While politicians posture, Illinois industry is getting crushed
The average cost of workers’ comp for steel workers among neighboring states is under $8 per $100 of payroll compared to nearly $12 in Illinois.
A glimmer of hope flashes in the furnaces of TriALco.
Located just outside of Ford Heights, one of the poorest areas in Illinois, Jay Armstrong has been running this small manufacturing business since 2001. TriALco provides nearly 60 jobs for the surrounding community in South Cook County, making alloys for other manufacturers.
But its future in Illinois is in jeopardy. Armstrong puts the odds at 50-50 that he moves his manufacturing business to Indiana. And they’re getting worse each year.
“We are ready to do an expansion,” Armstrong says. “But our owner is questioning us: How could we expand in the state of Illinois when it would be about $400,000 to $500,000 cheaper per year to move to Indiana?”
Illinois has crawled out of the Great Recession. The state’s economy has recovered the number of jobs it lost during the recession years, albeit much later than most other states.
But try telling that to Illinois manufacturing workers. For them, the worst months of the recession and today are barely different. Manufacturing tanked here, and it never bounced back.
Since the bowels of the Great Recession in January 2010, manufacturing jobs have grown less than 3 percent in Illinois.
And before blaming nameless competition overseas for this pitiful performance, Illinoisans must look in their backyards. Manufacturing families looking for opportunity need not flee the Midwest to find hope.
Iowa (6 percent growth in manufacturing jobs since January 2010), Missouri (8 percent), Wisconsin (11 percent), Indiana (21 percent), Kentucky (23 percent) and Michigan (33 percent) are all just beyond Illinois’ border.
Those states largely have been immune to the sickness that ails Illinois: perverse priorities that place trial lawyers and government workers ahead of the vast majority of middle-class people who remain here, fighting.
Those states have forged futures with manufacturing in mind. And they didn’t do it with fairy dust. There are clear policy differences that made those states ripe for stronger recoveries.
One of the policies that affects manufacturers especially is workers’ compensation.
Compared to others in the Midwest, manufacturers in Illinois pay the highest workers’ comp costs by far. For example, while the average cost of workers’ comp for steel workers among neighboring states is under $8 per $100 of payroll, the average in Illinois is nearly $12.
Armstrong says his business would save nearly $120,000 a year on workers’ compensation costs alone by moving just a few miles across the Indiana border.
Illinois lawmakers could pursue many easy policy fixes to bring down these costs while ensuring worker safety. Putting wage replacement rates in line with the average of surrounding states, tying medical fees to Medicare, barring workers’ comp doctors from selling pills out of their offices, and making sure workers don’t get a pay raise to stay off work are just a few.
But Illinois lawmakers seem to have no interest in real reform. And certainly not the types of reform that would cut into trial lawyer profits.
Instead, the Illinois House passed a bill that would create a state-run workers’ comp insurance agency. After all, state government here is famous for its ability to provide quality service at a fair price.
Another big problem for manufacturers is Illinois’ infamously high property taxes. Armstrong estimates his business would save another $100,000 to $120,000 a year in property taxes by moving across the state line.
Much of Armstrong’s high property tax bill goes to fund Ford Heights School District 169. The entire district oversees fewer than 500 students. Despite this, Superintendent Gregory Jackson took home more than $325,000 in total compensation last year. Lavish pay and benefits are common among Illinois superintendents.
Thankfully, a bill in Springfield would allow nearby Chicago Heights School District 170 to absorb the small Ford Heights district, saving money on administrative costs and hopefully reducing Armstrong’s tax bill.
But Jackson wasn’t going to take that lying down.
The day after House members passed the bill out of committee, Jackson sought and received school board approval to add a special protection to a certain part of his contract: the part that guarantees he gets paid all the salary and benefits remaining in his contract should his district get consolidated. The new provision lets Jackson decide whether he needs to sue in order to protect that rich payout, and the district would have to pay for the lawyer.
Only in Illinois.
And it’s not just Jackson. State Rep. Sam Yingling, D-Grayslake, sponsored an amendment to a bill that would prohibit any layoffs or pay cuts in the event of consolidation. That’s absurd.
Instead of protecting manufacturing jobs, Yingling and other lawmakers would rather defend bloat within Illinois’ nearly 7,000 taxing bodies, the highest total in the nation.
These priorities are crushing Illinois industry. And until lawmakers loosen the vise, manufacturing families shouldn’t expect success.
“I like this community. I like supporting this community. I feel we help. I feel like we’re a good neighbor. And I feel there’s plenty of room for improvement,” Armstrong said.
“But once we’re gone I just don’t see anybody else moving back in.”