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Our sorry state

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Illinois boasts the fourth-most big companies in the U.S., including Boeing, Abbott Labs, Caterpillar and Kraft Foods.

Job growth, however, is projected to be second worst in the country over the next five years, according to Moody’s Analytics.

Throughout my lifetime, Illinois has lagged other states at the end of recessions. But this one is worse. Much worse.

posted by Rich Miller
Friday, Sep 27, 13 @ 9:16 am

Comments

Illinois has not created a friendly place for business to thrive. We have amazing assets in our geography and people but have somehow managed to overcome that. Pension reform is an important part of that, but not in a way that welches on promises made and does not respect the clear meaning of the Illinois Constitution. No business wants to invest in a state that does not respect the rule of law. Without contracts (they bring certainty to an uncertain world) no one wants to put capital at risk. A state that does not keep it’s promises is not an attractive place to do business. I hope all keep in mind that if you let the state stick it to one group you will eventual be next.

Comment by facts are stubborn things Friday, Sep 27, 13 @ 9:31 am
Keep in mind, this has been the worst recession in your lifetime.

Comment by Small Town Liberal Friday, Sep 27, 13 @ 9:41 am
In addition to increased global competition, I think a large issue is that most of the Illinois economic-drive industries, particularly Downstate, have matured and require less labor.

Increases in productivity and efficiency allow you to make money with fewer workers.

Farming has been shedding workers for decades. Check out census data for many Illinois farming counties in central and southern Illinois and you’ll see long declines in population.

Manufacturing, while facing global competition, also sheds workers with increases in productivity and automation.

High sulfur coal doesn’t have much of a future with the boom in natural gas (unless you can sell it to the Chinese before they wise up to their massive pollution problem).

Even in the financial services industry in the city, they’re shedding workers left and right due to the communications explosion. CBOT and CME used to be humming with thousands of more clerks, backroom workers, secretaries, etc.

What’s the next big thing? Maybe its energy extraction through fracking. Works elsewhere.

Maybe its legal marijuana cultivation. Why let the gangster get rich on it? The Busch’s were St. Louis’ leading citizens peddling beer, employing thousands. That used to be naughty, too.

But long-term, investing in infrastructure and K-12 and the universities are the only sure thing that state government can influence.

Comment by wordslinger Friday, Sep 27, 13 @ 9:42 am
One of the thing most news stories do not link is that historically most job growth happens in smaller companies, and in these smaller organizations first. Just because you have big companies doesn’t mean they grow the fastest. They grow pretty slow once they get big, are risk adverse, etc.

we need a better environment for the small business to grow. Tax dollars to try to keep the big guys doesnt really mean growth, just less loss to keep the big guys from moving.

Comment by RonOglesby Friday, Sep 27, 13 @ 9:43 am
It seems like Rich had a column a while back about the difficulties in locating a new Wal-Mart and previously some difficulties for vendors at Navy Pier. Illinois has been blessed with some very beneficial natural attributes; but has been cursed with corruption and mismanagement for decades.

Comment by Logic not emotion Friday, Sep 27, 13 @ 9:44 am
Maybe that was vendors at McCormick Place… Don’t remember…

Comment by Logic not emotion Friday, Sep 27, 13 @ 9:45 am
Those businesses are successful and growing. They are expanding. But not here. Other places.

That makes our dilemma more acute. The decision makers are not investing in Illinois. If they we’re start ups, they wouldn’t have picked Illinois.

It’s pitiful when the state that had it all forgets how it got it all.

Comment by VanillaMan Friday, Sep 27, 13 @ 9:51 am
Worthless speculation from two dinosaur organizations with lousy track records. What makes either of them relevant? This recession was worse than any, except for the Great Depression. Some have stated certain aspects were worse than the 1930’s but for the safety net infrastructure. It will take time to properly recover with a strong foundation. And that calls for a skilled hand and a scalpel not a hammer…

Comment by nothin's easy Friday, Sep 27, 13 @ 10:00 am
Facts: I’m afraid you have it backwards, regarding business community expectations. You call for rule of law and respect for contracts (the position of the unions and others opposed to drastic pension reforms) — while my experience with big and small companies (Civic Committee, Chamber, NFIB, etc) is that they want to see major pension restructures similar to what happened in the private sector, and are not at all focused on the Constitutional “enforceable contract” issue.

Getting out from under unsustainable “debt”, less regulation, tort reform, and lower taxes, are their expectations of the state govt.

Comment by walkinfool Friday, Sep 27, 13 @ 10:09 am
People keep forgetting how big a hole rod blagovich dug in this state.

