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 Ten years ago, the nation bottomed out.
The second quarter of 2009 was the lowest point of the Great Recession, the
ashes from which the U.S. economy would rise. New data from the Bureau of
Economic Analysis released in November show how far each state has come in the
decade since.
And how far Illinois still has left to go.
Bottom line: Illinois’ recovery has significantly lagged the regional and
national growth stories. Over the past decade, Illinois’ economy has expanded by
14.7% in real terms. The rest of the Great Lakes region, which includes
Michigan, Ohio, Indiana and Wisconsin, has grown 21.9%. The rest of the U.S. saw
25.7% growth.
These abstract figures represent very real lack of opportunity for Illinois
families, businesses and even governments. They show the grass is growing
greener elsewhere.
 Gov. J.B. Pritzker’s office has touted raising the minimum wage and signing a
capital bill as evidence of their work to improve the state economy.
“Since taking office, Governor Pritzker has been strengthening the foundation
for continued, long-term job growth across the state,” said economic development
official Erin Guthrie following the November jobs numbers release.
But Illinois history runs counter to the governor’s narrative.
In 2009, then-Gov. Pat Quinn signed a $31 billion capital bill to stimulate
construction spending. Despite that massive influx of cash, Illinois’
construction industry continued to decline for more than three years.
Construction output in Illinois today is 2.1% below what it was in 2009.
By comparison, U.S. construction output is up by 13.5%; Wisconsin is up 7.7%;
Indiana is up 9.4%; Ohio is up 20.8%; and Michigan is up by 33.6%.
This calls into question the potential boost from Pritzker’s capital bill, which
is already shrouded in controversy. Two of its key backers in the General
Assembly, Chicago Democratic state Sen. Martin Sandoval and state Rep. Luis
Arroyo, have announced their resignations in the wake of a federal corruption
probe.
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Why is Illinois construction so weak? As it turns
out, big government programs can’t paper over weak fundamentals.
New housing helps form the backbone of the
construction sector. But high property taxes, policy uncertainty and
population loss are cracking vertebrae.
In 2018, Illinois saw 10,000 permits issued for new single-family
homes, according to the U.S. Census Bureau. The state averaged
around 40,000 permits a year prior to the Great Recession. That 75%
plunge is the worst decline of any state in the nation. Indiana,
Michigan, Wisconsin and Missouri have all seen more single-family
home construction than Illinois for three years running.
Even when including permits for new multi-unit housing, Illinois’
drop is still the worst in the nation, declining to 21,500 units in
2018 from a yearly average of 58,100 prior to the recession. In
2018, Indiana saw nearly 21,500 new units with a population half as
large. Colorado saw 42,600.
Monthly permit numbers released so far suggest 2019 will be
similarly slow for Illinois.
Ultimately, the construction sector is downstream from the state
economy overall. Getting Illinois on a path to healthy growth
requires a competitive business climate, reasonable tax burden and
effective government services.
But standing in the way of all three is the worst state and local
pension problem in U.S. history. It is the cause of endless property
tax hikes, hollowed-out government services and pressure for higher
taxes at the state level. Pritzker’s progressive income tax
proposal, for example, would raise Illinois’ corporate income tax to
among the highest in the nation.
The path toward better growth is not paved with flashy new
government programs. It is paved with the discipline and honesty to
get the basics right.
Illinoisans are waiting, Springfield.
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