Madigan’s middle class: Pain for the many, perks for the few
Middle-class Illinoisans who aren’t employed by the government are suffering, but Illinois House Speaker Mike Madigan stands in the way of solutions.
Illinois House Speaker Mike Madigan claims to be the protector of the middle class.
Problem is, the speaker’s definition of “middle class” doesn’t resemble the true makeup of Illinois’ working families. For Madigan, “middle class” means “government workers,” and he prioritizes appeasing government workers over reducing the tax burden and increasing economic opportunities for all Illinoisans.
Just look at his track record. Madigan opposes the very reforms that would benefit Illinois’ middle class most: a property-tax freeze to provide relief from the third-highest property taxes in the nation, term limits for politicians, and economic policies that make the state more business-friendly and create more jobs.
Instead, Madigan wants billions of dollars in tax hikes to feed the state’s unsustainable government-worker pension system, which is $111 billion in debt.
But the best proof of Madigan’s true loyalties lies in his actions surrounding the state’s contract negotiations with the American Federation of State, County and Municipal Employees.
Madigan wants the private sector to pay for more than $3 billion in state-worker salary, health-insurance and pension benefits under the new AFSCME contract, even as Illinoisans suffer in a state with the nation’s second-worst jobs recovery. AFSCME’s leaders want four-year raises ranging from 11.5 to 29 percent, a 37.5-hour workweek, five weeks’ vacation and enhanced health care coverage – benefits that are far out of line with what Illinoisans working in the private sector can afford to pay for. Not to mention these additional benefits would come on top of the unsustainable salary growth AFSCME workers have already seen.
Madigan’s influence has led to years of economic hardship for Illinois taxpayers, who are forced to prop up benefits for government workers.
AFSCME’s Cadillac benefits
Over the past decade, state AFSCME worker salaries grew by more than 40 percent, even as private-sector earnings remained virtually flat.
AFSCME workers also receive other benefits that overburden state taxpayers.
The state, meaning taxpayers, provides government workers generous health insurance plans – often with no deductibles. Government workers also pay for only about 7 percent of the cost of their coverage, according to a study by The Pew Charitable Trusts, while taxpayers cover the other 93 percent of state-employee health care costs.
These state-run plans offer the equivalent benefits of a private-sector “platinum” health care plan, the most generous plan available through health care exchanges.
In addition, most state workers get free health care when they retire – a benefit that’s virtually unheard of in the private sector.
For state employees who work more than 20 years, taxpayers pick up virtually 100 percent of their health insurance during retirement. The current value of those benefits to a state worker equals anywhere from $225,000 to $500,000, depending on when a worker retires.
A decade of private-sector pain
Those generous state-worker benefits were paid for by a middle class that suffered economically from 2003 to 2014 – a decade when Madigan virtually controlled state government. That’s when Madigan had majorities in both legislative chambers and Democratic governors in Rod Blagojevich and Pat Quinn. Their combined legislative agenda – more debt and taxes, a bigger public sector, and the avoidance of structural reforms – remained in full swing until January 2015, when Gov. Bruce Rauner took office.
That 11-year period ushered in one of the worst economic performances of any state in the nation. Under Madigan’s leadership, Illinois’ credit rating was downgraded 16 times, the state’s pension crisis became the worst in the nation, and Illinoisans suffered the nation’s worst post-Great Recession jobs recovery – all while residents faced a record income-tax increase in 2011 and the nation’s second-highest property taxes.
From 2003 to 2014, median household incomes in Illinois actually fell. When taking inflation into account, Illinoisans had to deal with a $3,000 drop in their real incomes.
Illinoisans also saw their source of jobs dry up. Though every neighboring state suffered during the Great Recession, Illinoisans suffered through the worst recovery of any state in the country. Between 2003 and 2014, Illinois employment fell by over 150,000, according to the federal Bureau of Labor Statistics – a far higher number than any of its neighbors.
Much of the pain felt by Illinois’ middle and working classes has been due to the state’s loss of manufacturing jobs. From 2003 to 2014, Illinois lost more than 100,000 manufacturing jobs on net, many to its neighboring states. Higher workers’ compensation costs, high property taxes and an unfriendly business climate have contributed to that collapse.
Illinois’ poor economic performance left more than 16 percent of state’s residents dependent on food stamps to feed their families, the highest ratio in the Midwest. The number of food stamp recipients in Illinois doubled to more than 2 million from 2003 to 2013.
Despite their economic struggles, Illinoisans were also hit with increased taxes. Illinois property taxes – now among the highest in the nation – rose 45 percent from 2000 to 2013. And in 2011, Illinois’ politicians passed a record income-tax hike that took $31 billion in additional dollars out of taxpayers’ pockets.
That tax hike, despite politicians’ promises, failed to fix the state’s pension crisis, pay off Illinois’ unpaid bills or spur an economic recovery.
The importance of AFSCME contract negotiations
The next AFSCME contract has deeper implications than simply what costs will be imposed on the state and taxpayers.
What happens with the next AFSCME contract will determine whether Illinois will continue to follow the same failed policies of the status quo or finally enact the reforms needed to bring jobs and growth back to Illinois.
Ironically, Madigan said in December 2015: “I don’t think any government should be in the business of lowering wages and the standard of living.”
He was talking about the AFSCME contract, sticking up for his government-worker “middle class.” But what Madigan refuses to acknowledge is that his agenda of failed policies has had the effect of crushing the state’s true middle- and working-class residents’ wages and growth in Illinois.
Taking care of the middle class means giving it a chance to grow again – and that means Madigan must embrace economic and governmental reforms that make all Illinoisans, not just those in the public sector, more prosperous.