Illinois Economic Policy Institute

The Illinois Economic Policy Institute is a new nonprofit organization which supports research and provides timely, candid, and dynamic analysis on major subjects affecting the economies of Illinois and the Midwest, specializing in the construction industry. The Illinois Economic Policy Institute uses advanced statistics, reliable surveying techniques, and the latest forecasting models to evaluate and generate public policies that empower individuals, policymakers, and lawmakers to make a positive impact.

Latest Research: Policies that Support Employment

State governments utilize public policies to impact the efficiency of labor markets. These policies are designed to increase employment by encouraging people to look for work, make it easier for people to get to work, provide support for people who are working, and create opportunities for employment. A new report– conducted jointly by the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign – finds that four policies and one budgetary practice support employment. Improving the share of the population with a bachelor’s degree, increasing enrollment in state early childhood education (ECE) programs, improving and expanding roads and bridges, and reducing the average commute time to work all directly raise the working-age employment rate. In addition, higher budget surpluses in state government indirectly boosts the employment rate. Other factors that are commonly articulated by political figures – such as personal income taxes, “right-to-work” laws, or minimum wage laws – have no statistical impact on the employment rate. Ultimately, the public policies that “work” for workers are all investments by the public sector. The State could add nearly 180,000 new jobs and grow the economy by at least $2 billion by investing in transportation infrastructure, in the education of all residents, and in future public expenditures.

Poll: The Views of Illinois’ Top Economics Academics

In August 2015, nearly 100 economics academics and policy academics from accredited university programs in Illinois voluntarily participated in a Poll of Illinois Economics Professors, Instructors, and Experts. The survey contained 25 questions about general public policy issues, Illinois-specific policy issues, and the field of economics. Relative to the actual number of economics and policy academics at accredited universities in Illinois, the 94-person sample size produces a margin of error of ±9.0%. The responses show that economics and policy academics in Illinois are strong supporters of infrastructure investment, anti-discrimination laws, public education, marijuana legalization, and action on climate change. They are more mixed on policies and institutions that address income inequality, such as minimum wage laws and labor unions. Finally, a significant majority of Illinois’ economics and policy academics do not think that elected officials generally have a strong understanding of economics.

Commentary: Unions Can Increase Efficiency

The Illinois Economic Policy Institute investigates ten examples of how unions can– and do– increase economic efficiency: 1.) Union workers earn higher wages and increase consumer demand; 2.) Unions reduce socially inefficient levels of income inequality; 3.) Union workers receive less government assistance; 4.) Union workers contribute more in income taxes; 5.) Unions increase productivity in construction, manufacturing, and education; 6.) Unions reduce employee turnover rates; 7.) Unions fight against child labor and for public education; 8.) Unions fight against all forms of discrimination; 9.) Unions collectively bargain toward efficient contracts; and 10.) Unions fight against the “monopsony” power of owners, especially in sports. Unions still play a significant role in the American economy. In evaluating the pros and cons of labor unions in the modern economy, these benefits must be considered.

ICYMI: Impact of Michigan’s Prevailing Wage

JUNE 22, 2015: The prevailing wage for publicly-financed construction projects is a positive economic development tool for the Michigan economy, according to a new study. If the state’s prevailing wage law were to be repealed, more projects would be won by out-of-state contractors and materials and fuels costs would rise by millions of dollars, negatively impacting the state economy. Ultimately, repeal would result in 11,320 jobs lost, a $1.70 billion reduction in economic activity across Michigan, and $28 million lost in state and local tax revenues per year. The primary industries that would indirectly experience output losses as a result would be health care, professional and business services, and restaurants and bars. The study concludes that prevailing wage supports a dynamic, “high road” economy that promotes worker productivity and boosts economic activity for businesses and families.

The report, The Cost of Repealing Michigan’s Prevailing Wage Policy: Impacts on Total Construction Costs and Economic Activity, was conducted by researchers at the Midwest Economic Policy Institute, Colorado State University– Pueblo, and Smart Cities Prevail.

FYI: Illinois is a “Donor State” in Crisis

Illinois has a lobbying problem that no one is talking about. According to a June 2015 policy brief from the Illinois Economic Policy Institute, Illinois residents are more productive and earn higher wages than the national average. As a result, Illinois workers contribute more in federal income and employment tax revenues that their counterparts across the country. The federal government redistributes this revenue disproportionately to low-wage (especially “right-to-work”) states to improve their economic outcomes. Thus, while Illinois residents contribute 19.2 percent more in federal taxes than the national average, they receive 32.2 percent less in federal subsidies to the state government. If federal government transfers to Illinois matched the national average, the state government would have $8.0 billion more in revenues. This would turn the current $6.2 billion deficit into a $1.8 billion surplus. Moreover, if Illinois received the same level of federal support given to “right-to-work” states, the state would have up to $11.5 billion in additional revenues. Instead, while their state government annually struggles to balance its budget, Illinois residents have been subsidizing the budgets of 45 other states. Since it makes little sense for Illinois to risk declaring bankruptcy when its residents have been bailing out other states for years, the federal government should increase assistance to “donor states.”

The policy brief, Illinois Can No Longer Afford to Be a Donor State: The Illinois Lobbying Problem No One Is Talking About, is available on the Research page.

A Smoother Path: The I-RIDE Proposal

A recent ILEPI Policy Brief proposes a smart, reliable policy to fund transportation infrastructure for the modern world. The Illinois Road Improvement and Driver Enhancement (I-RIDE) program is a road user fee for each mile traveled by a vehicle in Illinois. Utilizing a public-private partnership agreement, the I-RIDE allows Illinois motorists to choose their own pay-as-you-drive plan through various technologies. Depending on the rate schedule, the I-RIDE allows the state to bring its roads, bridges, and rail lines back up to acceptable levels of quality or to create the highest-class infrastructure in the nation. The I-RIDE would increase infrastructure investment funds by $2.6 billion annually for the state and would support over 31,000 new jobs every year under “full capacity” rates. The I-RIDE allows the state to be a global leader in smart, comprehensive infrastructure investment policies that grow the economy, alleviate traffic, and modernize transit. Additionally, in May 2015, ILEPI added a slideshow outlining the proposal found under “Policy Presentations” on the Research page.

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