econscius

Archive for the ‘Illinois’ Category

Driver Licenses and Auto Insurance Are Sensible Steps for Undocumented Workers

In Illinois, Immigration on November 27, 2012 at 10:30 pm

 

Illinois is considering allowing special purple-colored “not for identification” driver’s licenses for undocumented immigrants. [1]   This is a common sense idea.

“Unlicensed, uninsured drivers are involved in almost 80,000 accidents in Illinois each year, resulting in $660 million in damage, according to the Illinois Highway Safety Coalition. Unlicensed immigrant drivers cost $64 million in damage claims alone.  The Safety Coalition said on its website that since New Mexico made the change in 2003, the rate of uninsured motorists fell from 33 percent to under 9 percent.

The measure would expand to undocumented immigrants Illinois’ existing temporary visitor driver’s license, used by legal immigrants. The licenses are “visually distinct” from ordinary licenses, with a purple background and the words “not valid for identification” on the front.” [1]

Undocumented workers are a fact of life in the USA.  Some get fake driver’s licenses or other documents, anyway.  For that matter, some teenaged Anglo kids obtain fake driver’s licenses to purchase beer.  Estimates range but somewhere around 11 million [2] of the nation’s 330 million people (about 3% of the population) is an undocumented person.  Be assured: some of the people who pick your fruits and vegetables, mow your lawn, clean your hotel rooms, wash dishes at your favorite restaurant, landscape your office building, and watch your kids at day care are here illegally.

Given that they’re here and driving anyway, doesn’t it make sense to have them educated about the rules of the road and road-tested for a license?  Isn’t auto insurance a good idea?   It is reminiscent of contraception: you probably don’t want your 16-year old daughter sexually active, but if she has a boyfriend and is active, anyway, would you prefer she use condoms to protect against potential diseases and pregnancy?  Or would you put your head in the sand and wish for the best?

The claim is made that offering a license is rewarding people who break the law.  If it protects the rest of the country by insuring them, the reward is as much for the populace as large. 

Also, in the cases of some young people, they broke no law.  If you were an illegal immigrant child, say age 12, when brought to the US by your parents, you did not commit a crime.  Western jurisprudence has always held that children cannot be liable for the actions of their parents.

It behooves us to take into account the fact many people commit small crimes.  Many of us violate traffic laws every day.  Is working here without the proper papers a major crime?  I would say no, it is not a big deal.  In fact, it’s really in the realm of “victimless crimes,” which is why it happens.  If an apple orchard in Washington state hires an illegal worker to pick the apples you eat, who is harmed?  No one else wanted that job and I mean that literally.

Growers mostly blame rising tensions around illegal immigration that have spooked migrant farm workers, the majority of whom are here illegally, while worker advocates say there’d be no shortage if growers were willing to pay workers more.

 “Truth be told, we’ve always had a labor shortage in this state; 75 percent of these workers aren’t authorized to be here,” said Dan Fazio, director of the Washington Farm Labor Association.  From Wenatchee to Wapato, in orchards up the Okanogan Valley and across the Yakima Valley, apple trees hang heavy with still-ripening fruit.   At the entrances of a few farms across the region are variations of a sign: “Necesitos Piscadores” — pickers wanted.  [3] 

Labor shortages are a fact of life in the Dakotas.  I don’t buy that Americans are being denied these jobs.  If you are unemployed, are you moving to North Dakota?

When it comes to labor shortages on dairy farms, owners have few options to find the workers they need. Unlike vegetable and fruit growers, dairy farmers have no federal program they can utilize to solicit immigrant labor. If they can’t find domestic labor, their work is likely to go undone.

Dairy farmers don’t talk openly about their labor dilemma for fear of drawing unwanted attention from immigration officials in their region.

One organization, Rural Migration News (RMN), regularly summarizes and analyzes the most important migration-related issues affecting immigrant farm workers in California and the United States. Their efforts are supported by the Rosenberg, Giannini and Farm Foundations.  RMN reported in October 2011 that some Wisconsin dairy farmers believe E-Verify would “kill the dairy industry in Wisconsin.” John Rosenow of Wisconsin’s Rosenholm-Wolfe Dairy commented that, “60 percent of the milk that’s harvested is harvested by immigrants, and the vast majority are probably undocumented.” [4]

You benefit from lower apple prices.  Some argument illegal immigrants create a heavy burden with costs but the fact is that working age adults come, not elderly people who need significant medical care.  Anyone who lives here, regardless of immigration status , is contributing to the local economy by buying gasoline for their car, buying groceries and clothing, paying rent, purchasing other goods and services.