Comment by foster brooks Friday, Sep 27, 13 @ 10:11 am
Illinois is part of the rust belt. In many ways, we have fared better than our peers. Manufacturing and, as someone said, farming, were once big business, but are no more. There is a new economy. Downstaters, people in Wuakegan, Rockford, East St. Louis, Western IL have fewer job opportunities because of these changes in the economy. There have been efforts to court businesses and adapt to a service and tech economy, but our reputation (corruption, inept politicians/leadership) and heavy regulations make Illinois less appealing than, say, Wisconsin or Indiana. We also have unique and deep poverty and few answers to address unemployment among our least educated, most isolated populations. There is also an ongoing mismatch between the skills people have and the skills employers need. It takes time to move these things and (too) many of our elected officials, IMHO, are so self-centered (get the power, keep the power) that they just are not taking the steps to move economic development. The number of vacant blocks and foreclosed properties on the city’s south side, in the suburbs, increased poverty in the suburbs - no one really wants to deal with this. They are hard topics.

Comment by Worker bee Friday, Sep 27, 13 @ 10:15 am
RonO is right again.

The economic growth engine is small companies, but all we talk about, support with tax breaks, lobby for, and respond to, are the giant corporations.

Let’s see some news analysis and reporting on small companies and start ups, in this state versus others. Their needs and concerns are frequently different from the big ones’.

Comment by walkinfool Friday, Sep 27, 13 @ 10:22 am
Today the House Revenue Committee is hearing subject mater testimony on Corporate Tax Disclosure. No wonder companies are avoiding Illinois. When the legislature is openly hostile to job creation it’s no wonder companies run the other way. Illinois has the resources, location and workforce to be an industrial giant. We also have the second highest unemployment in the nation. Not shocking in a state where job providers are viewed as piggy banks instead of partners.

Comment by Rail Sitter Friday, Sep 27, 13 @ 10:26 am
Yes, our policies and politics are much worse right now than at the end of other recessions. We really need to stabilize our finances, properly invest in our infrastructure and reduce our fixed business costs to be competitive (Unemployment insurance & workers compensation costs).

While we’re home to many of these corporations, their growing their workforce in other states because it’s simply more cost effective.

Comment by Ahoy! Friday, Sep 27, 13 @ 10:26 am
WalkingFool

You ever wonder why they want that stuff? Might it be because virtually no-one wants to pay more taxes and at the end of the day without other changes the state is going to have to raise taxes significantly again to try and deal with the issue.

But wait, that was the elected officials. Yeah, but all sorts of labor leaders testified in 2005 in favor of the pension holiday. So I have a finite amount of sympathy.

Some of us though it was stupid back then

http://htsblog.blogspot.com/2005/05/yet-again-another-budget-solution.html

Comment by OneMan Friday, Sep 27, 13 @ 10:27 am
==Not shocking in a state where job providers are viewed as piggy banks instead of partners. ==

Shall we not tax corporations at all?

Comment by Demoralized Friday, Sep 27, 13 @ 10:29 am
Corporate tax transparency is an “attack on job creators”? In what universe?

Comment by walkinfool Friday, Sep 27, 13 @ 10:34 am
Growth lags in Illinois but it is non existent in Southern Illinois. If you take the schools, prisons, and other government jobs out of the picture we have had little or no job growth for the last 30 years. Let’s hope the oil boom brings some growth in the next few years,

Comment by Nieva Friday, Sep 27, 13 @ 10:34 am
Opening and running a business in Chicago can be a pain in the behind. Although the mayor is reducing the large volume of licenses that required, it is still tough.

For construction, the permit process is ridiculous. The fact that we have “permit expediters” shows the insanity of it all. Why not just call them “clout” or “bagmen”? Let’s just be honest about the system.

I love living in Chicago, but can be amazingly unfriendly to business.

On top of that, there is still a substantial faction in Springfield that looks down on any corporate interests. Corporations are viewed as the enemy. This morning, there was a hearing where the apparent goal was to do little other than to make things more difficult on corporations, in the name of “transparency.”

When you have those restrictions and those underlying attitudes, you are going to lag more business-friendly states.

Comment by Skeeter Friday, Sep 27, 13 @ 10:36 am
@Demo

I don’t think anyone is arguing that Corporations shouldn’t be taxed. The thing that amazes me is the idea that somehow a corporation is a different business than any other business. Corporations should be treated the same as any other business IMHO in how they are taxed, hand outs, and regulations. If a local grocery store cannot qualify for the same tax incentive neither should the corporation.

