Respond Directly to Doug   March 12, 2013 Doug Whitley is the president of the Illinois Chamber of Commerce.  Illinois by the Numbers: Five Alarming Trends to Watch      Part II  Yesterday, we explored two significant demographic trends affecting the economic well-being of our state: a major decrease in population and the widespread loss of jobs. This message continues the series with a look at three additional trends of note: the aging of Illinois' population, rising poverty levels and the state's growing tax burden. Trend 3: Illinois' Population is Aging...with Serious Implications for State Budgets The population of Illinois, like much of the U.S., is aging dramatically. Left unaddressed, this trend will bring major financial shockwaves to our state and local governments, especially with regards to pensions and social services. The number of residents 60 years old and older is expected to increase from 2 million to more than 3.6 million by the year 2030 - a 77 percent increase - according to the Illinois Association of Area Agencies on Aging. By 2030, one in every five Illinoisans will be 60 or older. This trend gives employers pause as they contemplate their future workforce requirements. As "baby boomers" move into retirement, will the state have the workers to meet their needs? From 2002-2011, there was an 11.2 percent increase in the number of Illinois residents collecting Social Security. The cost shot up 50.7 percent in the same time period, in part due to the growing number of people who receive Social Security Disability Insurance (SSDI), which compensates people who cannot work or have limited capacity to do so because of a disability. In 2011 alone, Illinois residents were paid $20.7 million in Social Security benefits, compared with $13.5 million in 2002. In addition, 52 percent of Illinois seniors did not have any retirement savings except for what they received from Social Security in 2010. Thanks to advances in health care, life expectancy for senior citizens is much greater than ever before. While this is a welcome trend, it puts added pressure on Social Security and contributes to Illinois' signature financial problem - public employee pensions. Older residents are living longer and, as a result, depleting these funds to an extent much greater than originally anticipated. With an unfunded liability in excess of $96 billion, the pension situation truly has become a crisis that affects the state's ability to finance more traditional government priorities like education, parks and infrastructure. Achieving a legislative solution to the pension issue is a critical demonstration to private sector employers that the state is restoring fiscal discipline in the budgeting equation. This reform is fundamental because private sector employers desire a stable business environment where they can predict with some certainty future actions by the state government. Uncertain liabilities measured in the billions do not provide the kind of confidence employers and investors seek. Fixing the pension liability problem is an absolute must. Trend 4: Poverty on the Rise in Illinois Two recently released reports shine a disturbing light on how the state's economic struggles have affected families. The results show pockets of poverty throughout the state's 102 counties. Statistics cited in the Voices for Illinois Children's Illinois Kids Count 2013 report andHeartland Alliance 2013 Report on Illinois Poverty show: Roughly 4.1 million Illinois residents - or about 33 percent of the state's population - live in or near poverty. The number of Illinois residents considered "low income" is 2.2 million. Nearly 1.9 million live at or below the Federal Poverty Level, while the number living in extreme poverty is nearly 864,000. Between 1989 and 2011, median family income, adjusted for inflation, declined by 17 percent for both black families and Latino families, compared with 6 percent for white families and 5 percent for Asian families.     The federal poverty level (FPL) for a four-person family is $23,021 in income per year, and the extreme federal poverty level is $11,511 or below. The number of Illinoisans living at or below the FPL increased 40.2 percent from 2000-2011. Additional relevant data: More than 20 counties - many in central and southern Illinois - still had unemployment rates of over 10 percent in December 2012, compared to statewide average of 8.7 percent and 7.8 percent for the nation. In January 2013, Illinois' unemployment rate increased to 9 percent while the national rate ticked up to 7.9 percent. Roughly 822,000 Illinois children receive benefits from the Supplemental Nutrition Assistance Program (SNAP/food stamps). From 2000 to 2011, the number of people receiving government financed Medicaid services in Illinois grew from 1.4 million to 2.7 million. To arrest these disturbing trends, we must work to improve the economy and accelerate private sector job growth. Our goal should be to make every Illinois resident a productive member of society. The more people who support themselves, pay