Policy think tank: Illinois should learn from Michigan to reverse manufacturing job losses

By Taryn Phaneuf | Sep 23, 2016

CHICAGO – Illinois lost 22,000 workers in August, the Illinois Department of Employment Security reports.

CHICAGO — Illinois lost 22,000 workers in August, the Illinois Department of Employment Security reports.

While the state’s unemployment rate dropped to 5.5 percent in August from 5.8 percent in July, the change is a result of the labor force declining for the fourth straight month. Illinois lost 8,200 jobs in August — 4,400 of which came from the manufacturing sector. Other hard-hit areas include financial activities, educational and health services, construction, other services and trade, transportation and utilities.

So far, Illinois has lost a total of 8,000 manufacturing jobs in 2016, surpassing 2015’s losses of 6,200 jobs. Illinois is on track to have the worst year of manufacturing job losses since the recession, according to the Illinois Policy Institute.

These workers are going somewhere. To Michael Lucci, vice president of policy at the Illinois Policy Institute, it looks like trends from previous years are continuing, with states like Texas, Florida and Indiana benefiting most from Illinois’ losses. Wisconsin, Arizona and California also often gain people who leave the state.

“There are a number of changes that can be made to keep more people in Illinois. Most specifically, we can stop doing things that cause job loss and drive so many people away,” Lucci told the Madison County Record.

He pointed to several major policy differences between Illinois and the states that gain from its losses. Illinois places a heavier regulatory burden on manufacturing and other industries; taxes are higher, with the highest property taxes in the country; and an estate tax on wealthy families leads business owners to move away when they get older, Lucci said.

“Reversing these policies would be a great place to start. Surrounding states have made many of these changes,” he said.

In a recent analysis of Illinois out-migration problem, Lucci examined how policies enacted in Michigan helped turn around similar labor force losses in a state that was actually worse-off after the recession.

In 2006, Michigan and Illinois each lost a little more than 65,000 people to other states. Two years later, when the auto industry nearly collapsed, Michigan lost 110,000 people — worse than Illinois’ record loss of 105,000 people last year.

“But Michigan has since retooled its economy, brought down taxes and enacted a statewide Right-to-Work law. Those factors combined with a restructured auto industry helped Michigan bounce back and lower out-migration,” Lucci wrote.

In 2015, Michigan lost 39,000 residents, and Illinois has taken the lead in the region, losing the most workers to other states. Michigan’s numbers have improved thanks to the state’s growing manufacturing sector. Since the worst of the recession, Michigan now regains 12 jobs in that sector for every 1 in Illinois, Lucci said, gaining the Great Lakes State 171,000 manufacturing jobs to Illinois’ 15,000.

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