Who are the illegals?  Perhaps one million of America’s undocumented aliens are from Asia. [5]  I knew an Irishman who overstayed his student Visa and stayed to marry an American.  Any rational discussion of illegal immigrants must consider those from the Ukraine, Philippines, Poland and other places who overstay tourist or student Visas.

In recent years it is estimated that about half of all illegal aliens in the United States enter through the US-Mexico Southern sector. Among those who ‘enter without inspection’, the great majority are Mexicans and Central Americans (Gonzalez Baker et al., 1998). The other half is ‘visa over stayer’. They typically fly into US international airports with proper documents and overstay their permits, This is an extremely heterogeneous population. Most U.S. citizens would find it surprising that today Canadians constitute an important group of illegal immigrants in the USA.” [6] According to Pew, just 58% of illegal aliens are from Mexico. [2]

If you’re a Republican and still disagree, you may wish to reconsider in light of the politics.  Mitt Romney lost the 2012 election solely on Latino votes, which went 71% for Obama. [7]  Asian-Americans, despite being America’s wealthiest ethnic category, voted even more strongly for Obama.  Many middle-class and upper class Asian-Americans and Latinos voted against their economic interests and perceived unfriendliness on immigration.  The Latino voting population will double in by 2030. [8]

If the GOP wants to be more than just a debate club, it would behoove the party to focus on more important conservative issues, anyway, like entitlement spending, taxes and the role of government in health care.  Trying to stop a few percent of the population from obtaining driver’s licenses and auto insurance is a fool’s errand.

[1] http://news.yahoo.com/illinois-may-grant-drivers-licenses-illegal-immigrants-001637595.html

[2] http://pewresearch.org/pubs/1876/unauthorized-immigrant-population-united-states-national-state-trends-2010

[3] http://seattletimes.com/html/localnews/2016652587_farmlabor31m.html.    See also http://www.bizjournals.com/seattle/morning_call/2011/10/lack-of-washington-state-apple-pickers.html

[4] http://www.farmandranchguide.com/news/dairy/stalled-lack-of-immigration-reform-complicates-staffing-at-dairies/article_69ebc837-a669-578c-82ce-3cb6a92e02bf.html

[5] http://www.usimmigrationsupport.org/immigrants-coming-from.html

[6] http://www.fas.harvard.edu/~gstudies/latin/curriculum/intro.htm

[7] http://www.pewhispanic.org/2012/11/07/latino-voters-in-the-2012-election/

[8] http://www.pewhispanic.org/2012/11/14/an-awakened-giant-the-hispanic-electorate-is-likely-to-double-by-2030/

Pictures from Wikipedia Commons.

Advertisements

Immigrants More Likely Entreprenuers than the Rest of Us

In Illinois, Immigration, Job Creation on June 14, 2012 at 8:52 pm

Famous Mi Tierra Restaurant, San Antonio, Texas (photo by author)

“Immigrants are more inclined to own small businesses than native-born Americans,” says today’s excellent Wall Street Journal article “Migrants Keep Small-Business Faith” by Miriam Jordan.  [1] The article is free, not behind the Journal’s paywall.

Highlights include 4.7 million people were employed by immigrant owned businesses in 2010 and generated nearly a trillion dollars in revenue.

I quote a vignette from the article about an immigrant entrepreneur near where I live.  This one of countless stories of newcomers who spoke no English but quickly adapted to American culture, learned English and started thriving businesses.  They employ many and enrich our culture.

 

Delfino Bello emigrated from Mexico unable to speak English. Now, he runs three popular Mexican restaurants about 40 miles from Chicago.

 

In 1995, Mr. Bello opened his first eatery, called “El Faro,” in a shopping strip in Bartlett, Ill., that had fallen on hard times. As the taqueria flourished, it attracted other businesses. A few years later, he opened restaurants in Elgin and East Dundee, serving a clientele that includes both immigrants and Americans.

