Amazon’s new Joliet, Ill., facilities will bring needed jobs to the state, but special tax deals are not the way to improve Illinois’ sluggish jobs climate.
Amazon announced May 25 it plans to add more than 2,000 full-time jobs by opening a second warehouse in Joliet, Ill. While this announcement is welcome news for Illinois – the state with the highest unemployment rate in the country – it is far from a sign the state’s long-term structural problems are improving.
The retail company is doubling its Illinois presence thanks in large part to $2 million annually in tax breaks over the next decade, signed under former Gov. Pat Quinn but expanded under Gov. Bruce Rauner. Amazon has not yet advertised these new jobs and has yet to complete the second warehouse, which it hopes will be up and running by the holidays.
Bribing large corporations with tax breaks, though, isn’t what will revive Illinois’ sluggish economy and generate more jobs growth. In August 2015, when Amazon announced its first new warehouse and the new jobs that would come with it, it was revealed that the state had given the online retail giant tax breaks worth approximately $1 million annually – for 10 years. The Tribune now reports Amazon’s estimated tax breaks for the expanded facilities are worth $2 million annually. While more job opportunities are necessary for Illinois’ growing labor force, strong growth will not happen unless the state embraces reform rather than handouts.
Illinois’ labor force has grown by more than 185,000 since January 2015, which marked the recession-era bottom for the size of the state’s labor force. For the past year Illinois has seen a growing workforce, but that has also contributed to a rising unemployment rate.
Illinois added a modest 5,400 jobs on net in April, but still saw an uptick in the unemployment rate, to 6.6 percent from 6.5 percent in March, according to data from the Illinois Department of Employment Security. April marked the fourth consecutive month Illinois had jobs growth, but the unemployment rate is increasing because job opportunities are not keeping pace with the growing workforce.
The best way to ensure Illinois generates strong jobs growth to meet its growing labor force is to reform its structural uncompetitiveness, which is driven by an unfriendly tax and regulatory climate.
Illinois should reform its workers’ compensation system, which forces employers to pay the highest related costs in the Midwest; freeze its highest-in-the-nation property taxes; and pass a responsible, balanced budget that doesn’t add to the state’s already-high tax burden. Enacting these reforms would make Illinois more competitive in the long run, and give employers a reason to stay in the state, or even relocate to Illinois.
Even Amazon, until recently, avoided Illinois due to the now-defunct “Amazon Tax,” which the General Assembly passed in 2011 to require Amazon and any other retailer with affiliates in Illinois to collect a “use tax” for all sales to Illinois customers. The Illinois Supreme Court struck that tax down in 2013 because it conflicts with the federal Internet Tax Freedom Act.
Breaking down more barriers for job creators and jobs growth is necessary for the state to change course. The additional Amazon jobs provide some opportunities for the thousands of Illinoisans looking for work, but long-term structural reforms are needed to strengthen Illinois’ economy and bolster job opportunities.