News headlines in the Chicago Tribune and in business-oriented publications this week flagged an on-going reality for Illinois — “Jobs are crossing our borders the WRONG WAY!” Knowing that he is passionate about the need to be a state which welcomes and fosters the growth of “JOB CREATING” businesses, I contacted State Representative Thomas Morrison (R- 54th District) to solicit his reaction.
Mr. Morrison, a small business owner himself, knows first-hand the vital importance of limiting “overhead” costs in order to ensure that revenue will exceed expenses at the end of each year by a margin large enough to make the time, labor, and capital invested in the business prove worthwhile. In other words, running a business is inherently risky, and a business that breaks even or is unprofitable provides only risks and no rewards.
In order to maintain or increase profitability, some businesses have moved to a neighboring state, such as Indiana, Wisconsin, or Iowa. Thus far in 2011, ten Illinois companies have publicly declared their intent to move some or all of their operations to Indiana (ranging from State Farm and Modern Drop Forge to Canadian National Railway and the Berry Plastics Group. Indiana Gov. Mitch Daniels has been transparent in his efforts to transform Indiana into a business-friendly state. However, Daniels also recognizes that incentives for businesses must be more cost effective. Illustrating this, he has taken credit for lowering the cost per job of such business incentives from $36,000 in 2005 to $9,000 today.
There are many experts who doubt the long-term benefits of policies which serve to pick off businesses from a neighboring state. For example, Joshua Drucker, assistant professor for the Department of Urban Planning and Policy at the UIC, has made his conviction clear that a regional and national approach to job creation is needed in order for the impact to be maximized and long-lasting. However, he admits that such an approach is not nearly as appealing to politicians as the “deals” which result in a photo opportunity and news article trumpeting a politician’s success in supporting business growth.
The urgency of putting much more attention on sound job creation is illustrated by a 2010 report by the Center for Economic and Policy Research in Washington, D.C. That report concluded that if job creation proceeds at the same rate as it did during the 2000-2010 decade, employment will not return to December 2007 levels until March of 2014!
Rep. Morrison has outlined a three-point plan for encouraging job creating businesses:
1) Reform business tax law, property tax law, tort litigation, business regulations, and worker’s compensation costs in ways which ensure that all businesses carry their fair share of the cost of community services and infrastructure but do not place an out-sized burden on them. Our public policies must allow them to remain competitive in regional and international markets.
2) If incentives are offered to large companies, the rate should not exceed $10,000 per job. Illinois is home to some of the best businesses in the world. In this fragile economy we cannot afford to lose any jobs. At the same time, however, we cannot unfairly shift the tax burden from singularly large businesses to the medium and small-sized ones, which collectively employ more people.
3) Ensure that public policy initiatives eliminate the burdens and hurdles for start-ups and entrepreneurship development. Instead of developing more mandates, regulations and taxes, public policies need to shift the focus to innovation and entrepreneurship. More, not fewer, taxpayers will increase tax revenues and help to provide a more stable private and public sector environment.