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* A U of I economist claimed yesterday that almost half of Illinois’ $13 billion budget deficit is due to lost jobs over the past decade, with another decade of slow growth ahead of us…
“Before the current recession, it has never taken us more than eight years to recover from a recession. We’re now in our 10th year, with few prospects to get out soon,” economic analyst Geoffrey Hewings warned local government leaders Thursday. “We’re now essentially looking at the prospect of a lost two decades.”
Hewings is the director of the Regional Economics Applications Laboratory at the University of Illinois at Urbana-Champaign. He continued…
One factor in the problem is that Illinois’ taxes are outdated, based on a 1970s-era economy when there were far more manufacturing jobs, he said. That sector still is important, and job-heavy, as current workers retire. But it has shrunk, which links to a related factor in Illinois’ changing demographics. The state is not losing population. But the people moving in make far less money than the people moving out. Illinois has dropped from fourth to 15th in per capita income.
Oof. More…
According to Hewings’ figures, Illinois is about 600,000 spots lower than the employment peak in November 2000. The state made up some ground after a recession in the following year but never completely recovered, and another 386,000 jobs were lost in the current recession. Some people have stopped looking for work. Illinois has been slower than other states to recover, but in the 2000s, there was only one high-growth year when more than 50,000 jobs were added.
“This is not a pretty picture,” he said. “Even at twice the high-growth, it will take us five years to get back to November 2000.
People too often forget that the current “Great Recession” is only the latest hammer to hit Illinois. The decline began in the 1970s, then we were hit badly in the early 1980s. After some real growth in the 1990s, the post 9/11 recession never fully abated. We were totally unprepared and in the worst possible position when this current recession took hold. The surplus generated by Jim Edgar was spent, and then some, by George Ryan. And it just kept getting worse and worse under the clueless Rod Blagojevich. As we sank like a rock beginning in 2007 and 2008, the Democrats were too busy fighting each other to do anything about it.
* Now, let’s dig into the newly released unemployment numbers, shall we? Click the pick for a larger image…
* The Department of Employment Security tried to put the best face forward…
The Illinois Department of Employment Security says August represents the eighth consecutive month the rate was steady or declined. It was down slightly from July’s rate of 10.3 percent.
IDES Director Maureen O’Donnell says the long-term trend of falling unemployment may not be felt yet in local neighborhoods. But she says creating jobs, retaining workers and encouraging investment will help Illinois recover from the recession.
There were 671,400 people unemployed in August, about 12,000 fewer than in the previous month. The Illinois economy lost about 4,200 jobs in August due to declines in government-related jobs and Census 2010 positions.
Actually, as you can see from the above chart, it wasn’t just lost government jobs which led to the decline. Another 16,000 jobs were lost in various sectors. And I checked with IDES and was told that Illinois lost 5,900 federal jobs in August, mainly due to Census layoffs. But it gained a bunch of jobs at schools as they began to reopen, and another 500 local government positions. The “Educational” line in the report is mainly for private schools and colleges.
The biggest gain was in construction, due in large part to the state’s capital spending and the federal stimulus program. The Chicago Tribune and others regularly attack those two programs, but they’re the only thing keeping us from the abyss right now.
* IDES is right about the encouraging trend, however. Progress Illinois’ chart…
We seem to be improving much better than the nation as a whole since December, but we were in a much deeper hole to start with.
* The governor was quick to emphasize the positive…
On the same day Illinois got some better job news, Gov. Pat Quinn got another chance to talk about the state’s improving economy. But it remains to be seen if voters will ever hear the good news.
The Quinn campaign is quick to point to its economic selling points. Campaign officials say Illinois led the Midwest in new jobs in the first half of 2010. That one in every 10 new jobs in the US was in Illinois in the first half of the year. Illinois is outpacing the growth of the nation (0.07 to 0.05), and that the state [grew] 43,000 new jobs this year.
These are some of the very same points I made in yesterday’s Capitol Fax. It’s good to see that the faction within the campaign pushing for a jobs-focused message is starting to make progress, but Quinn needs to run some ads on this stuff for crying out loud. Enough with the decades-old wedge issues, already. It’s about the jobs, not the guns.
* More…
Mark Denzler, vice president of the Illinois Manufacturer’s Association, said after many months of idled production, companies are ordering once again.
“Manufacturing has picked-up slightly this year, we’ve added about 13,400 jobs since February. Companies are filling those shelves again, they got low on goods and manufacturing orders are up.” […]
But Denzler is quick to point out that while Illinois has added more than 13,000 manufacturing jobs in 2010, other Midwestern states have added more.
“All of our neighboring states, in the last year, have added more manufacturing jobs than Illinois. So we generally trail other states when it comes to manufacturing recovery.”
