Fact Checking Governor Rauner

Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI.

Today the Illinois Economic Policy Institute (ILEPI) released A Turnaround or a Turn Aground? Fact Checking Governor Rauner’s First Claims (PDF). The report evaluates statements made by new Governor Bruce Rauner during his first month in office. Governor Rauner’s ambitious policy agenda aims to fix Illinois’ fiscal crisis mainly through a constitutional amendment on public sector pensions, changes to the state’s tax code, and adjustments to the state’s labor laws– including banning political contributions from certain labor unions and implementing local right-to-work laws which reduce the power of unions. Would his proposals, if enacted, accomplish his goal of making Illinois a “competitive” and “compassionate” state? Are his policy proposals supported by evidence and fact? Of the eleven claims analyzed, ILEPI finds that:

  • Two (18.2 percent) were found to be true,
  • Three (27.3 percent) were rated as only half true, and
  • Six (54.5 percent) were deemed to be false.

A summary of the fact check is below:

ONLY HALF TRUE: Illinois Job Creation Lags Behind Neighboring States

Rauner’s numbers are misleading and may be out of date. While the Illinois labor market has lagged slightly behind the economies of neighboring states, the actual disparity is much smaller than Rauner suggests. The largest year-over-year unemployment rate decline in America occurred in Illinois, where the unemployment rate fell by 2.7 percentage points. Using correct payroll data, this claim is found to be only half true.

FALSE: Illinois is Currently a Bad Place to Do Business

Outcomes matter. Rauner uses rankings of corporate executives to suggest that Illinois is a terrible place to do business, but the claims have no predictive power of a state’s unemployment rate and are negatively correlated with average wages in a state. A good state for business should be statistically related to lower unemployment and higher worker wages. The appropriate policy is to attract high-road employers with sound infrastructure and a skilled workforce. After completing the rest of the story, the claim that Illinois is a bad state in which to do business is found to be false.

TRUE: Raising the Minimum Wage to $10.00 Will Increase Earnings

To generate full economic benefits, the minimum wage should be expanded to cover employers with 2 or more employees, indexed to the chained-Consumer Price Index, paired with an expansion of the state’s Earned Income Tax Credit, and be applicable to workers in their first 90 days of employment. Without these additions to the new minimum wage law, this claim will only be half true. With meaningful change, this claim is found to be true.

FALSE: Right-to-Work Would Help Workers in Illinois

First, it is disingenuous for Rauner to suggest that right-to-work laws are “employee empowerment laws” when they reduce the ability of workers to come together to demand higher wages and improved working conditions. Second, right-to-work laws reduce wage and salary incomes by 3.2 percent on average, increase employment by a minimal 0.4 percentage points, are associated with reductions in health insurance coverage, lead to increased reliance on government programs such as food stamps. Finally, at 7.3 percent, the unemployment rate is higher in Indiana counties bordering Illinois than it is in Illinois counties which border Indiana (6.0 percent). RTW actually has no discernible impact on employment outcomes but significantly reduces worker incomes, so this claim is false.

TRUE: Families Are Leaving Illinois Because of the State’s Fiscal Woes

Although over 275,000 more people chose to leave Illinois than settle in the state, Illinois still enjoyed a population growth of over 543,000 people during the past decade. Even with the departure of over 275,000 net migrants, Illinois added more residents than every neighboring state except Indiana. In addition, data suggests that people with lower levels of educational attainment are a significant component of those who are exiting Illinois, while the number of residents with at least a bachelor’s degree continues to rise. Still, this Rauner claim– although a bit more complicated than presented– is found to be true.

FALSE: Prevailing Wage Laws Cost Schools $160 Million Per Year

The source cited by Rauner to support this claim has been completely discredited by an academic economist at the University of Utah. Instead, the preponderance of economic research finds that prevailing wage laws have zero impact on total construction costs, including in cases where school construction was exempted from prevailing wage regulations. If Illinois’ prevailing wage law was repealed, the state economy would lose 3,300 jobs, see a $1 billion contraction in economic output, and forgo $44 million in lost state and local tax revenues. Rauner’s claim that prevailing wage costs schools millions of dollars is false.