 

“I had nothing, nothing when I arrived in this country,” said Mr. Bello, 55 years old. If the economy continues to recover, he says he plans to open a fourth restaurant.

Immigrant businesses have enlivened otherwise dead cities and suburban areas.  One of Mr. Bello’s restaurants is in Elgin, an old industrial city near Chicago.  If you’ve been to Elgin or the very similar industrial city of Aurora, located on the same Fox River, you’ve seen the importance of immigrant businesses.  Both cities’ downtowns have very few national retailers or restaurant chains.  But they have many immigrant businesses.  If you travel Broadway in downtown Aurora, you see many immigrant businesses.

The country benefits from immigrant entrepreneurs.

Latin American products, San Antonio, Texas

Latin American products, San Antonio, Texas.  (photo by author)

 

 

[1] http://online.wsj.com/article/SB10001424052702303410404577464853249366254.html

Pictures of Mi Tierra (San Antonio) and Latin American products at market stalls in San Antonio by author.  Picture of 26th Street in Little Village neighborhood of Chicago from Wikipedia Commons.

 

A “Blue” Economy: 12.2% Unemployment & Vacant Storefronts in Rockford & Freeport, Illinois

In Economy, Illinois, Unemployment on February 5, 2012 at 3:22 am
 

Remember when gas was $1.86? Long vacant gas station on main drag (Bus'n US Route 20), one block from county courthouse, Downtown, Freeport, Illinois.

Vacant storefronts in downtown Freeport, Illinois.  Read the homemade sign on the left: 3 story commercial building for sale for $30,000.
 
Today, we get behind the numbers to see what a high unemployment, dying “blue state” city looks like.  The unemployment rate in very ‘blue’ Illinois is 9.8%, [1] more than a percent above the national rate.  The Illinois economy is dire, no question.  The Rockford-Freeport-Rochelle Metropolitan Statistical Area had one of the highest unemployment rates in the entire United States at 12.2%. [2]  Freeport is located 25 miles due west of Rockford on the busy four-lane, limited access highway U.S. 20. 
 
On Forbes’ annual list of the most miserable cities, Rockford is usually there.  “Rockford has unusually high violent crime rates for a city of its size. Most notably, the city has the fourth highest rate of aggravated assault in the country, with 10.5 cases for every 1,000 citizens in 2010. During the same period, 20 murders occurred, almost double the number in 2000.” [3] “Property tax rates were fifth highest in the country in 2010. The median tax bill was $3,234 on home values of $136,000 for a rate of 2.4 percent.” [4]  Freeport is smaller and included in the greater Rockford unemployment data above. 
 
I was in Freeport today and took a few pictures downtown.  Most old cities have a ‘bad side’ of town.  I did not cherry pick bad areas for pictures.  The pictures are not taken in one of the far-worse looking slums of Freeport (most cities have a slum), but rather, these pictures are all in the downtown area.  In fact, on the southeast edge of downtown are two square blocks of hulking, long vacant factories, the one-time home of the manufacturer Rawleigh, which left some 45 years ago.  Companies come and go; what is concerning is when companies that left a half century ago are never replaced.  The main drag, Business US 20 has no less than four abandoned gas stations spread through various neighborhoods, including national names like Mobil and CITGO; this is a bad sign about the local economy.
 ”]
Freeport is a county seat (Stephenson County), which guarantees a certain amount of economic stability with the offices of courts, sheriff and other administrative government bodies.   Unfortunately, there are few prosperous commercial areas in Freeport.  Like most cities, there are some big box stores on the edge of town (Wal-Mart, Menard, K-Mart, Shopko, Staples) but even the retail edge of town has a surprising number of vacant retail properties.
 
The chart below shows how Freeport has been in decline, though it briefly turned around its population declines in the 1990s, before more recent declines.
 
 
Year Freeport Population
1970 27,736
1980 26,266
1990 25,840
2000 26,443
2010 25,638
  Chart by Author [6]
 
Freeport is located on a busy highway that runs to Rockford, before allowing one to take either I-39 or I-90 to Madison, Bloomington or most importantly, Chicago.  Freeport is about 110 miles from Chicago, but less than 80 miles from Chicago’s northwest suburbs.  Both Rockford and Freeport are located reasonably close to Chicago with good expressway access, which could be an economic selling point.
 
