mining, quarrying and oil and natural gas extraction.– http://www.ft.com/cms/s/0/87c5014c-b5f7-11e3-b40e-00144feabdc0.html#axzz31XFA2CVe And all those dudes need trucks. That’s great news for GM, Ford and Chrysler as they dominate full-size pickup sales in this country to the tune of 93% market share. Those trucks can have a profit margin as high as $10,000 and are the cash cows for the Big 3. –Ford’s F-Series accounted for 90 percent of its global auto profits last year, while GM’s big pickups and sport-utility vehicle derivatives generated two-thirds of worldwide earnings, according to Adam Jonas, an analyst at Morgan Stanley..== http://www.bloomberg.com/news/2013-06-04/american-pickup-sales-leading-best-sales-year-since-07.html - Demoralized - Monday, May 12, 14 @ 3:53 pm: @Arizona Bob: Then change them going forward. Anything beyond that is borderline criminal in my opinion. You don’t change the rules of the game that somebody started under or that somebody retired under. I get it. You dislike public employees. - Demoralized - Monday, May 12, 14 @ 3:56 pm: ==excessive and unnecessary pension program== What is excessive and unnecessary about it? Not in favor of any pensions for public employees? I don’t know exactly what it is you want besides to obliterate the retirements of people. - Bill White - Monday, May 12, 14 @ 4:04 pm: From wordslinger’s Bloomberg link: = GM and Ford each saw pickup sales surge in energy states such as Texas and North Dakota. U.S. crude-oil output in the fourth quarter this year will exceed imports for the first time since 1995, as fields in North Dakota and Texas put the nation on track to surpass a production record set a quarter-century ago, according to the U.S. Energy Information Administration. = Energy deposits allow lower taxes. Lower taxes do not create hydrocarbon deposits. - Steve - Monday, May 12, 14 @ 4:05 pm: Does anyone out there know when Pat Quinn and Rahm Emanuel are going to take a tour to Texas to sell Illinois as a better place of business to operate? Anyone have a guess? - Bill White - Monday, May 12, 14 @ 4:13 pm: Steve, please pay attention. Texas is not a better place to operate a business, unless that business is extracting shale oil. - Percival - Monday, May 12, 14 @ 4:25 pm: I think the uncertainty factor has a role. There are fiscal bombs ticking away and no one knows what the tax and spending fallout will be. Who wants to take a big risk before you know? - persecuted - Monday, May 12, 14 @ 4:28 pm: Hasn’t this state lost a number of military facilities along with their military and civilian employees in the last fifteen or twenty years? - Jorge - Monday, May 12, 14 @ 5:39 pm: “The only defense I’ve heard is that “you promised!”, but little definse about why thesse generous benefits were good public, not political, policy.” I wouldn’t say that $32,000 a year for the average IL pension plan recipient is all that generous but dogma generated arguments and spiels are going to be devoid of the necessary facts. - stand - Monday, May 12, 14 @ 6:18 pm: @Bill White AND Everyone else =Fewer units of local government does not translate to fewer public sector employees. Also, despite incessant chirping, Illinois already has very few public sector workers per capita= You’re wrong. The state directly employees fewer workers per capita, however your link does NOT include local employees. Here’s census data link showing Illinois in the top 5 of government employees per capita when ALL levels of government are included. http://www2.census.gov/govs/apes/2012_summary_report.pdf Garbage in, garbage out. - Anonymous - Monday, May 12, 14 @ 6:19 pm: People like AZ Bob will always find the 2 people who have exceptionally generous pension payments and hysterically try to convince the world that every pensioner gets that amount. Unfortunately, there are lots of people who are dying to believe that. But that’s as uneducated and ignorant as believing that everyone who works for a private company earns Bill Gates income. Bob must not have been a good student. Or he’s a hysterical type. - stand - Monday, May 12, 14 @ 6:19 pm: Page 9 for the chart. - Bill White - Monday, May 12, 14 @ 6:40 pm: Page 9 is total numbers not per capita numbers Illinois has about 775,000 but Texas has almost 1.6 million. We need to divide the numbers on page 9 by the population of each state to get an apples to apples comparison. And yes, page 9 includes state and local employees. - Anonymous - Monday, May 12, 14 @ 6:51 pm: Figure 6 on page 5 of stand’s link also is interesting . . . Between 2007 and 2012 Illinois saw less than 2% decrease in state and local workers Between 