FALSE: State Employee Payroll Costs are Out of Control

Rauner’s graphical representation of state employee payroll costs is devoid of context and seems to cherry-pick an unrepresentative component of the workforce employed by state government. For state employees, total income was $49,662 in 2013 compared to $50,915 for their counterparts in the private and non-profit sectors. Additionally, in Illinois, more than half of state and local government workers in Illinois have a bachelor’s degree compared to just three-in-ten private sector workers. Rauner makes no effort to compare the rise in state employee compensation with either private sector increases (after controlling for education) or with payroll trends for other governmental bodies across America.

ONLY HALF TRUE: State Workers Must Pay Higher Shares to Fix the Pension Problem

Fully 78 percent of workers in state government do not receive Social Security coverage when they retire. In his rallies against public sector workers, Rauner leaves out that state contributions returned 12.3 percent on average in the market in for the past five years, that pension payments are constitutionally-protected and must be paid even if an amendment is passed, and that pension payments have an impact on the state economy. Retirees spend the money in local restaurants, grocery stores, and department stores, supporting almost 85,000 jobs. Notions that state employees are somehow at fault after years of underfunding from legislators during both Republican and Democratic administrations are more ideologically driven than based on fact.

FALSE: State Workers Are Forced to Pay Union Dues for Political Purposes

Illinois law does not prohibit labor organizations with state collective bargaining agreements from contributing to elected officials, but it also does not mandate that workers must pay for political activities that are endorsed by their representative union. An employee can exercise his or her constitutional right to free speech and make “voluntary political contributions in conjunction with his or her fair share payment.” If the Governor would like to limit special interest influence in Springfield, he should also ban political contributions from businesses and corporations that receive either direct or indirect tax breaks or incentives. Why single-out labor unions, banning organized workers from lawfully and transparently exercising their freedom of political speech? This proposal is very clearly ideologically motivated and politically driven.

ONLY HALF TRUE: Raising Taxes Alone Won’t Work to Fix the Illinois Fiscal Crisis

Illinois households paid 10.4 percent of their income in (all forms of) taxes on average to the state, the 19th highest tax burden in the nation. This is behind Minnesota, Wisconsin, Indiana, and Kentucky. While Voters have demonstrated that they are willing to incur an additional 3.0 percent tax on incomes greater than $1.0 million to provide additional revenues to school districts. In the 2014 election, 60.0 percent of voters favored the “millionaire’s tax.” Small tax increases must be paired with smart infrastructure and education investments to boost the economy.

FALSE: State Medicaid Spending is Unsustainable

Federal spending paid for most of the recent increase in Medicaid costs. In addition, Illinois ranked 47th in Medicaid spending per enrollee. Rauner has also not provided any context comparing Medicaid costs to cost inflation for private health insurance plans. For each of these reasons, this claim is considered false.

With sound economic and fiscal policies, Illinois can become the greatest state in the nation. Those policies which invest in the future of Illinois and the region, improve the knowledge and skills of the state’s workforce, advance high-quality jobs for working families, and foster transparent governments will help accomplish this goal.

11 thoughts on “Fact Checking Governor Rauner

  1. Hello Frank,

    Just wanted to let you know the link to the article does not work…. GREAT ARTICLE though!

    Tom Szymanski

    IBEW 725

  2. Although I am not forced to pay Union dues for strictly political purposes, I am forced to pay dues that are used by the union to support members of the Democratic Party. I have no choice in this matter, and no choice in whom might best represent our views. The only choice I have is to contribute more to an opposing candidate that may only act to negate contributions on my behalf to a candidate I oppose. What’s more is that if I also had a choice to support a union, the union would be held to a measure of accountability. Currently I am a pawn, with no choice, well of course I could quit but is this what we are working for!