I should point out I do not mean to pick on Freeport, but rather to use it as an example of what has been happening in hundreds of small cities in high tax, pro-union “blue” states.  Freeport and its eastern neighbor, Rockford, Illinois have the unfortunate distinction of also being part of politically corrupt and ineptly governed Illinois, where the last two Governors reside in jail, at the same time both cities are a very short drive from more business-friendly Wisconsin and only an hour from right-to-work Iowa.  The unemployment rate in Wisconsin is much lower at 7.1% and Iowa even lower, just 5.6%! [1]
 
Those state comparisons mean something.  Certainly when you drive just 20 miles north of Freeport into the small city of Monroe, Wisconsin, the differences are great.  Monroe is more prosperous, has newer industrial plants and lacks the vacant buildings of a Freeport.  Iowa is a bit further, but there is a contrast between, say, similar sized Clinton, Iowa, on the Illinois border.  Clinton has several large, new industrial facilities, especially a newer complex from ADM. 
 

More vacancies, downtown Freeport, Illinois

I think people in Illinois need to be honest and ask themselves why the Illinois economy is so bad.  I know liberals who love to make excuses for Illinois.  They say Illinois is too cold.  Except Iowa, Indiana and Wisconsin are no warmer!   Lots of ‘cold’ states have better economies than Illinois.  Then they say Illinois is a better place culturally (meaning Chicago) than Wisconsin or Iowa or Indiana and companies should want to open up in Illinois because of, say, the wonderful Lyric Opera in Chicago.  The cultural benefits may be real but are not winning the race for jobs.  These same liberals are then stuck essentially telling people in Freeport and Rockford they are better off unemployed because Illinois is a very blue state and if companies won’t locate in Freeport or Rockford because of Illinois’ adversarial attitude toward commerce, so be it.  Live ‘blue’ or die.
 
Freeport’s people are friendly and I have no reason to think they are any less hard-working than anyone else.  I have known many, many people over the years from Freeport and Rockford and think well of them.  The area was long respected as a home to many highly skilled blue-collar workers.  There is some history there and a sense of civic involvement.  So why is the local economy so poor now? 

More vacancy on main drag (US Bus'n 20), Freeport, Illinois

Surely there are many reasons.  Not only Rawleigh but many other companies have left Freeport.  Newell-Rubbermaid company moved its corporate headquarters to Atlanta last decade, taking some good jobs away.  But, in the end, discussing why such and such a company left does not really do justice to the numbers.  People can make excuses.  But why is unemployment so much higher in Illinois, especially in small cities like Rockford and Freeport? 
 
One reason has to be how rarely anything new moves in.  A city like Freeport or Rockford seems to be focused on a sort of whack-a-mole battle to keep what it has from leaving; Illinois does this at its state level with tax incentives for whichever big Illinois employer is asking for them.  If economic development were a sport, Illinois would be accused of playing defense with no game plan for offense.  Driving around Freeport you see some sizable manufacturing operations: a tire plant, several Honeywell locations and a Vitners potato chip plant.  But you see nothing of note that has been added in recent years. 

Blue Economy, Downtown Freeport, Illinois

 
When you look at Freeport or Rockford, you see a once proud city of good citizens stuck in a deep economic rut.  Freeport keeps losing residents, which only makes a bad situation worse as city infrastructure stays the same but there are fewer taxpayers to support it.  I think the solution to Freeport’s problems lies largely outside of the city’s control.  The issue is the Illinois business environment.  It is fascinating how much better off nearby Wisconsin and Iowa are.  It is as if there are invisible “Do Not Cross” lines at the Illinois borders that tell employers to stay away.
 
I sincerely think one of Illinois’ greatest problems is Chicago’s political domination of the State.  Chicago can muddle through high levels of taxation and anti-business legislation because it has two of the world’s elite private universities (Northwestern & University of Chicago), cultural amenities that people will pay extra for, and Chicago is a services economy.  All the computer programmers or other young professionals at consulting firms or Groupon in Chicago are not impacted at all by pro-Labor Illinois rules.  But, the rest of Illinois does not have Lake Michigan as its front yard and lacks the universities, services sector, airports and the cultural amenities Chicago has.  The rest of Illinois simply cannot compete with other states.  Downtown Freeport and a sad number of other Illinois places show the result.  It impacts people like the owner of the three story Freeport commerical building who is asking only $30,000 for his vacant building (see second picture from top).  As do the legions of unemployed in Freeport, Rockford and other Illinois cities outside of Chicago. 

