|Chart by WSJ based on Bureau of Labor Statistics|
If the states are laboratories of democracy, then a great comparative policy experiment is taking place in America's Great Lakes region. Democrats in Illinois have been pursuing their blue-state model of higher taxes and union-dominated government. Neighboring states since 2010 have gone for lower taxes and union reform.
The comparison is especially apt because Illinois Democrats are doubling down on their strategy in this election year. Governor Pat Quinn has announced plans to make permanent the "temporary" tax hikes that were supposed to sunset at the end of this year. Illinois House Speaker Michael Madigan last month floated a 3% surcharge on income over $1 million, only to have it shot down by some in his own caucus. Yet Democrats are still flogging a progressive income tax, which Mr. Quinn all but endorsed last year.
All of which makes it an ideal moment to consider how the Quinn-Madigan policies are working. One way to judge is to compare Illinois with four other Great Lakes states that the federal Bureau of Economic Analysis (BEA) lumps together for its annual survey of economic performance by the 50 states.
Key points from the WSJ opinion piece:
- Illinois's 8.7% jobless rate is the country's second highest and has only fallen by a mere 0.7 percentage while Michigan, Ohio, Indiana and Wisconsin saw sharp declines. Only Illinois raised taxes.
- Illinois recorded the slowest personal income growth in the Great Lakes and one third of of its growth last year was driven by "transfer receipts" (i.e., food stamps, workers' compensation, disability, welfare, Medicaid, Social Security, Medicare, earned income tax credits, unemployment benefits). According to BEA, these payments increased 5.2% in Illinois in 2013, the third most in the U.S., while wages and salaries ticked up only 1%."
- Illinois saw workers leaving the state while the Michigan and Indiana saw their workforce grow.
- Illinois lost manufacturing jobs while Michigan, Indiana and Ohio each added them.