Comment by Mason born Friday, Sep 27, 13 @ 10:41 am
–There have been efforts to court businesses and adapt to a service and tech economy, but our reputation (corruption, inept politicians/leadership) and heavy regulations make Illinois less appealing than, say, Wisconsin or Indiana.–

Not following you there. Wisconsin and Indiana aren’t in the ballpark when it comes to service or tech jobs.

–Not shocking in a state where job providers are viewed as piggy banks instead of partners.–

Get real. Two-thirds of Illinois corporations pay no state income taxes. The workers are the piggy banks.

And I haven’t noticed any lack of state handouts for illusory “job creation.”

Read the annual reports of Illinois’ largest corporations. They have to disclose the total amount of what they pay in state and local income taxes nationally.

When you see that number, you’ll understand why they don’t want to break out the Illinois number.

Comment by wordslinger Friday, Sep 27, 13 @ 10:47 am
=
Keep in mind, this has been the worst recession in your lifetime.=
Maybe, you didn’t read this part =Job growth, however, is projected to be second worst in the country over the next five years, according to Moody’s Analytics.= Illinois is lagging behind 48 other states.

Comment by Downstater Friday, Sep 27, 13 @ 10:48 am
=== Job growth, however, is projected to be second worst in the country over the next five years ===

We’re running behind before we even get started.

Ouch.

But yeah, let’s re-elect this Governor so he can make sure to see through that 5 year plan.

Comment by Formerly Known As... Friday, Sep 27, 13 @ 11:01 am
I see all of the negative statistics/projections that are being cited here regarding our state. Where are all the statistics regarding the positive economic indicators such as State GDP numbers, per capita income, etc.? All of this makes me come down with a case of the Statistician’s Blues!

https://www.youtube.com/watch?v=8ZWmbWrMwqo

Comment by Anonymous Friday, Sep 27, 13 @ 11:10 am
=The city of Chicago, whose credit rating was downgraded in recent months, has pension liabilities that are 678 percent of its annual revenue, Moody’s said. Cook County, which includes Chicago, has the second-worst pension liability burden, at 382 percent of revenue. Meanwhile, the metropolitan water system had the sixth-worst ratio at 323 percent.

Chicago Mayor Rahm Emanuel (D) has warned that the city’s required pension contributions will nearly triple, to $1.2 billion, between 2014 and 2015 — about one out of every five dollars spent to run the city. He has called for the state to restructure the pension system, saying essential city services would otherwise suffer.=
From the Washington Post. Just another nail to be hammered in the coffin for Cook County and Chicago making it a less desirable place to live and work.

Comment by Downstater Friday, Sep 27, 13 @ 11:14 am
Others have made a lot of valid points.

I’m just going to add one observation. Back when I tracked the numbers from about 1980 to 2002, job recovery in Illinois following a recession lagged the national economic recovery by 18 to 24 months.

Comment by RNUG Friday, Sep 27, 13 @ 11:20 am
In FY12, corporate income tax collections were $2.5 billion, 7% of general revenues.

For that, corporations get roads, schools, rule of law, etc.

On what planet is $2.5 billion in corporate tax revenues somehow a crippling blow to Illinois business? A state with an annual $644 billion GDP?

For crying out loud, last year Abbott Labs alone had sales of $39 billion and profits of $4.7 billion. It’s effective tax rate, across the globe, was 2.2%.

Comment by wordslinger Friday, Sep 27, 13 @ 11:33 am
Thank God for our geography.

Comment by A guy... Friday, Sep 27, 13 @ 11:44 am
== llinois boasts the fourth-most big companies in the U.S., including Boeing, Abbott Labs,
Caterpillar and Kraft Foods. IL also ranks 14th among the states in quality of life. ==

Those with a political agenda of dissing Obama’s home state and its Democratic majority ignore or dismiss positive facts about the state while focusing on and exaggerating the negative. It has been going on since Obama starting running for president.

Comment by reformer Friday, Sep 27, 13 @ 11:54 am
Maybe a bit off point, but I wonder how much of the increasing state and local government pension payouts stay in Illinois. It seems to add insult to injury when the payouts by mismanaged pension plans, funded by Illinois taxpayors, end up enhancing the economies of Arizona and other warm weather states, with whom Illinois may be competing for jobs.

Comment by Cook County Commoner Friday, Sep 27, 13 @ 12:02 pm
Maybe you can fund the pensions with more red light and speed cams. Maybe you can raise parking rates another 30 dollars. How about $500 vehicle stickers.
Oh, so much left to tax and so little time.
One need only look no further then Chicago. New speed cam revenues are NOT being used to pay debt. OH NO, they started another new program!!!!
Spending addicts are all we have left.