Another vacant storefront in downtown Freeport

 
[1] December 2011 state unemployment rates from http://www.bls.gov/lau/, retrieved 2/5/12.
[2] December 2011 data retrieved 2/5/12 from http://data.bls.gov/timeseries/LAUCA17466003
All pictures by author.

There is No Santa Claus for Illinois Unemployed after 2011 Income Tax Hike

In Illinois, Income Tax Rates, Job Creation, Unemployment on December 2, 2011 at 12:17 am

People told me a Christmas tree dealer’s showroom in nearby North Barrington, Illinois is great for kids because it displays some 200 decorated Christmas trees.  My young sons happen to be connoisseurs of garish Christmas lights.  Thinking that walking the boys through an indoor forest of lit Christmas trees would occupy some free time on a gray, rainy Saturday, I looked up Tree Classics to check hours and address.

I was surprised when the Tree Classics website only showed an address in Wisconsin. [1]  Could I have the wrong name?  I tried an internet search and sure enough, Tree Classics was listed in yelp.com reviews and in business directory Manta.com as located on North Pepper Road in North Barrington, Illinois.  Except that in 2011 Tree Classics moved a bit closer to the North Pole. 

These days, it seems most anything not bolted down is leaving Illinois for Wisconsin, Indiana, or some other state.  Motorola, Caterpillar, Sears, Navistar, Chicago Board Options Exchange and the Chicago Mercantile Exchange are some of the big Illinois employers demanding tax concessions to keep them in the state. [2] [3]  “We’re not real happy with the tax rates and we’ve made our feelings known on the subject,” said Irene Rosenfeld, CEO of Illinois-based Kraft Foods. [4]

I could not find any articles about why Tree Classics left Illinois.  It might be about taxes.  Chicago is a much larger market than Milwaukee which makes the move questionable, but perhaps they have their reasons.  Maybe something else dragged Tree Classics out of Illinois.

As we saw in my post https://econscius.wordpress.com/2011/08/03/stimulus-recipient-among-illinois-mass-layoff-notices-indiana-welcomes-another-illinois-company/, smaller companies are leaving Illinois.  Smaller companies do not have the pull to extract tax breaks from the state legislature.  The departure of a company with 50 or 75 employees may not even get a notice in the newspaper, but the state’s job market shows the toll. 

The Department of Labor graph below clearly demonstrates how the Illinois income tax grinched the Illinois job market:

Pertinent facts: 

1. From January 2010 to December 2010, Illinois employment grew by 173,795 jobs.  The Illinois unemployment rate declined from 11.2% to 9.2%, converging with the national average.

2. In January 2011, Illinois passed a 66% increase to the personal and corporate income tax rate, made retroactive to January 1, 2011. [4]

3. After Illinois companies had a few months to react to the tax increase and explore their options, the state unemployment rate surged from 8.8% in March to 10.1% by October.

4. After the December 2010 peak of 6,052,731 jobs, Illinois lost 93,787 jobs through October.

5. The US unemployment rate has been steady in 2011, being at 9.0% in both January and October. [5]

Why did 2010’s job growth in Illinois abruptly end in 2011, then reverse into job losses and a 10.1% unemployment rate even as the US national unemployment rate held flat at 9.0% in 2011?  Might income tax rates have something to do with it?  Job losses continue:  we have breaking news literally today that Unilever is eliminating all 800 office and manufacturing jobs at the Melrose Park, Illinois headquarters of its Alberto-Culver unit. [6] 

There is no Santa Claus for Illinois workers in 2011 and my sons need another interest to replace seeing groves of articifical Christmas trees.  Perhaps they could count moving vans on the interstates leading out of Illinois?

