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GOVERNMENT
JOBS SURPASS MANUFACTURING JOBS BY 175,000 IN ILLINOIS
Illinois Policy Institute
Illinois stands out in the industrial
Midwest for its skewed government-to-manufacturing-jobs ratio.
Illinois and the Great Lakes states are America’s traditional
manufacturing powerhouses. When the Industrial Revolution transformed
Midwestern cities into prosperous production centers, the manufacturing
sector drove up wages and employment for a large swath of Illinois’
middle class. But now government jobs are far more common than
manufacturing jobs in Illinois.
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 In March 2002, Illinois state and local government jobs surpassed manufacturing
jobs for the first time in Illinois’ recorded history. Since then, the ratio of
government jobs to manufacturing jobs has moved in favor of government work, as
Illinois manufacturing jobs have plummeted, while government jobs have remained
steady. There are now 175,000 more jobs in state and local government in
Illinois than there are in manufacturing, a striking change in a state in which
production jobs once formed the backbone of middle-class opportunity.
Illinois’ weak economic recovery has led to the smallest
manufacturing-to-government-jobs ratio in the industrial Midwest
Of the five largest manufacturing states in the Midwest, Illinois is the only
one with significantly more government workers than manufacturing workers. In
Indiana, there are 125,000 more manufacturing jobs than government jobs; in
Wisconsin, there are 92,000 more manufacturing jobs than government jobs; in
Michigan there are 55,000 more manufacturing jobs than government jobs; and in
Ohio, government jobs slightly outnumber manufacturing jobs by 17,000.
One factor that has driven the disparity between Illinois and other
manufacturing states in the Midwest is Illinois’ poor recovery from the Great
Recession. Illinois lost more than 120,000 manufacturing jobs during the
economic downturn of the Great Recession. And Illinois has regained only 20,000
manufacturing jobs since hitting bottom in January 2010. Since their respective
recession bottoms, the other Midwestern manufacturing states have added tens of
thousands more manufacturing jobs than has Illinois, helping to drive all of
their unemployment rates at least one point lower than Illinois’.
Illinois needs spending, tax and regulatory reform to make the state more
attractive for manufacturing investments and the jobs that come with them.
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 Spending reform should include changes to the state’s pension
systems, including an amendment to the Illinois Constitution’s
pension-protection clause. Collective bargaining with government
unions should be optional rather than mandatory, so local
governments can better manage their costs and employees. And
Illinois local governments should be consolidated as necessary to
eliminate duplicative services. All of these reforms would help
drive down the cost of government – and the property taxes needed to
fund it.
Tax reforms should focus on lowering property taxes and making the
tax code more pro-growth. Manufacturing firms will be much likelier
to invest in Illinois if they think they can get a solid return on
their investment, after factoring in the cost of taxes and
regulations. The estate and franchise taxes should be repealed,
because they directly tax manufacturing capital in Illinois and
create an incentive for companies to locate their machinery outside
the state. Furthermore, the sales tax can be expanded to services in
order to lower income taxes and exempt business inputs from sales
taxation.
Finally, policymakers should prioritize regulatory reform for the
state’s workers’ compensation system, which affects manufacturers
more than employers in many other sectors. Illinois’ workers’
compensation system has high medical, wage-replacement and indemnity
costs, along with financial incentives for physicians to dispense
potentially harmful drugs and for workers to stay out of work.
Reinvigorating Illinois’ manufacturing sector will take time and
significant policy reforms to restore the state’s competitiveness
and fiscal viability. It is urgent that lawmakers come together on
these points to help Illinois’ production workers get back on the
job.
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