Comment by bk Friday, Sep 27, 13 @ 12:20 pm
“we need a better environment for the small business to grow. Tax dollars to try to keep the big guys doesn’t really mean growth, just less loss to keep the big guys from moving.”

Ron O. nails it.

You really want to see something depressing? Go out to kickstarter - where these days small (I mean the really tiny folks) try to get funding for the ‘out there’ ideas.

But they’re the ‘cutting edge’ ideas - succeed or fail. For example, just take a look at:

http://www.kickstarter.com/projects/occipital/structure-sensor-capture-the-world-in-3d?ref=category

or:

http://www.kickstarter.com/projects/117421627/the-peachy-printer-the-first-100-3d-printer-and-sc?ref=category

or

http://www.kickstarter.com/projects/1410146982/zim-the-first-dual-head-personal-3d-printer-fully?ref=category

There’s like 30+ different really smart crowdfunding ideas out there in 3-D printing/additive manufacturing. Guess how many are based in IL (Note: Haven’t been through all of them, have yet to find one).

And that’s just one area of the crowdfunding going on. You want to grow jobs here in IL? Good jobs? Well, here’s where you start.

There’s a message here - If you’ve got dreams and want to do something innovative, special, and great - you’re going to be located elsewhere than Illinois.

It’s not that we’re going to lose the jobs - It’s that we won’t even be considered. Illinois isn’t even thought about.

We.Don’t.Count.

Crazy idea - If you are based in IL and have a successful kickstarter idea that reaches 100% funding (up to $250k) within the required time frame, and are/will stay based in IL for a min. two years, then the state will up front match the amount raised (up to $250k).

Yeah, it’s probably going to cost the state $10-$15 mil each year (it would be great if even more). But if you want jobs (startups), it’s worth the effort.

But doing that would mean our state’s political leadership would have to think creatively - and that’s certainly beyond the capabilities of our current governor. He’s too busy trying his hardest to totally alienate the members of both parties in the state legislature.

Comment by Judgment Day Friday, Sep 27, 13 @ 12:40 pm
Is this the same Moodys that failed to see the largest financial crisis of our lifetime coming? Right…

Comment by K3 Friday, Sep 27, 13 @ 1:26 pm
The IL voter put people like Blago in office and then RE-ELECTED many of them! The Clinton Crowd that helped put in NAFTA escaped the wrath of that same IL voter. I made the mistake of supporting Obama, but only ONCE!

Comment by Geneseo Gent Friday, Sep 27, 13 @ 1:28 pm
You want to see something interesting?

Go out to kickstarter.com Then select “Food”, then select ‘Successfully Funded Projects”. There’s a bunch of IL projects/locations out there. Imagine the impact of giving those folks matching, minimal/no paperwork State grants and saying “Go out and do something special - create your dreams”.

They’re not big money. Biggest one I saw was less than $50k, and most were easy under $20k. But there’s successfully funded projects from Rogers Park, the Pullman neighborhood in Chicago, food trucks, Garfield Park, etc.

Imagine what they could do with a little bit more funding.

Be a far better use of funds than providing IL with a “Kayaking czar”.

Comment by Judgment Day Friday, Sep 27, 13 @ 1:31 pm
Didn’t get this link in my last comment. But it’s a good example of what we need to be supporting:

http://www.kickstarter.com/projects/chicagojohnnys/chicago-johnnys-hot-sauce-the-kind-you-put-on-ever

Comment by Judgment Day Friday, Sep 27, 13 @ 1:36 pm
==The Clinton Crowd that helped put in NAFTA==

Actually NAFTA was negotiated under George H. W. Bush and was done before Clinton got in office.

Comment by Demoralized Friday, Sep 27, 13 @ 1:44 pm
Demoralized,

You are wrong NAFTA, was mostly negotiated under Bush, but Clinton and Bill Daley are the ones who pushed it through the senate and got it ratified.

Comment by Fed up Friday, Sep 27, 13 @ 2:54 pm
Facts are stubborn things -

Bill Daley was Bill Clinton’s point man on NAFTA in the US Congress. In the US, Congress has to approve such treaties. Back in 1993, both the US House and US Senate had Democratic majorities.

US House passed NAFTA on Nov 17, 1993. US Senate passed it 2 days later. Bill Clinton signed it on Dec 8 1993. Then, Clinton stated “NAFTA means jobs. American jobs, and good-paying American jobs. If I didn’t believe that, I wouldn’t support this agreement.”

Comment by BobInPeoria Friday, Sep 27, 13 @ 3:56 pm