  How the Grinch Stole Christmas cover.png

[1] http://www.treeclassics.com/Contact-Us-Information-s/63.htm

[2] http://www.chicagotribune.com/business/breaking/chi-caterpillar-tax-vote-sign-of-illinois-dysfunction-20111201,0,3403745.story

[3] http://www.chicagotribune.com/business/breaking/chi-motorola-mobility-could-lay-off-790-and-keep-state-tax-break-20110619,0,2021941.story

[4] http://www.chicagotribune.com/business/columnists/ct-biz-1106-phil–20111106,0,2792639.column

[5] http://money.cnn.com/2011/01/13/news/economy/illinois_corporate_tax_hike/index.htm

[6] 2010 and 2011 employment and unemployment data and graph retrieved 12/1/11 from http://data.bls.gov/timeseries/LASST17000003 (US) and http://data.bls.gov/timeseries/LNS14000000 (Illinois).

[7] http://www.suntimes.com/9185920-417/unilever-closing-alberto-culvers-melrose-park-plant-offices.html

Grinch pictures from Wikipedia Commons; Christmas tree picture from www.treeclassics.com.

Occupy Chicago Is Completely Wrong on CME Tax & Job Claims

In Illinois, Income Tax Rates, Job Creation, Occupy Wall Street Protests, Political Rhetoric on October 15, 2011 at 12:51 am

Occupy Chicago protesters rally Thursday in the Loop, echoing their Occupy Wall Street counterparts in New York. But how about a march on Main Street by the wealthy? That may be just the catharsis America needs.

I heard a theatre teacher from Occupy Chicago talk on the radio about the movement’s demands.  The various Occupy movements have been criticised in many corners for a lack of specific proposals, but Occupy Chicago has a specific demand.  A quick analysis shows the math does not work behind an Occupy Chicago idea and the concept is completely divorced from reality.

Occupy group Stand Up Chicago is demanding the City of Chicago place a 25 cent per trade tax on all contracts traded at the Chicago exchanges, of which the CME is the largest.   Occupy Chicago says this would earn $1.4 billion of fresh tax revenue, which it claims could be used to create 40,000 new City of Chicago jobs. [1] [2]

One sign of a complete lack of perspective and knowledge is how Stand Up Chicago’s statement demanding the tax calls the Chicago exchanges “giant casinos” it claims brought on the financial crisis.  Considering the financial crisis was caused by subprime mortgages going bad, it is quite curious to blame Chicago’s options and futures markets.  The CME and Chicago Board Options Exchange did not make loans nor did they bundle mortgages for securitization.   CME is the parent of the legendary Chicago Mercantile Exchange and iconic Board of Trade.  Clearly, Stand Up Chicago does not understand.

It just so happens the CME was already negotiating with Florida and Texas about relocating its operations.   Illinois raised its state income tax in January, becoming the 3rd highest in the nation.  [3] The CME then announced its attention to look at alternatives.  Illinois was desperately trying to keep the CME from leaving before Occupy Chicago’s idea of a fresh $1.4 billion tax came along.  Such a tax certainly is not going to stop the CME from leaving.

The idea of taxing the Chicago exchanges will not work.  Surely, the CME will leave and Chicago will end up with fewer taxpayers and thus fewer taxpayers as a result.  CME employs 2,000 in the Chicago area, but it has a large multiplier effect because of the numerous trading firms that reside in Chicago to be near the CME’s trading floors.  Banks and other financial institutions employ many who service the CME and trading firms.  Large private firms maintain traders and support staff, for example, meteorologists who predict weather patterns on behalf of agricultural companies’ hedging activities.  “Some estimates place the job count from the trading industry here, which includes the Chicago Board Options Exchange, at more than 60,000.” [3]

But Occupy Chicago’s ideas are even more outlandish than they seem at first blush.  Let us look at the math.  First, the CME had 2010 revenue of $3 billion, on which it earned a profit of $951 million. [3]    A $1.4 billion tax on a local industry where the primary firm, the CME, earned less than $1.0 billion is a very significant tax, indeed. 

Even if the CME were to stay in Chicago despite the special tax, there is nothing stopping aspiring exchanges in Singapore, London, Dubai, Mumbai, Hong Kong, Shanghai or Tokyo from working to steal away the CME’s business.  Since they are not in Chicago and thus not subject to a special tax, these international competitors would gain a significant opportunity.

Would $1.4 billion create 40,000 new jobs for the City of Chicago? 

No.

A quick check of the City of Chicago budget shows the City employs 32,922 employees at a cost of $3.3 billion.  [4]The average city worker earns about $75,000. [5]  The average worker costs about $100,000, including benefits.  That means a $1.4 billion tax, even if enacted and collected, would employ one-third of the claimed 40,000 but rather 14,000.  Adding 40,000 employees would more than double the entire City of Chicago workforce. 