    1. Dnemeth- If you google the national poverty level you’ll find that most if not all will show $28,526 as the national poverty level.
      If the minimum wage was raised to $10 hr a person working 40hrs make $20,800 yr BEFORE taxes. A person making $15hr based on 40 hrs will make $31,200 BEFORE taxes.
      In the 1700’s in this country the top 1% wealthy controlled 44% of all property in this country. Rauner not being able to raise donations for his election campaign wrote a personal check for $54ml. to buy the governorship and yet Illinois with a popularization of 13 million people won by only 100k votes !!!!
      Unions came about because everybody needs a
      “Sustainable Wage” in order to start achieving the
      American Dream at what point does your american dream start.
      I’ve been a union guy since I was 18 yrs old but always voted for the best candidate , you have the same options. Unfortunately for you our governor had to BUY the election for $54ml and start cutting the easiest $$$$ to make an immediate impact to survive his 4 yrs. Without union representation -those state workers don’t stand a chance !!!!

    2. Union= organized.
      Our union officials do their homework very well. They know the political climate much more intimately than the average person.
      They also realize that pre-emtive action is much more logical, than trying to undo a tangle of greed motivated domination.
      If you, as a member, have a non organized agenda, then, you might be happier to persue something else,to satisfy gainful employment.
      Employers are in business to succeed and thrive. If left unchecked, without the requirement of organized bargaining, the ordinary worker would eventually, have extreme limited ability to thrive him/herself.
      The amount of our dues spent on political persuasions, is rather minimal.
      In other words, I would rather entrust a fellow organized member, that is informed, than try and dedicate research on my own time. I have a family and a life to live.
      And to address your broad statement about
      Unions supporting democrats, I can assure you that if a republican politician is found to be fair minded in regards to the rights of the working person, we,as organized labor would promote such republican. There certainly are republican officials that recognize the importance of promoting balance in the tussle of greed vs. workers, and our union representatives will point them out as well! I personally prefer the term organized labor over the word “union”, because unfortunately, many people that are not in unions, relate that word to ” strong arm” tactics.
      Maybe we could come up with another term.
      Any ideas?

    3. Rauner has keen,but narrow vision.
      This characteristic has enabled him to amass the fortune that he has, and at the same time, not have a clue to the cause and affect of HIS perspectives.
      For instance, his focus on driving down state spending, by kicking the legs out from under organized labor, might see a small immediate savings in the bid prices of state contracts.
      Now, you will have more,out of state contractors being awarded contracts, and that ” competitiveness” will drive down wages, not to mention, our tax money leaving our state.
      When wages go down, guess what?
      Taxable income goes down!
      Now, somewhere down the road, after the damage is done, and Rauner off back to his wine club, the future governer will be explaining how the tax MUST be raised because not enough was coming in,AGAIN!
      Look, State spending habits definitely need some stricter accountability.
      Let’s focus on that.
      In the meantime, keeping the population busy and optimistic, is far more important than a debt that is pushed into the future.
      Strike a balance of gradually paying off debt, with, progressive maintinance of workers rights.
      What Rauner is essentially trying to do, is comparable to,smacking a mosquito on a windshield with a 24# sledgehammer.
      Mosquito’s dead, but now we’re driving wet in the rain with glass in our face, and he goes on to run for president.
      Oops, did I just say that?

  3. Id like to know answers to the follow-
    1. What was the average income of Rauners employees at the businesses he owned?
    2. In the “private sector” if a CEO borrows or fails to fund its employees retirement plan as agreed -that CEO goes to jail !
    In the “public sector” if the legislature fails to fund its employees retirement plan as agreed- the employees are at fault.My question here is- Why aren’t OUR legislators under-funding their own retirement ? Where in the private sector can a person work for 5 yrs and receive a pension ?
    3. To keep things “Fair” why aren’t all State employee wages/benefits linked to our legislators wages/benefits by law ?
    Why does our legislature continue to vote themselves pay raises at the end of a session on a Friday afternoon at 4:55 pm when they know nobody is watching the news ?

    The “Middle Class” is what built this country into a powerhouse/world-leader it is today. I refuse to let these clueless politicians sitting on leather seats decide i’m making to much money after they vote themselves a pay raise.
    They chose to be “Public Servant’s” so why do we feel like were serving them !!!!!!!!

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