What’s wrong with Illinois’ economy?

Madigan’s economic record is one of failure, and the best he can say in his defense is that trying a new path would somehow make things worse.

Illinois House of Representatives Speaker Mike Madigan’s comments at a recent event prove that the long-serving speaker simply does not understand the problems Illinois faces in terms of low wages for the working class, significant blue-collar job losses and a broken workers’ compensation system.

Madigan made this clear at a Dec. 9 speech before the City Club of Chicago. Early in the question portion of his appearance, an audience member asked Madigan how the speaker can claim to protect the middle class in the midst of such significant middle-class job losses in Illinois. Madigan said nothing to address the continuing job losses in blue-collar, working-class industries – most likely because there is nothing positive to say. Nor did he address the fact that in many major working-class occupational areas such as production and transportation, Illinoisans are the worst-paid in the Midwest.

Instead of answering for his own record, Madigan turned to Gov. Bruce Rauner’s reform proposals and claimed that the governor – who has been in office less than a year, compared to Madigan’s 45 years in office – has proposed a set of reforms that would lower wages and the standard of living for the middle class. Madigan failed to explain how or why this claim is true, and also failed to address why working-class wages in Illinois are already in many cases the lowest in the region. When Rauner came to office, Illinois had a larger portion of its population on food stamps than any other state in the Midwest – disturbing evidence of the poor standard of living that Illinois’ economic environment fosters for the state’s working class.

Madigan ended his speech by explaining that he is carrying on the tradition of Franklin Delano Roosevelt by managing the economy to raise wages and the standard of living – without citing a single example of how his governance or any particular policy has accomplished this vision.

The facts tell a story that differs from the speaker’s rosy declarations: Illinois has lost more than 14,000 manufacturing jobs on net so far in 2015.

In short, Madigan showed little knowledge of economic issues, especially considering the myriad problems the state is facing:

• Illinois has suffered the nation’s worst recovery from the Great Recession in terms of putting people back to work, with 180,000 fewer people working today than before the recession began
• Illinois is experiencing record out-migration from the state, with 95,000 people lost on net in 2014, according to the U.S. Census Bureau

Illinois has a larger portion of its population on food stamps than any other state in the Midwest, and is the only state in the Midwest to put more people on food stamps than in jobs during the recession recovery. At the speech, Madigan also was asked about Illinois’ workers’ compensation system. When describing workers’ compensation in general and Illinois’ 2011 workers’ compensation bill in particular, Madigan said:

“The bill is working. Costs are coming down. That doesn’t mean that the Illinois costs are at a level with Indiana or Wisconsin because the system is predicated upon wage levels. If you’re injured on the job, and you prove your case, the award is a percentage of your wage. So the wage levels in Illinois are higher than they are in Indiana and Wisconsin. And so if you want to bring down the cost, some people would say, ‘Bring down the wage levels.’ I don’t sign up for that program.”

Madigan’s answer reveals that he doesn’t have a strong understanding of the workers’ compensation system, nor about how wage level differences affect the rating rankings between states.

Take, for example, the difference between average wages in Illinois and Indiana, and average workers’ compensation premiums. The average wage in Illinois is 18 percent higher than in Indiana before adjusting for the cost of living, according to the Bureau of Labor Statistics. But higher wages cannot account for the fact that Illinois’ average premium for workers’ compensation is 122 percent higher than in Indiana.

The difference in workers’ compensation costs is not primarily driven by wage levels, it’s driven by different regulatory structures and different judicial interpretations of each state’s law.

In addition, looking at the difference in average workers’ compensation premiums misses the mark because most of the cost difference is concentrated in a few areas such as manufacturing, construction and transportation.

One example of a manufacturing cost comparison is for train-car manufacturing workers, insurance class code 3881. The premiums per $100 of payroll in surrounding states range from $2.90 in Kentucky and $3.90 in Indiana to $12.90 in Illinois. Illinois costs are 330 percent higher than those in Indiana.

An example from the construction trades is masonry, insurance class code 5022. The premiums for surrounding states range from $4.60 per $100 of payroll in Indiana to $20.60 in Illinois. Illinois premiums are 350 percent higher than those in Indiana.

And consider the transportation industry’s truck drivers who deliver packages or parcels, insurance class code 7230. The premiums for surrounding states range from $7.30 per $100 of payroll in Indiana to $23.60 in Illinois. The Illinois premiums are 220 percent higher than the premiums in Indiana.

Madigan’s speech revealed that he does not understand Illinois’ economic problems, is ignoring the painful job losses that many in Illinois have experienced, doesn’t have any idea where to turn for solutions, and is determined to resist anything Rauner proposes to change the way economic policy is made in Illinois. The only change Madigan has offered is to suggest that the state’s income tax should go back up to 5 percent. He’s proposed no other reforms except for toothless bills on property taxes and workers’ compensation that would do nothing to improve the current broken systems.

Illinoisans should expect better than a head-in-the-sand approach from a political leader who has spent decades at the helm of the ship of state. Madigan’s economic record is one of failure, and the best he can say in his defense is that trying a new path would somehow make things worse.