For Policy Makers

Please find reports below that discuss policy implications for a variety of topics including minimum wage increases, “right-to-work” laws, and macro-economic impacts.

SCHEDULING STABILITY FOR MORE OR FEWER WORKERS? A PROJECT FOR MIDDLE CLASS RENEWAL BRIEF

A briefing for policymakers on the impact of scheduling stability on workers in Chicago and in Illinois.

THE IMPACT OF ENACTING A PROGRESSIVE INCOME TAX IN ILLINOIS

Illinois has the one of the most unfair tax systems in the United States. In response, Governor J.B. Pritzker and the General Assembly have debated whether to amend the Illinois Constitution to allow the state to replace its flat-rate income tax system with a progressive (or “graduated-rate”) income tax. Illinois is currently one of only eight states that has a flat-rate tax, while 33 states have progressive income tax systems. The Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute (ILEPI) have jointly evaluated the effects of 8 different scenarios for adopting a progressive income tax in the state, including the governor’s proposed “fair tax.” The scenarios are intended to serve as examples for voters and lawmakers. A progressive income tax would transform Illinois’ tax code by bringing middle-class tax burdens down towards rates in neighboring states. Moving to a graduated-rate structure could make the state’s tax code fairer, cut income taxes for working-class and middle-class families, provide opportunities for property tax relief, help balance the budget, and provide revenue to fund essential public services that contribute to the growth of the Illinois economy.

A “PENSION CRISIS” MENTALITY WON’T HELP: THINKING DIFFERENTLY ABOUT ILLINOIS’ RETIREMENT SYSTEMS

The near ubiquitous claim that Illinois is facing a “pension crisis” has rarely been challenged. The failure to examine this customary framing of the fiscal condition of Illinois’ five state pension systems limits how policymakers conceptualize their funding strategy. This white paper, jointly authored by researchers from the Project for Middle Class Renewal at the School of Labor and Employment Relations, the Government Finance Research Center and the Institute of Government and Public Affairs (all at the University of Illinois), argues that the “pension crisis” framework negatively influences discussions of policy options.

Rather than a singular problem, we contend that there are actually two, interrelated and in-conflict issues: concern over the pension systems’ finances, and operating budgets where expenses regularly exceed revenues. A tension exists between a desire to rapidly improve the finances of the pension systems (which would necessitate higher state contributions), and an interest in preventing pension contributions from crowding out other areas of the state budget. Illinois lawmakers have long sought a silver bullet solution that will not increase (or even lower) the state’s required contributions while simultaneously shoring up the pension systems’ finances. We view such a scenario as unattainable and its pursuit as a distraction from the job of responsible policymaking. Moreover, because the two issues are interrelated, a policy designed to address one issue will necessarily worsen the other.

LEGALIZING SPORTS BETTING IN ILLINOIS: EVALUATING POLICY OPTIONS AND FISCAL IMPACTS

If Illinois were to legalize sports betting through the Sports Wagering Act proposed last year, net revenues for the gaming industry would increase by $400 million and about 1,800 new jobs would be created at between 30 and 75 licensed locations. The proposed bills would also raise state tax revenue by between $50 million and $120 million per year. However, due to relatively high tax rates, the proposals in the Illinois General Assembly would result in nearly half of all sports betting activity remaining in the black market.

In this report, the Illinois Economic Policy Institute (ILEPI) and the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign, evaluates several proposals to legalize, regulate, and tax sports betting. If the General Assembly chooses to move forward on this concept, a balanced framework that combines the United Kingdom’s 15 percent tax on gross gambling revenues, a $100,000 annual license fee for sportsbooks and related establishments, and a small 0.05 percent “integrity fee” on wagers to ensure compliance and prevent fraudulent activity may offer a way forward.

THE FINANCIAL IMPACT OF LEGALIZING MARIJUANA IN ILLINOIS

There is significant public support for legalizing, regulating, and taxing recreational marijuana in Illinois. Fully 66 percent of registered voters in Illinois support legalizing marijuana, including a bi-partisan majority of Democrats and Republicans. Furthermore, 10 states and the District of Columbia have already legalized recreational marijuana.

This report finds that high taxpayer costs for law enforcement and cannabis-related incarceration would be reduced by legalizing recreational marijuana. In total, Illinois taxpayers would save $18.4 million annually in reduced incarceration costs, law enforcement spending, and legal fees from marijuana legalization. This revenue could be redirected to solve other crimes– such as homicides, robberies, and assaults.