The manufacturing uptick is heartening, but there’s still obviously a long way to go. And the fact that we have 7,200 fewer jobs in the economy than a year ago may seem like we’ve hit bottom, but that also means there’s been no overall growth at all. We need more darned jobs, man. Businesses are starving for customers, and they definitely need help as well.
* Related…
* American Society of Civil Engineers Illinois Report Card
* A family-style view of the Illinois budget crisis
* SJ-R: Quinn must answer lottery questions
posted by Rich Miller
Friday, Sep 17, 10 @ 9:35 am
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New housing was a dynamic driver of the state economy in recent years. That requires a lot of consumer confidence, credit and spending. Ain’t happening right now.
What’s next? Unless you’re counting on immigration, which drives most of the country’s population growth, probably a continued, long-term transition to a relatively wealthy, economically diverse state with a stable population.
Comment by wordslinger Friday, Sep 17, 10 @ 9:52 am
There are entire industries that have been decimated in the current recession. Commercial real estate has all but collapsed. Think General Growth, Equity, and all the related businesses that support commercial real estate. These are big companies in Chicago and until that market gets worked out, there is going to be a large displacement of workers.
Comment by Anon Friday, Sep 17, 10 @ 9:54 am
Rich, you’re absolutely right. My husband and I saw the “Porsche and condo” ad for about the sixth time last night, and I found myself wondering whether I should vote for someone based on their choice in wheels. Not to mention — geez, my uncle has a condo in Florida. He’s not a bad guy.
I was never gonna vote for Brady. But it’s time to give me something that will get me off my (so-far-unstamped) butt and work for the Democratic ticket. I need an ad that will drag me off the couch and into the phone bank — and that will get my hard-D neighbors out of the house and into the polls on Election Day. And that one just isn’t it.
Believe it or not, Governor Quinn has done some good things in office. Too bad people don’t know what they are.
Comment by soccermom Friday, Sep 17, 10 @ 9:56 am
“One factor in the problem is that Illinois’ taxes are outdated, based on a 1970s-era economy when there were far more manufacturing jobs”
Have any of these eggheads yet come to the conclusion that we are a service based economy because the tax system penalizes manufacturing and favors services?
2010: “Oh I know! Let’s start taxing services like manufacturing in order to bring our tax code into the 21st Century!”
2030: “How come their are no services?”
Comment by Leroy Friday, Sep 17, 10 @ 9:57 am
Speaking of bad news here is a little quote in the SJR from NoTaxBill that might energize some folks…
….”I asked him, ‘Do you support or oppose right-to-work for less?’” Guethle said, adding his own negative spin to the concept, reflecting the union stand against the idea.
“He goes, ‘Oh, I support right to work,’” Guethle quoted Brady. “‘I think it’s the way to go.’”
When Guethle pointed out that he and others in the room were union advocates, he said Brady responded, “Yeah, I know who you are. It’ll never pass. … But I support it.”
Guethle said his view of the idea is that “everybody’s wages go down half” because lower union wages would also mean lower wages in the nonunion work force.
Let’s see:
— cut minimum wage,
— freeze educator’s pay and
— right to work….looks like NoTaxBill is letting his “plan” slip out a little each day.
Comment by CircularFiringSquad Friday, Sep 17, 10 @ 9:58 am
Given the behavior of state government, how does one come up with the conclusion that half of the $13 billion deficit is due to the state’s lost jobs over the past decade? Ryan spent the surplus, Blagojevich continued the insanity.
That same 1970’s tax system gave us the surplus in the 90’s.
Comment by Greg B. Friday, Sep 17, 10 @ 9:59 am
===That same 1970’s tax system gave us the surplus in the 90’s. ===
Well, if you’re prepared to wait for another truly gigantic stock market bubble, then I guess you’re right.
Comment by Rich Miller Friday, Sep 17, 10 @ 10:03 am
Both gubernatorial candidates go back far enough in our history to have had a leadership role economically if they had a plan. Both men had a front row seat to our economic decline.What did they do? What are they saying now?
I have been writing about our lost decade for a few years, but my fellow Democrats have been willfully blind to this reality and I have been dismissed repeatedly as a scaremonger. Now will they listen?
Illinois has been in a decline my whole adult life. The doors that we open in “The City That Works” have been locked shut in a lame attempt to keep economic reality out by the real scaremongers running governments.
Chicago used to kick @# and became Chicago doing so. We have a whole generation of fat satisfied lazy leaders who failed to understand that you cannot sit back and stay as great as we were. We don’t have mountains or warm beaches or sea breezes to draw people. We have hard winters and snow. Chicago is here because it is where folks could come to make lots of money raise a family and get an education.Today we won’t even allow WalMart to lower our cost of living. Our schools are crap. Families are moving out.
