econscius

Posts Tagged ‘Illinois Unemployment’

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.
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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.
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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.