taxes and contribute to the economy, the less demand there is for government programs and services. The keys to satisfying this goal: early childhood education, zero tolerance for educational dropouts, skills-based learning outcomes from our public schools, and aggressive job training, retraining and placement to match residents with meaningful employment opportunities. Thousands of job openings are offered up by Illinois employers every day, but the skills gap in our state and lack of job matching capabilities cause many of these positions to go unfilled. A quality workforce is the foundation for every successful business. Employers will invest in the cities and states where their needs are best satisfied. Trend 5: Illinois' Growing Tax Burden Think about it: The loss of hundreds of thousands of residents ... the aging of the population and the resulting increase in non-taxed pension benefits ... the rising poverty level and the need to care for those who are not self-sufficient...the growing reliance on government financed health care. Who is going to pay for the rising costs of government when there are fewer people actively engaged in the workforce? The good news is that Illinois has a diverse economy that benefits from many positive geographic and economic strengths, including: Third largest population center and market in the country Leading industrial and agricultural state Center for international business, foreign consulates, direct foreign investment and a leading export state with direct airline access to countless global destinations Economic capital of the heartland with extensive business and financial services Headquarters for many multi-national corporations Extensive transportation, distribution and infrastructure hub for all modes (including pipelines and fiber networks) Exceptional higher education and health care institutions High-quality and highly productive workforce Easy access to an abundance and variety of competitively priced energy Location in the center of the nation and Central Time Zone, which are conducive to business Home to Chicago, a world-class, multi-cultural city with enviable cultural institutions and a reputation for high quality of life. Those are just a few of the state's positive attributes. A recent illustration of this point is a positive report by Site Selection Magazine showing Illinois has three consecutive years of improved rankings in the magazine's annual multi-state comparison of business growth. The 2012 study shows Illinois has moved from 8th to the 5th most attractive location based on actual investments and related data. Meanwhile, Crain's Chicago Business says Chicago's urban center "is adding residents faster than any other urban core in America, according to the U.S. Census Bureau data. "Unfortunately, however, in recent years the state's positive attributes have often been overshadowed by the many negatives. Currently, Illinois' corporate income tax rates are third highest in the country. Workers' compensation costs and minimum wage requirements are fourth highest in the nation. Likehttps://bitly.com/wise, several tax rates that vary among jurisdictions such as property taxes, sales taxes, motor fuel taxes and hotel/motel taxes are also among the nation's highest. Tax policy and tax costs are government controlled factors that can assist or deter economic growth. As of September 2012, Illinois' total state debt was $271 billion, or $21,000 for each Illinois resident. Thanks primarily to its public employee pension liabilities, Illinois has the fifth highest debt per capita of any state, according to nonprofit group State Budget Solutions. Only Alaska, New Jersey, Connecticut and New Mexico rank higher. Meanwhile factors controlled by the federal government continue to impose a serious financial burden on the backs of our job-creators. In 2014, when the new health insurance tax takes effect under the Affordable Care Act, Illinois' share over the following ten years will be the 6th highest in the nation at nearly $5.3 billion. This does not even include the millions of dollars employers will be required to pay in new penalties for lack of coverage. The state's credit rating has been determined by bond rating agencies to be the least creditworthy of any of the fifty states. The state's unfunded public employee pension obligations are the highest among the fifty states. The evidence is overwhelming that reform is long overdue. We must conclude that much of our state's economy has continued to be successful in spite of failed government leadership and policies. It seems clear that Illinois' political leaders have too often focused on trying to resolve the government's problems, instead of taking a big-picture approach and looking for ways that government cooperation and participation can unleash the power of free enterprise. Tomorrow's message in this series will examine what steps might be taken to pull Illinois out of its economic tailspin.

Respond Directly to Doug Message from the President - Copyright ©2013 The Illinois Chamber of Commerce