2007 and 2012 Texas saw more than 4% increase in the number of state and local workers http://www2.census.gov/govs/apes/2012_summary_report.pdf - Anonymous - Monday, May 12, 14 @ 6:52 pm: Thanks for the link, stand. It’s a good one. - Stand - Monday, May 12, 14 @ 6:53 pm: @bill white Page 9 is in percent. Illinois is 5th. Period - Bill White - Monday, May 12, 14 @ 7:07 pm: 4.0% is the percentage that IL state and local workers bear to the total number of state and local workers in the United States. However, Illinois has considerably more than 4.0% of total US population. - wordslinger - Monday, May 12, 14 @ 7:16 pm: Stand, you’re misreading your chart. The 4% represents Illinois share of state and local government employees in the country — it’s not a per capita measure. Read the rest of the chart and you’ll understand — maybe. 1. California — 11% 2. Texas — 8.2% 3. New York — 6.9% 4. Florida 5.1% 5. Illinois — 4% Are you detecting a pattern here? The states with the largest populations have the largest percentage shares of the total of state and local employees nationwide. They track, exactly. But it is not a per capita measure. - Stand - Monday, May 12, 14 @ 7:20 pm: I may be mistaken on 5th, but we are not last either. - Stand - Monday, May 12, 14 @ 7:21 pm: I shouldn’t read charts while eating!!! - Stand - Monday, May 12, 14 @ 7:23 pm: Illinois 13 million US 313. That’s right about 4 percent. Check my math. That makes illinois average not near the bottom. - Bill White - Monday, May 12, 14 @ 7:24 pm: Illinois lagging the US in state and local govt hiring simply is one significant piece of the Illinois unemployment picture, which brings this full circle to the post these comments are attached to. - Lost in the Weeds - Monday, May 12, 14 @ 7:25 pm: I do not think it is government workers, teachers, fireman and policeman that cause unemployment to be high, since they have jobs. It is what happened in the mortgage/real estate/credit/mortgage lender crisis and its aftermath - a deep recession that has created unemployment. A lot of those mortgage related jobs were in the urban centers. In Illinois the biggest hits in real estate foreclosures and people being underwater is in Northeast Illinois. From the Motley Fool…. http://www.fool.com/investing/general/2014/01/31/9-states-with-the-highest-unemployment-rates.aspx “What stands out to me is that many of these states have well-defined metropolitan areas and/or larger corporate centers than the states we looked at earlier in the week. If you recall, the disadvantage to having large business centers is that it can be difficult for prospective workers to focus on a particular skill that will ensure they get hired. This could be one reason why states with larger populations and bigger metro regions (e.g., California, Michigan, Illinois, and New Jersey) suffer from higher unemployment rates. Another factor — or at least something that tends to correlate strongly with high unemployment levels — is a large number of residual foreclosures in many of these states. The recession hit the entire U.S. housing industry hard, but states such as California and Nevada were throttled by an exceptionally high number of home foreclosures. While not hit as hard immediately, New England states like Rhode Island, as well as some Ohio River Valley and Southern states, have seen home prices rebound slowly in recent months.” - wordslinger - Monday, May 12, 14 @ 7:32 pm: –However, Illinois has considerably more than 4.0% of total US population.– No, pretty much exactly 4% of the U.S. population: 12.9 million of 317 million. Of the other big states, California has 12% of the U.S. population, Texas 8.2%, New York 6.2% and Florida 6%. The percentages of the national pool of state and local government employees and national population are pretty close to spot on. - Bill White - Monday, May 12, 14 @ 7:41 pm: I concur on the 4%. My error. However, the link I first posted excludes K-12 educators. That might explain why the one link shows IL ranked 47th even if total workers (with educators) are smack dab at 4%. - MyTwoCents - Monday, May 12, 14 @ 7:47 pm: @Arizona Bob, I don’t know about your part of Illinois, but where I’m from, substitute teachers get paid the same, period, unless you’re expressly hired as a permanent sub. Also, they needed retired teachers because there was a lack of people wanting to sub. It’s not a matter of teachers double-dipping, it’s pure necessity, particularly for the rural districts. - Lost in the Weeds - Monday, May 12, 14 @ 7:47 pm: Chicago and the Causes of the Great Recession The article does not show the change in unemployment. It