SPRINGFIELD — It’s clear that finding or keeping a job in Illinois is getting tougher, but the reason why isn’t so clear.

By Benjamin Yount

SPRINGFIELD — It’s clear that finding or keeping a job in Illinois is getting tougher, but the reason why isn’t so clear.

Illinois’ July unemployment numbers show that the state is bleeding jobs. The state’s unemployment rate jumped from 9.1 percent in June to 9.5 percent, with Illinois losing 24,900 jobs.

“The question is why, and that’s something that we’re trying to answer,” said Greg Rivara, spokesman for the Illinois Department of Employment Security.

Illinois’ unemployment rate has been higher. In October 2010, the jobless rate reached 9.6 percent.

Gov. Pat Quinn has applauded Illinois’ economic recovery, pointing to months of decline in the jobless rate.

Illinois’ unemployment rate fell from 11.2 percent in January 2010 to 8.7 percent in April 2010. But May, June and now July of this year have seen the rate rise.

Jay Shattuck, a business consultant and lobbyist who works with the Illinois Chamber of Commerce and other business groups, said Illinois’ economic uncertainty is coming home to roost.

“Employers are so concerned with a number of issues,” said Shattuck. “Nobody knows what’s going to happen. Are we going to have more taxes? Regulations? Nobody knows.”

The state ratcheted up personal income taxes by 67 percent, and corporate taxes by 57 percent earlier this year.

Kelly Kraft, a spokeswoman for Quinn’s budget office, said there is “no connection” between the tax increases and the unemployment increase.

However, Kristina Rasmussen, executive vice president the public policy think tank, the Illinois Policy Institute, said several businesses see a connection.

“The policies currently in place — higher taxes, more spending and unreformed liabilities — are clearly not working for those who are struggling to make ends meet,” Rasmussen said.

Shattuck said the tax increase, and Illinois’ overall business climate, are part of the uncertainty employers hate.

“That’s why there are so many businesses hoarding cash; they want to be able to pay the bills,” Shattuck added.

Illinois saw job losses in personal services, trade and transport, and government sectors. Manufacturing continued to add workers in July.

Shattuck said this summer’s legislative hearings into Illinois’ business climate may provide enough stability to convince employers in Illinois to start hiring.

“We’re trying to come up with ways to advance the business climate without costing the state any money,” Shattuck said. “But if we’re going to lower the tax increase that means other incentives have to go away. But which ones?”

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  1. Will the politicians ever wake up?

    The lackluster recovery should not be a surprise to those who have studied economic cycles and conducted some thoughtful analysis. Sadly, our politicians aren't in that group. Our economy has been driven over the last decade plus, by excessive use of leverage at all levels of government; local, state and federal, and debt fueled consumption by individuals. In addition, the "housing boom" was just a sugar rush that fed other economic activity that wasn't sustainable. Yes, it's easier reaching these conclusions with the benefit of looking into the past. So where does that leave us today? This is the key issue which everyone including our political leaders should consider.

    We have an excess supply of housing nationwide, including parts of Illinois. Sunday's NY Times carried a story about an exurb ~ 60 miles southwest of Chicago which is basically a ghost town. One can debate the amount of excess inventory, how long it's going to take to work its way through the system, but the fact is that this real estate overhang is and will depress economic activity for quite a while into the future. The second major issue is the deleveraging at the government and consumer levels. Corporations prudently generated cash and in general have strong balance sheets. As the government and consumers delever, this means LESS consumption and LESS economic activity. So why should there be many new jobs? Where's the demand? Fortunately, Illinois is blessed with fertile agricultural land and that part of our economy is booming. Farmers however don't need to hire as many people due to the significant advances in technology. Technology has also raised productivity but at the expense of new jobs. There has been a structural shift and substitution of capital in place of labor. Illinois has benefited from companies like Groupon and other technology companies, but the numbers would suggest that their employment gains haven't offset the job losses in other sectors. Read some articles published by The Federal Reserve Bank of Chicago on their website. They do an excellent job in looking at the midwest region.

    So where does that leave the politicians. They're hoping and praying for new jobs. But they're also hoping and praying that the Cubs will win the World Series. These are low probability events. While there are many things out of the control of the politicians, they can control the image of Illinois. Illinois has an anti business reputation, deserved or not deserved, depending on whom you speak with. The letter from Caterpillar''s CEO published a couple of months ago should serve as a wake up call. Caterpillar is an industry leader and is very well respected in their sector. People should listen. The lack of a plan to address our state's unfunded liabilities is another major deterent to job creation in Illinois. Just look at the size of the unfunded healthcare and pension liabilities at all levels of Illinois government. It's frightening, and business leaders understand this issue. The quoted figures are staggering, but they're likely even understated. If you believe the figures from Northwestern's Kellogg Professor, Joshua Rauh, you may consider early retirement and get out of Illinois before this mega tax bill comes due. Business people are pretty confident that the State of Illinois will come knocking on their door to pay off these debts. So why incur this additional cost? They don't want to, and instead create additional jobs in other states or other countries.

    Governor Quinn, Kelly Kraft, Jeff Schoenberg, Robyn Gabel, Daniel Biss, Mayor Tisdahl, Evanston Alderman ,  and D202 and D65 School Board members, please take notice.

  2. Wake up?

    These are all liberal progressive politicians. It is impossible for them to wake up. They are all in a political trance on an overdose of hopium. Symptoms? Kick the can down the road, the mantra of "tax-the-rich", social justice, the government is here to help you, etc.

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