By Michael Lucci -
The office of Governor Pat Quinn is claiming victory off a study released Thursday by CareerBuilder and Economic Modeling Specialists International. The study shows that Illinois ranked third-highest nationally in the creation of net new business establishments from 2009-2012. An establishment is defined as a single location that produces some form of economic activity, and Illinois had a net gain of 18,000 establishments during the years of the study.
What the governor and his supporters don’t mention is that Illinois lost 33,500 payroll jobs during that same time period, according to the Bureau of Labor Statistics. This discrepancy occurs because larger businesses went bust and were replaced with smaller businesses with a smaller number of employees.
The number of net new businesses has consistently been positive in Illinois, yet the number of net jobs from business births and deaths has consistently been negative. In fact, an Illinois Policy Institute study that covers 1995-2009 shows that after 1999 Illinois often created more than 18,000 net new businesses annually.
However, the size of businesses collapsed from 9.2 jobs per new business in 1999 to 2.4 jobs per new business in 2008. Meanwhile, the jobs lost per business death rose from 6.7 jobs per death in 1999 to 10 jobs per death in 2008. What the 2009-2012 study likely showed was the continuation of this trend of failure.
Texas, on the other hand, shows what healthy business growth should look like. It led nationally in net new business creation for the same period, with nearly 30,000 net new businesses. Unlike Illinois, Texas increased employment by 785,000 and payrolls by more than 700,000 during the same period. Texas was creating more businesses and, critically, creating more jobs at the same time. Illinois missed the boat on the job creation.
The result of Quinn’s triumph is fewer opportunities and less economic strength. Other indicators point to this fact.
- Unemployment in Illinois is third-highest nationally
- Net out-migration continues at a blistering pace
- Illinois is losing residents to all of its neighbors
- Workforce participation under Quinn fell to the lowest level since June 1978
- Payrolls are down by 159,400 since before the recession
Quinn’s office should acknowledge that our once-great economic fleet is now being pulled out of the market by tugboats, leaving workers paddling for survival in life rafts. Illinois can only handle so much more of this “success” before more ships, and the state, sink.
Michael Lucci is Director of Jobs & Growth at the Illinois Policy Institute