A Tale of Two States – Jon Luers
America is currently enjoying what is really an unprecedented good period economically. We have record employment nationally, record tax receipts, and relatively low interest rates. But Illinois is not fully participating: people, jobs, and business are being discouraged and driven out by high taxes, and by politicians generally more interested in bragging about how much they are doing for people than in how much the people are accomplishing themselves. Illinois could become more competitive and participate more in the economic good times, but the voters and politicians would need to embrace policies that encourage growth, and stop punishing achievement.
You may have noticed that gas prices have been coming down lately—as I write this, a gallon of gas can be bought for as little as $1.859 in the far western suburbs. This is possible because of the abundant supply of oil being produced by “fracking” technology, developed by private enterprise in the US. The technology has been so successful that the US is overtaking Saudi Arabia as the largest producer of oil, and OPEC has been rendered powerless to control the price, because if they reduce output, American companies will just gain market share.
The heart of this revolution, of course, is in Texas.
The San Antonio Business Journal reported in August: “Overall, Texas has added 217,600 jobs in the first half of 2018, according to the Dallas Fed’s Texas economic update. And its annualized job growth rate of 3.6 percent is double the rate of the US rate.
“The Texas oil and gas industry has seen a 22 percent job growth this year, the largest growth rate among industries in the state.”
Further, “Wages are expected to rise, as the unemployment rate in Texas is near an all-time low at 4 percent.” This is in a state that assesses no personal income tax, has a maximum sales tax rate of 8.25%, and has an average effective property tax rate of 1.9% (compared to 2.32% for Illinois). It also has a Republican governor and more than 60% Republicans in both houses of their legislature.
Illinois has shared some of the good news, but not nearly to the same extent. IllinoisPolicy.org reported, also this August: “Illinois experienced its sixth consecutive month of jobs growth in July, yet continues to trail the pace of growth in the rest of the nation for 2018.” “Illinois’ unemployment rate fell to 4.2 percent from 4.3 percent in July, 0.3 percentage points higher than the national rate of 3.9 percent.” “Since December 2017, the rest of the nation has expanded payrolls 31 percent faster than Illinois.”