Public Policies That Help Grow the Illinois Economy

Below is a summary from the recent study by

Robert Bruno, Ph.D.  Director

Project for Middle Class Renewal

University of Illinois at Urbana-Champaign

Frank Manzo IV, M.P.P.  Policy Director

Illinois Economic Policy Institute

…. policy changes that have been proposed in Illinois would have mixed economic and social impacts:

• Peer-reviewed studies demonstrate that “right-to-work” laws have no statistical effect on overall employment in a state economy, but research does find that “right-to-work” tends to reduce wages, limit unionization, and redistribute wealth from labor to capital.

• A repeal of the Illinois Prevailing Wage Act would have no discernible impact on construction costs but would reduce middle-class construction worker earnings, increase worker reliance on government assistance programs, negatively impact apprenticeship training, and hurt the market share of local contractors.

• Reducing unemployment insurance and limiting program eligibility tends to reduce unemployment spells but also lowers the post-unemployment wages of workers because they have less time to find the “right” job match.

• Research indicates that reducing workers’ compensation benefits would have no role in boosting employment in Illinois.

• Raising the minimum wage would have little to no effect on total employment, but would reduce inequality and make housing affordable for hundreds of thousands of workers in the state.

• Providing economic development incentives and business subsidies would have little effect on economic outcomes, and numerous studies conclude that they actually reduce employment in areas because they come at the expense of other productive public goods.

• There is no evidence that limiting local government from increasing property taxes positively impacts per capita income growth, but a property tax freeze can negatively impact local economic

development if it reduces the quality of public schools or causes cuts to protective services.

• Studies on term limits for state legislators find that they are correlated with higher government spending and slower long-run economic growth, regardless of which party controls the legislature.

Read the full study report here….