Open the doors and let the world in. Then beat them at their own game. Begging is for losers. Our great grandparents in Chicago would be ashamed at how we lost the Chicago can-do spirit.
We need a businessman to lead our governments. To know what it is like to fight forr a buck in the real world. Not another pencil neck professional politician. It is time for a real change not another campaign slogan promising a political change.
Illinois has to return to the basics. What we got now is rotted and corrupt. That is why we are in our current situation.
Comment by VanillaMan Friday, Sep 17, 10 @ 10:17 am
Rich, Did you mean to use “Peaks” as a play on words or did you mean “Peeks”?
Comment by Draznnl (Rhymes with orange) Friday, Sep 17, 10 @ 10:35 am
VM - you must not have gotten the memo - Chicago has only become a ‘global city’ in the past few years, and it’s all thanks to Mayor Daley.
The media has spared no ink or bandwidth making sure I know this.
Comment by Leroy Friday, Sep 17, 10 @ 10:35 am
Leroy is right. You can count on the Democrats to pass a service tax. They already passed a service tax out of the Senate last year (House Bill 174). It is just a matter of time before we are paying another 6.5% for a hair cut or dry cleaning. We know Brady voted againt it. Where is Quinn on the Service Tax?
Comment by Pink Tomato Friday, Sep 17, 10 @ 10:41 am
We had a market bubble in housing this last decade and strong economic growth.
Empirically, from what’s been provided there appear to be some holes in the good professor’s analysis.
Doesn’t mean he doesn’t offer any food for thought or it’s not worth further reading.
Comment by Greg B. Friday, Sep 17, 10 @ 10:50 am
Let’s see:
— cut minimum wage,
— freeze educator’s pay and
— right to work….looks like NoTaxBill is letting his “plan” slip out a little each day.
Just not going to happen with the Dem’s in charge of the General Assembly.
Comment by LittleTruth Friday, Sep 17, 10 @ 10:51 am
Thanks, Draznnl, fixed. Oops. Also, how does that rhyme with orange? lol
Comment by Rich Miller Friday, Sep 17, 10 @ 10:53 am
In a typical Chicago suburban street, walk about 1000 feet. The unemployment rate indicates that there would be two people in those 20 houses unemployed, and another person or two underemployed. With the recent down tick of unemployment, the number of people unemployed or underemployed in those houses hasn’t change significantly.
From the viewpoint of our strolling observer, the number of his friends, neighbors and family members suffering from the recession hasn’t changed significantly.
Quinn can tout the better employment numbers all he wants, but the employment growth rate is so anemic that from the view point of the voters, the situation hasn’t changed. In the US, it will take about 300,000 new jobs every month for the next FIVE years to get us back to the employment rate we had when Obama was inaugurated.
So I say this, any politician’s ad, Quinn’s included, that tout their ability to increase job falls flat with the average voter. I am not nay-saying the obvious good news here, but it is too little, to late, to make any difference to voters. If Quinn were to bring in some company that would employ 100,000 people, that could be a game-changer, but finding such a windfall is virtually impossible.
Quinn is toast.
Comment by Cincinnatus Friday, Sep 17, 10 @ 10:53 am
If smaller boarder states around us are gaining more jobs, then maybe we really need to look at our tax, legal and economic development policies. Our workman’s comp rates, that directly affect a business’s bottom line, are double that of Indiana’s and one of the highest in the nation. Add to that our national perception of being a “judicial hell hole” and our lack of progress in public education; it’s tuff to attract companies to locate here in a 21st century marketplace.
Comment by Ahoy Friday, Sep 17, 10 @ 10:55 am
Cincinnatus, we can’t keep thinking in terms of that huge windfall company. Because most likely, even is we can bring it here, it’s coming from someplace else in the U.S. So it’s a zero sum game.
We need to make the kinds of investments in innovation and new industries that will put the next Silicon Valley right here in Illinois — creating hundreds of thousands of new jobs for years to come. That means we need to make some smart bets on small companies with the capacity to grow big, fast, and we need to make some bets on promising new technologies.
An old school approach is not going to cut it in this century.
Comment by soccermom Friday, Sep 17, 10 @ 10:57 am
Add jobs. Add taxpayers. Add revenue to State government.
In reading the article, I didn’t see anything about increasing income taxes on the existing diminished number of workers in Illinois. The article also stated that the states surrounding Illinois were now adding new jobs at a faster pace than Illinois since the start of the year, after I’m assuming, taking a similar beating following the economic collapse two years ago.
Does it matter all that much if service jobs are taxed differently at this point in time if you are adding income tax payers to the tax rolls?
Add jobs. Add taxpayers. Add revenue.
