As Illinois’ Voters Go to the Polls, An Important Message to Remember In American government classes, students are taught that American politics is a pluralist system. In theory, they are told, this arrangement prevents extreme outcomes because competing groups tend … Continue reading The Middle Class Needs Strong Unions
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. This post is part of the “Frankonomics” series. Governor Rauner gave the annual “State of the State” Address this … Continue reading The Private Sector Is NOT Doing Well Under Rauner
Last week, ILEPI fact-checked claims made by Governor Rauner that were most important to his policy agenda. Governor Rauner has now put some of his untrue and misleading claims into action in his budget proposal.
This afternoon Governor Rauner proposed a $4.18 billion reduction in state spending, an 11.7 percent cut from last year (without adjusting for inflation). The budget proposal comes after Rauner paid $120,000 to consultant Donna Arduin for four months of service. Keep in mind that Rauner has (incorrectly) asserted that state employee salaries are out-of-control while increasing the salaries of his top officials by 36 percent higher than their predecessors were paid under former Governor Quinn.
Among the $4.18 billion in proposed cuts, the Rauner budget reportedly includes: Continue reading “Proposed Rauner Budget Hammers Low-Income and Middle-Class Families in Illinois”
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 Continue reading “Fact Checking Governor Rauner”
Yesterday the Illinois Policy Institute (IPI) released “The Anatomy of Influence: Government Unions in Illinois,” perhaps-not-so-coincidentally on the same day that Governor Rauner passed an executive order prohibiting public sector unions from paying fair share fees to fund union activities. In usual IPI fashion, the report only tells a small component of the whole story. Below are a few thoughts on the report.
Report quote: ” At both the IEA and the Illinois Federation of Teachers or IFT, the top 20 highest-paid employees all are paid salaries of more than $100,000 annually.”
The IEA and the IFT represent about 214,000 workers in Illinois combined, according to the report. These 40 individuals’ salaries represent 0.02% of all members. By contrast, data from the American Community Survey 1-Year Estimates for 2013 reveal that the Top 10% of all workers in Illinois earned at least $100,000 in real total income and the Top 1% earns $475,000 or more [Note: See the STATA output above, which reports weighted estimates for 59,743 Illinois residents who are in the labor force and are employed]. The fact that 40 salaries in the IEA and IFT are above $100,000 is utterly meaningless when contrasted with the rest of the Illinois labor market.
There is a myth about the “overpaid” labor union leader. In a report released last month with the University of Illinois Labor Education Program, ILEPI debunked that myth (PDF) from a national perspective. The report provides a complete story by comparing and contrasting (perhaps a novel idea these days…). We concluded:
Unions raise and compress wages, and union leaders are compensated accordingly. The typical labor union is neither large nor lucrative, with average compensation packages to employees that are similar to social advocacy, community services, and worker services groups. Payroll costs are much lower in labor organizations than they are in business associations (such as chambers of commerce), in law offices, and among managers of companies and enterprises. Additionally, labor leaders and top administrative staff are not paid more than the market rate for other leaders and administrators. In fact, they tend to earn far less than comparable CEOs and executives in relevant industries. Thus, there is no evidence to support any claim of “Big” labor, with unions governed by overcompensated leaders.
Once again, here is a link to that paper.
Report quote: “The Illinois Policy Institute reviewed campaign-finance reports from 2002 to 2014 and found the five major government unions in Illinois spent a combined $46 million in political campaigns in that time.”
According to FollowTheMoney.org, $1.29 billion has been contributed to statewide political campaigns in Illinois since 2002. In the context of all campaign contributions, the $46 million influence of public sector unions represents just 3.6 percent of all campaign contributions. Furthermore, during that exact same time, Bruce Rauner contributed $39.6 million to political campaigns. Once again, that is $46 million dollars representing hundreds of thousands of public sector workers (3.6 percent) versus nearly $40 million from one businessman (3.1 percent). Let’s get real about the influence of money in politics here. Continue reading “A Quick Comment on Government Unions in Illinois”
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. A July 8, 2014 Economic Commentary by the Illinois Economic Policy Institute investigates the effective tax rates paid by Illinois workers across occupations. The study– Illinois Federal Income Taxes: By Occupation, 2011-2013 [PDF]– finds five key takeaways: The majority of workers in Illinois (60 percent) pay federal income taxes; The average effective federal income tax rate for all Illinois workers is 13 percent (but 21 percent for only those workers with any federal income tax liability); The average effective … Continue reading Federal Income Taxes for Illinois Workers