Reeder: State government policies stymie jobs rebound
By Scott Reeder email@example.com May 15, 2013 10:18PM
Updated: June 18, 2013 7:44AM
Illinois has the second-worst unemployment rate of any state.
At 9.5 percent, it’s two percentage points higher than the national average of 7.5 percent.
Two percentage points might not seem like much on paper, but that equates to 130,000 people. That’s more than the entire populations of Peoria, Springfield or Elgin.
Think about it — that’s how many jobs Illinois would have to create just to be as bad as the rest of the nation.
Only Nevada has a worse unemployment rate than Illinois. And Nevada’s problems lie almost exclusively with an economy dependent on one industry, gambling.
But Illinois has a much more diverse economy. With its central location, excellent transportation system and a top-notch workforce Illinois should be a powerhouse among the states.
Instead, Illinois is arguably the nation’s biggest laggard when it comes to jobs.
Why? A major reason is that our state has instituted policies that discourage employers from hiring.
The other day, someone pointed out to me that Texas wasn’t as good a place to live because it had more minimum-wage jobs than Illinois.
Yeah, well, Illinois has more unemployed people. Which is worse — a minimum-wage job or no job at all?
Illinois has the fourth-highest minimum wage in the nation, and legislation is pending in Springfield to raise it.
The higher the cost of labor, the fewer people get hired. It’s a basic law of economics.
And the folks most likely to be hurt by this are the least-skilled workers, many of whom are young people.
In 2011, only 27 percent of teens in Illinois had jobs, which is the lowest teen employment rate in the state in the 42 years the U.S. Bureau of Labor Statistics has been tracking this data. The percentage was worst for African-American teens in Chicago, where only 10 percent had jobs.
These numbers are significant because, nationally, about half of all people earning the minimum wage are 24 or younger.
Do you remember your first job as a teenager? I’m willing to bet it didn’t pay much, but it taught you what it meant to work and hopefully it instilled in you some accountability and responsibility. And it prepared you for the next job down the road.
Aside from the minimum wage, other regulatory costs also contribute to the Land of Lincoln’s discouraging unemployment numbers.
For example, the high cost of workers’ compensation deters companies from locating in Illinois and serves as an added impediment for existing employers to expand their workforce.
Just consider, for every $100 in payroll, Texas employers pay 39 cents for workers’ compensation insurance while those in Illinois pay $1.10.
And like it or not, taxes also play a significant role in the state’s unemployment rate.
Illinois has the fourth-highest corporate income tax in the industrialized world. This deters companies from locating here, defers money that could be used for other purposes and makes it more difficult for them to expand.
If we want the Prairie State’s employment numbers to rebound, we need state government to lessen the burdens on businesses, not increase them.
Illinois needs to tax less, regulate less and get out of the way to become more welcoming to businesses and foster economic development.
That also will result in more job opportunity for our residents and a lowering of that embarrassingly high jobless rate.
Scott Reeder is a veteran statehouse reporter and the journalist-in-residence at the Illinois Policy Institute, a nonprofit research group that supports the free market and limited government.