Ep. 43: Why three major companies just fled Illinois
It was a bad month for big businesses in Illinois as Boeing, Caterpillar and Citadel announced they’re moving their headquarters out of Chicago. Illinois Policy Institute President Matt Paprocki joins the Policy Shop to discuss what these businesses’ departures mean for the state. And how state leaders can turn things around. Learn more by subscribing to the Policy Shop newsletter at illin.is/newsletter.
This edition of The Policy Shop comes to you from President Matt Paprocki.
It was a bad news month for big businesses in Illinois.
First, came the news Boeing was moving its headquarters to Virginia after 20 years in Chicago. Then Caterpillar announced it was moving 230 corporate jobs to Texas after nearly 100 years in Illinois. And now, Citadel says it, too, is taking its corporate headquarters to Florida.
Ignored: The worst part? Illinois state leaders were warned a decade ago by Caterpillar’s CEO that this would happen if business conditions didn’t improve.
In February 2012, former Caterpillar CEO Doug Oberhelman wrote an op-ed outlining the reforms Illinois needed to foster an environment for jobs growth. He pointed out the policy problems that prevent companies such as Caterpillar from making new investments and creating new jobs in Illinois. He urged state leaders to take on reforms. “Caterpillar has deep roots in Illinois,” he said. “Illinois is Caterpillar’s home, and it is my home.” However, Oberhelman also pointed out Caterpillar hadn’t opened a new Illinois factory for decades, and state policy problems had a lot to do with it.
His warning in 2012 about regulations and taxes were not only ignored, but the problems have grown worse. Higher taxes and inflated spending, including on the nation’s highest pension debt at $313 billion, all led the company to leave the state for Texas.
Caterpillar wasn’t the only one flashing warning signals. Citadel founder Ken Griffin “long hinted that he would consider relocating the firm amid growing frustrations with violence and political leadership in Illinois.”
Griffin’s letter to his staff also notes, “Over the past year, however, many of our Chicago teams have asked to relocate to Miami, New York and our other offices around the world.”
Sound the alarm: CNBC ranks Illinois as the third-least friendly state to businesses. The Tax Foundation found Illinois’ business climate declined 10 spots in the past five years – the only state to drop in the Midwest – as Pritzker imposed $650 million in new taxes on businesses amid a pandemic recovery. Losing three Fortune 500 companies in two months should be ringing alarms in Springfield.
Not without solutions: As I recently wrote in The Washington Post, “What needs to be done isn’t that complicated; the state’s leaders just have to act instead of relying on wishful thinking and leaving the ever-worsening trouble for the next generation to handle.”
For businesses to thrive and grow, Illinois’ solutions must include addressing the second-highest property taxes in the nation, controlling rising state and local tax burdens thanks to 21 years of unbalanced state budgets, and fixing an onerous regulatory environment. And as we often explain, pension reform is a must in order to course-correct the failing Illinois economy.
The exodus is not coincidental or unfixable. Illinois’ elected leaders must be willing to face the truth and fix the policies that are driving away people and businesses.