Adding the 40,000 workers would require a tax of $4.0 billion, or more than 4X the entire profit of the CME.  As a reference for the relative size of a hypothetical $4.0 billion Occupy Chicago tax, consider that the entire city budget, serving 2.7 million residents and long known as one of the least efficient and most corrupt of municipal governments, is $6.2 billion. [6]

The cost of an employee is more than just payroll and benefits.  The 40,000 hypothetical workers will require new leases of office space, and expenses for business cards, computers, telephone connections, pens, staplers, and many other things, all costing money.  Any tax will hire fewer City workers because of these other overhead costs.

The Occupy Chicago tax idea and related job claims may make for good populist press, but they are so divorced from reality they must be dismissed out of hand.  Chicago’s financial industry is already at serious risk of leaving the city over the tax burden already in effect.  A $1.4 billion tax increase would certainly drive it out altogether, putting as many as 60,000 private sector jobs at risk.  The Occupy Chicago claims of 40,000 new City of Chicago jobs are triple what a $1.4 billion tax could realistically pay for.  [7] The Chicago exchanges are not in the mortgage business and did not cause the financial crisis.   Just as protesting capitalism will not create any jobs, excepting the occasional protester paid by a union to attend, a huge tax on financial transactions will cause Chicago to lose jobs, not gain them.

 

 

[1] http://articles.chicagotribune.com/2011-10-11/news/ct-met-take-back-chicago-20111011_1_protesters-demonstration-cboe-holdings

[2] http://www.chicagonow.com/chicago-muckrakers/2011/10/40000-jobs-for-25-cents-a-new-plan-for-job-growth-in-chicago/

[3] http://www.suntimes.com/business/5854347-417/cme-group-leaders-cite-illinois-taxes-in-threat-to-leave-chicago.html

[4] pg. 5 of http://civicfed.org/sites/default/files/ChicagoFY11BudgetAnalysis.pdf 

[5]  http://anthonytrendl.blogspot.com/2011/06/chicago-city-worker-salaries.html

[6] pg. 3 of http://civicfed.org/sites/default/files/ChicagoFY11BudgetAnalysis.pdf

[7] I take the $1.4 billion tax revenue claim at face value though it seems a bit rich.  The CBOE had 1.124 billion contracts trade in 2010 ( http://ir.cboe.com/releasedetail.cfm?releaseid=549018) and the CME approximately 3.0 billion contracts (based on daily avg. 12.2 million contracts (http://cmegroup.mediaroom.com/index.php?s=43&item=3088) multiplied by 250 trading days a year).  Apply 25 cents to 4.124 billion contracts and we only get $1.0 billion in tax.  There are a few other small, inconsequential exchanges.

Pictures from Wikipdia Commons, except Chicago protest from Chicago Tribune (credits embedded in picture).

Stimulus Recipient Among Illinois Mass Layoff Notices… Indiana Welcomes Another Illinois Company

In American Recovery & Reinvestment Act (Stimulus), Economy, Illinois, Indiana, Job Creation on August 3, 2011 at 9:32 pm

Today’s Yahoo News story “Ominous signs of surging layoffs in Illinois, nation” [1] reports mass layoff notices.  Let’ see why these layoffs are happening.  An AP story explains why A-1 Wire was closing its Rockford, Illinois operation, laying off 51 employees:

“ELKHART, Ind. — The Indiana Economic Development Corp. says a producer of high-performance engineering alloys is moving its operations from Illinois to Indiana, creating up to 100 new jobs by 2014.  THE IEDC said Saturday that Special Metals Corp. will move its A-1 Wire division from Rockford, Ill., to a 50,000-square-foot plant in Elkhart starting in September.” [2]

The State of Indiana is one of many that has targeted Illinois companies for relocation after Illinois raised its personal and corporate income tax rates in January 2011. 