Comment by Louis G. Atsaves Friday, Sep 17, 10 @ 11:00 am
soccermom,
I was only acting as a political analyst here, and not an economic one (see the Morning Shorts for that). All I am saying is that short of a major coup (impossible at best), these nickels and dimes claims of a couple of jobs here and there by any politician, especially the very lame Quinn, have no political effect, and as such will not resonate with voters nor effect the election.
Comment by Cincinnatus Friday, Sep 17, 10 @ 11:13 am
Ah yes, VMan’s old Lonesome Rhodes long-decline song. So sad.
Not to spoil things by entering a few facts, but:
–The Chicago Metro area has the fourth largest GDP in the world behind Tokyo, New York and LA.
http://www.citymayors.com/statistics/richest-cities-gdp-intro.html
–Illinois ranks 5th among the states in GDP behind California, Texas, New York and Florida.
http://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP_%28nominal%29
Comment by wordslinger Friday, Sep 17, 10 @ 11:22 am
Illinois’s problem is our lousy job climate. Until we get that fixed, expect our neighbors with better run states to grow their economies faster.
Blago and Quinn have done nothing for private sector job creation. Public works are good if they’re needed, but they don’t drive the economy. The private sector does and until the Democrats start to realize that, they’re doomed and determined to take us down with them.
The EDGE tax credits only target those who kiss the governor’s ring. If you want broad-based job creation, then create broad-based incentives or an economic climate that’s supports business creation rather than pile on taxes and regulations.
One example, look to small fight over hair braiders this spring. Hairdressers saw them as competition and wanted them regulated. Hair braiders argued otherwise. The Democratic solution was to regulate hair braiders separately and call it a victory. A free market solution would be to realize there’s no reason to regulate hair braiders in the first place.
Comment by Downstate Friday, Sep 17, 10 @ 11:50 am
“Half the $13 billion deficit” is pretty much than annual shortful. The other half is the unpaid bills carried over.
That pretty much means the entire deficit is due to job loss (this year’s shortfall plus each of the last years’ shortfalls that we are still paying off).
And here I thought it was all due to out-of-control spending…
Comment by George Friday, Sep 17, 10 @ 12:12 pm
People need to see some concrete action which places more than a pittance in their hands, right now. And not temporary aid (stimulus). Real, structural change which will get folks spending and thereby improving job prospects. In my area of Skokie, one of the largest expenses to keep wallets closed is the property tax. For most folks I know, the property tax is the single largest tax paid, followed by the payroll (Social Security) tax. You want more jobs? Get people spending. Then the employers will return.
Comment by Cook County Commoner Friday, Sep 17, 10 @ 12:44 pm
- George - Friday, Sep 17, 10 @ 12:12 pm:
“Half the $13 billion deficit” is pretty much than annual shortful. The other half is the unpaid bills carried over.
And here I thought it was all due to out-of-control spending…
It is, George. If spending exceeds available revenue, you get deficits. The State did not adjust its priorities and spending profiles to meet revenue projections. Instead they robbed pension funds and borrowed money. I can almost understand when this happens at the very beginning of economic turmoil, but this state has been out of control when times were good, and even more so when times were bad. Totally irresponsible behavior.
Comment by Cincinnatus Friday, Sep 17, 10 @ 12:48 pm
–Add jobs. Add taxpayers. Add revenue to State government.–
I wish people who use these broad based statements came up with solutions instead of obvious sayings. How do you propose to do that captain obvious? You don’t think that’s already the end goal?
Comment by Ahoy Friday, Sep 17, 10 @ 3:03 pm
Well Soccermom and Quinn supporters what does this all tell you about negative campaigner Quinn?
Quinn “fired” AKPD, and they probably told him to not to go negative.
Don’t let me get started on his Sheila Simon pick. The pick he just insisted on because he just knew that she would be able to deliver downstate and women votes.
If he thought going negative was going to help him, and it hasn’t, he has no one to blame but himself and maybe his crazy brother who is helping to run his campaign. Ditto on the whole Sheila Simon thing, Quinn has no one to blame but himself.
Quinn does not make good or effective decisions as a governor or candidate. He doesn’t deserve to be governor anymore. He’s worn out his welcome and thankfully more and more people in Illinois have begun to see that.
Comment by Not using my state-issued computer Friday, Sep 17, 10 @ 4:27 pm
===and they probably told him to not to go negative. ===
Wrong.
Comment by Rich Miller Friday, Sep 17, 10 @ 4:32 pm
===The Democratic solution was to regulate hair braiders separately and call it a victory. ===
That’s a complete misread of the bill. Even the free market Illinois Policy Institute supported it.
Comment by Rich Miller Friday, Sep 17, 10 @ 6:39 pm