Labor Day Blues: Why Workers in Wisconsin and Iowa are Doing So Much Better Than Those in Illinois

Labor Day Blues: Why Workers in Wisconsin and Iowa are Doing So Much Better Than Those in Illinois

Latest federal labor data shows Illinois headed in the wrong direction on the employment front when compared to its neighbors
CHICAGO - Governor Pat Quinn is using the Labor Day holiday to once again propose raising the minimum wage in Illinois from $8.25 per hour to $10 per hour.  "If we want to fight poverty, curb crime and revitalize our neighborhoods, the best way to do it is with jobs," Governor Quinn said in a news release. "Increasing the minimum wage will ensure that many Illinois workers get a fair day's wages for a fair day's work and can pull themselves from poverty."  Quinn, who is fighting for re-election, will also march in the Galesburg Labor Day parade, a city where he was very vocal in criticizing Maytag when it decided to outsource hundreds of jobs from its Galesburg plant to Mexico. 

However, a recent report from the federal Bureau of Labor Statistics shows that Illinois heading in the wrong direction on one measure of the economy when compared to neighboring states under Quinn's leadership.  Their latest report on June unemployment shows:
  • Only 38 of 372 metropolitan areas nationwide saw their unemployment rate increase from June 2012 to June 2013 (10%).  In Illinois, 6 of 10 metro areas saw increases (60%).
  • Illinois' statewide unemployment rate (9.6%) is now higher than every other state except Michigan's (9.7%).
  • The Chicago-area, an important stronghold for any Democrat seeking statewide office, is now seeing unemployment approaching 10%.
  • Neighboring Wisconsin saw unemployment rates drop in all 12 metropolitan areas surveyed in June, including Janesville, which now has an unemployment rate of 7.9%.
  • The highest metro area unemployment rate in Iowa (Cedar Rapids-4.9%) is now substantially lower than the lowest in Illinois (Quad Cities, 6.9%, which it should be noted includes two cities in Iowa -- Davenport and Bettendorf).

Why the difference between Illinois and its neighbors?

Officials with the Illinois Department of Employment Security note that Illinois has typically trended higher when it comes to unemployment rates for various reasons.  That doesn't explain, however, why Illinois is not seeing its unemployment picture improve like its neighbors are seeing.

One reason may be ongoing perceptions about how each state is run.  Illinois is seen by many as a governmental 'basket case' with high public employee pension debts, a long backlog in paying its bills, and the lowest credit rating in the nation.  Such conditions are not likely to inspire business confidence and hiring, especially if businesses fear the state may raise their taxes or fees to cover budgetary shortfalls or their cost of doing business by mandating higher wage rates. 

Wisconsin and Iowa by contrast have excellent credit ratings, balanced budgets, and well funded public employee pensions.  Both have also taken hard lines against increased spending and taxation, and both are perceived as having strong leadership from the Governor's office.  Both Wisconsin Governor Scott Walker or Iowa Governor Terry Branstad are also against raising their state's minimum wage.

In Illinois, Governor Quinn's response to the recession has been to expand both spending and taxation, whether it be raising the state's income tax rate or supporting increasing toll rates and other user fees, and handing out large sums of tax money for capital improvement projects as part of his 'Jobs Now' program.  Iowa at one time had its own 'I-jobs' program, but discontinued it after Gov. Branstad was elected in favor of policies designed to lay the groundwork for creating more private sector investment in the state.

Iowa and Wisconsin are real-world examples of how state governments in the Midwest can help inspire business confidence and improve hiring, and both stand in stark contrast to Illinois' current approach, which appears to be driving jobs out of state.
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