On-Cor Frozen Foods is moving 85 jobs out of Illinois [3].  This is interesting because last fall, On-Cor was the beneficiary of Stimulus tax-exempt financing to open a new facility in the Chicago suburb of Geneva. [4]  As reported 11/6/10 in the local newspaper:

“GENEVA – Kane County officials are getting ready to issue $10.25 million in recovery zone bonds to facilitate On-Cor Frozen Foods’ relocation to Geneva.  Under the American Recovery and Reinvestment Act of 2009 the county can issue up to $41 million in bonds to stimulate the economy through low-cost, tax-exempt financing.  The proposed bonds are intended to help companies with financing for buying or improving property or for buying equipment. The bonds do not create an obligation for the county or the taxpayers, but will be paid back by On-Cor, officials said.  Sherry DeMeulenaere, treasurer for a limited liability corporation that owns most of On-Cor, said the bonds will pay for equipment used to process frozen foods… “We have an existing workforce in Chicago and jobs will depend on how many will come out to Geneva.  We have 85 jobs downtown and we expect to create another 46.” [4]

So much for the job creation in Illinois.  46 minus 85 is a negative number.  Might those “46 jobs” at the new Geneva facility be among Stimulus jobs the Administration’s website counts as created? 

“Furniture maker Clarin is closing in Lake Bluff, telling the state that it’s letting 75 workers go due to the sale of its assets. ” [5]  This site is Clarin’s corporate office and manufacturing plant.  Ironically, Clarin’s website is proud President Hebert Hoover sat in a Clarin chair.  [6] [7]  Clarin survived the Great Depression but not the Great Recession.

President Herbert Hoover sitting on a Clarin chair

Atlanta-based Consolidated Container is a good-sized operation with 65 facilities; I could find no word on why they’re closing in suburban Chicago. [8]

Pacific Coast Feather is a large company from Seattle, WA.  No word on why it is closing a facility in Des Plaines, Illinois. [9]
 
Schofield Media Group LLC in downtown Chicago is closing, affecting 107 employees.  Schofield was a $25 million revenue company and is closing operations after “unexpectedly” losing its bank financing. [10] 
 

The Chicago Sun-Times “will eliminate 456 jobs in Chicago starting in late September through year-end. Most of the jobs are unionized and include electrical workers, machinists, mailers, operating engineers, pressmen, paper handlers and Teamsters who serviced the soon-to-close plant at 2800 S. Ashland Ave.” [5]

Some of these closings are not surprising; Borders is closing everywhere.  Retail operations like Shopko, restaurants or garden centers may close due to competitive stresses or because of weakness with local consumers.  A weak economy may reflect high local unemployment, which might be expected when companies like A-1 Wire, Pacific Coast Feather, On-Cor Foods, Clarin Seating and Schofield Media close or leave.  The Illinois economy is not working very well and Illinois does itself no favors with an unattractive tax and regulatory environment.

  

[1] http://news.yahoo.com/blogs/chicago/ominous-signs-surging-layoffs-illinois-nation-132147422.html?bouchon=602%2Cil

[2] http://articles.wsbt.com/2011-07-16/elkhart-county_29783101

[3] http://www.examiner.com/independent-in-chicago/10-large-companies-closing-or-leaving-illinois 

[4] http://www.kcchronicle.com/2010/11/06/on-cor-on-tap-for-bonds-geneva-move/aqusss1/

[5] http://articles.chicagotribune.com/2011-08-02/business/chi-10-illinois-companies-tell-state-theyll-cut-1100-jobs-by-yearend-20110802_1_job-cutting-jobs-in-plant-closings-job-losses

[6] http://www.clarinseating.com/about.php

[7] The picture of Herbert Hoover in a Clarin chair is from Yahoo! Images http://images.search.yahoo.com/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3Dclarin%2Bherbert%2Bhoover%26ei%3DUTF-8%26fr%3Dyfp-t-892&w=118&h=192&imgurl=www.clarinseating.com%2Fimages%2Fabout_us%2Fabout-us_right_img_2.jpg&rurl=http%3A%2F%2Fwww.clarinseating.com%2Fabout.php&size=5KB&name=President+Herber…&p=clarin+herbert+hoover&oid=8e622c509a44a00989da692e63fb24cd&fr2=&no=1&tt=4&sigr=116rkq78b&sigi=11u46dl55&sigb=12q1bl78i&.crumb=hHoSiPH8Zmf

[8] http://www.cccllc.com/facilities.php

[9] https://www.pacificcoast.com/about-us

[10] http://www.foliomag.com/2011/schofield-media-shutters-u-s-operations