 Government taking too much money from the private economy through taxation and
imposing too many regulations has in large part driven Illinois’ sluggish
economic growth. As a result, Illinois’ private-sector economy is not producing
enough jobs and growth to keep Illinoisans in the state, and out-migration has
reached record levels.
Since June 30, 2015, Illinois has operated without a full budget, leading to
speculation that the lack of a budget is driving job losses and a slow state
economy. This assumption, in turn, has fueled the idea that passing virtually
any budget is better than experiencing the fallout from a stalemate between the
governor and the General Assembly over the inclusion of fundamental economic
reforms as part of a budget plan. Perhaps surprisingly, jobs growth in sectors
associated with state government has continued, while much of the private-sector
economy has stagnated. Undoubtedly, dislocations and economic pain have occurred
due to the budget impasse, especially for families involved in providing or
receiving social services. However, Bureau of Labor Statistics, or BLS, data
show that state government, health care and social services sectors have still
seen jobs growth. Meanwhile, the rest of the tax-generating private sector
continues to suffer under the state’s onerous tax and regulatory burden.
Health care and social assistance employment have continued rising during the
budget stalemate
Employment in health care and social assistance has been rising steadily in
Illinois for years. Even during the worst jobs months of the Great Recession,
from January 2008 to January 2010, health care and social assistance continued
adding jobs at a brisk pace, rising by 22,000 jobs during a time when the state
lost more than 400,000 net jobs in total.
More recently, jobs in the health care and social assistance sector have
increased by 11,200 in the year since the state’s budget impasse began.
Jobs growth in health care and social assistance has been 1.5 percent in the
year since the impasse began, on pace with jobs growth in this sector in
previous years. This is compared to Illinois’ overall jobs growth rate of 0.7
percent over the same time. It is normal for jobs growth in health care and
social services to outpace the economy as a whole as baby boomers require more
care. However, those who have warned Illinois’ budget gridlock would cause
terrible losses might find it surprising that jobs growth in health care and
social services – a sector with more state government involvement than most –
has continued unabated during the impasse.
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 While it is possible job gains in parts of the health care and
social services industry not affected by the impasse are simply
outweighing losses occurring due to state government, overall
employment disruption has not occurred in the sector. Thus the BLS
data do not support the claim that the budget-stalemate-induced
disruption of state social services and health care spending is
slowing down overall jobs growth in the affected sectors, or in the
economy in general. The trajectory of jobs gains in health care and
social services has remained steadily upward.
State government employment has increased during the budget
stalemate
BLS data similarly show that the budget impasse has not affected
employment in state government. While state government employment
showed some volatility during the recession timeline, it was still
steadier than many private-sector industries. In the past year of
budget impasse, state government payrolls have been relatively
steady, edging up by 1,200 in the 12-month period.
Illinois’ overall job market has been weak for the past year, and it
has been weak for the entire post-recession era. In fact, Illinois
is one of a few states that still has fewer people working today
than it had working before the Great Recession began. This is at
least in part because so many working-age adults have been leaving
Illinois.
It is important for Illinois to have a full balanced budget that
provides state services for those who need them most. It is equally
important, however, to remember that state services and all
government spending are made possible through tax dollars first
produced in the private sector. If the private sector isn’t growing,
neither will the government coffers that fund state services.
Illinois Democrats and Republicans have not been able to agree on
much recently. However, the state is pushing itself and its
municipalities up against the prospect of required pension payments
in the face of soft economic growth, weak job creation, sputtering
gains in tax revenues and massive out-migration. These problems
should inspire lawmakers to rise above partisan rancor. There is no
doubt that Illinois needs to do substantially better on the economic
growth side of the equation in order for the state’s financial math
to work. Without policies that foster more economic growth, funding
Illinois’ obligations will become more difficult each year, with the
rising risk that another recession will make Illinois’ financial
math impossible.
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