does show where the recession hit the hardest. “This generates a very strong relationship between debt growth and the collapse in spending, as can be seen in this scatter plot. Each dot is a zip code, and it shows that zip codes that had the largest increase in mortgage debt during the housing boom were exactly the zip codes that saw the largest collapse in spending on new autos during the bust:” http://houseofdebt.org/2014/05/08/chicago-and-the-causes-of-the-great-recession.html http://houseofdebt.org/2014/05/08/chicago-and-the-causes-of-the-great-recession.html - Anonymous - Monday, May 12, 14 @ 8:21 pm: Illinois is a sinking ship and all of you want to arrange deck chairs. Good luck! I’m moving!!! I feel great knowing I sold my house. You will not be able to soon. So sad. - Johnny Utah - Monday, May 12, 14 @ 8:58 pm: @Bill White The link you provide shows that Texas caught, then surpassed Illinois in median income in 2012. Do you think there’s any way that turned around going forward? http://www.census.gov/hhes/www/income/data/statemedian/index.html Taking government workers out of the equation and only looking at private sector workers, Illinois still lags in job creation. - Bill White - Monday, May 12, 14 @ 9:15 pm: - Anonymous - Monday, May 12, 14 @ 8:21 pm: Not knowing who you are, Anonymous, I can’t really say whether or not I will miss you when you are gone. For myself, I like Chicagoland - even though there are definite pros and cons. - Bill White - Monday, May 12, 14 @ 9:19 pm: Workers comp rates are a problem - however that is because the medical pay rates are above market. If medical payments for work related injuries were removed from the workers comp system and moved to vanilla health insurance plans, overall costs would decline. But then, a number of medical practices, including orthopedic specialists, would be less profitable. - Throwing Stones - Monday, May 12, 14 @ 9:26 pm: If you move to Texas, get fire insurance, that state likes to be on fire, literally. Also, it is a lot easier to get a support for very low minimum wage in that state as they can get more low wage emplyeesemployees from mexico. Also, look at border patrol (govt jobs), the firefighters (govt jobs) all in Texas. Also, lets not forget the water shortage there, good luck with agriculture. We may have some financial problems, but iI would take them over worrying about my hOuse catching fire or if anything will grow. - stand - Monday, May 12, 14 @ 9:29 pm: Medical pay rates are not the main culprit for workers comp cost. That has nothing to do with primal causation. - Bill White - Monday, May 12, 14 @ 9:49 pm: = Medical pay rates are not the main culprit for workers comp cost= That would be an interesting topic for a definitive scholarly study. - Johnny Utah - Monday, May 12, 14 @ 10:27 pm: Causation is the cause in the workers’ comp problem http://ilchamber.org/wp-content/uploads/2012/05/1WorkersComp.pdf - Bill White - Monday, May 12, 14 @ 10:39 pm: Did the IL Chamber report even examine medical pay rate issues? I see that report as an advocacy piece rather than a neutral assessment. - Bill White - Monday, May 12, 14 @ 10:44 pm: It would seem simple enough to figure out the dollar figures for knee replacement reimbursement at workers comp rates, Blue Cross Blue Shield ACA compliant rates, Medicare and Medicaid. People in the business tell me workers comp reimbursement is more generous than the others. Before accepting the IL Chamber conclusions, I’d want data on the issue I raise. - Johnny Utah - Monday, May 12, 14 @ 11:30 pm: Illinois might be better or worse on the issue you raise — workers’ comp reimbursement. The bottom line is that causation standards are ridiculous. - Sue - Tuesday, May 13, 14 @ 7:49 am: For all of you defenders of the status quo- ask yourselves why are we third on the list for states with more people leaving then arriving? - Headhunters Orange County - Wednesday, May 14, 14 @ 8:16 pm: Hi there, i read your blog frkm time to time and i own a similar one aand i was just wondering if you get a lot of spam remarks? If so how do you protect against it, anyy plugin oor anything you can recommend? I get so much lately it’s drivinjg me crazy so any support is very much appreciated. - software tools - Wednesday, May 14, 14 @ 10:37 pm: I’m truly enjoying the design and layout of your website. It’s a very easy on the eyes which makes it much more pleasant for me to come here and visit more often. Did you hire out a designer to create your theme? Superb work! - still - Tuesday, May 27, 14 @ 8:14 pm: how do you prevent food poisoning Sorry, comments for this post are now closed.