The economy would also grow if Illinois were to legalize recreational marijuana. If marijuana were legalized, regulated, and taxed in Illinois, an estimated $1.6 billion would be sold in the state, in part due to regional tourism.

RAISING THE MINIMUM WAGE: WHAT $10, $13, OR $15 PER HOUR WOULD MEAN FOR ILLINOIS

The last time that Illinois increased its minimum wage was in July 2010. If Illinois’ minimum wage had been indexed to inflation since then, it would be nearly $10 per hour today. 13 states now have minimum wages of $10 per hour or higher, and 9 of these states have unemployment rates that are lower than or the same as Illinois. Additionally, the majority of Illinois voters support increasing the minimum wage.

The Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute (ILEPI) has evaluated three state minimum wage hike scenarios ($10, $13 and $15). The analysis finds that raising the minimum wage boosts worker incomes while having little to no effect on employment.

The minimum wage is intended to ensure that working-class individuals can maintain a decent standard of living. Nevertheless, Illinois’ current minimum wage of $8.25 per hour fails to prevent workers from earning poverty-level wages. By raising the minimum wage, Illinois can boost worker incomes, reduce income inequality, increase consumer demand, grow the economy, generate tax revenues, and decrease taxpayer costs for government assistance programs.

PUBLIC POLICIES THAT HELP GROW THE ILLINOIS ECONOMY: AN EVIDENCE-BASED REVIEW OF THE CURRENT DEBATE

What policies improve a state’s economic performance and how do specific state laws impact economic outcomes? In an effort to provide some insight into the current debate in Illinois over measures under consideration by state lawmakers, the Project for Middle Class Renewal in the School of Labor and Employment Relations at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute have prepared this White Paper.

THE IMPACT OF “RIGHT TO WORK” LAWS ON LABOR MARKET OUTCOMES IN THREE MIDWEST STATES: EVIDENCE FROM INDIANA, MICHIGAN, AND WISCONSIN (2010-2016)

The movement to implement “right-to-work” (RTW) legislation has accelerated over recent years. Since 2012, RTW laws have been passed in Indiana, Michigan, Wisconsin, West Virginia, Kentucky, and Missouri. This report investigates the impact of RTW laws passed in three Midwest states for which there is available data – Indiana, Michigan, and Wisconsin – compared to a control group of three Midwest counterparts that remained collective-bargaining (CB) states – Illinois, Minnesota, and Ohio – from January 2010 through December 2016.

POLICIES TO REDUCE AFRICAN-AMERICAN UNEMPLOYMENT

The City of Chicago is experiencing extremely high rates of African-American unemployment compared to the rest of the nation. This report, conducted by researchers at the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign, seeks to understand the causes of high African-American unemployment in Chicago and other urban areas across the United States. It offers seven public policies and economic phenomena that make a difference in lowering the African-American unemployment rate.

ADVANCING CONSTRUCTION INDUSTRY DIVERSITY:  A PILOT STUDY OF THE EAST CENTRAL AREA BUILDING TRADES COUNCIL

The importance of the construction trades and apprenticeship programs as a unique and unparalleled pathway into middle class job opportunities for non-college graduates, inspired the Project for Middle Class Renewal in the Labor Education Program (LEP) at the University of Illinois’ School of Labor and Employment Relations to invite building trades’ apprenticeship programs to participate in a pilot diversity study.  The study was designed to determine not only levels of access and involvement in the apprentice building trades by minority and female workers, but also to recommend practices that would enhance inclusivity in the industry.  The goal was to address the question of how to make the “apprentice-able” construction trades the preferred labor force for both white and non-white workers.

THE IMPACT OF APPRENTICESHIP PROGRAMS IN ILLINOIS: AN ANALYSIS OF ECONOMIC AND SOCIAL EFFECTS

Despite the presence of registered apprenticeships in many Illinois industries, especially construction, little policy research has been conducted to analyze their economic and social impacts. This study, authored jointly by the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute, investigates the effect of registered apprenticeship programs on the workers, businesses, governments, and economy of Illinois. The study reveals that registered apprenticeship programs in Illinois’ construction industry provide $1.25 billion in long-term economic benefits to the state. If all registered apprenticeship programs for construction were combined, they would be the 7th-largestprivate post-secondary educational institution in Illinois.

THE COSTS AND BENEFITS OF INTERNATIONAL TRADE IN ILLINOIS: ESTIMATING IMPACTS ON MANUFACTURING AND THE ECONOMY

There has been a general consensus among economists that international free trade is an important source of economic growth for countries. However, recent evidence finds that trade hurts local jobs and worsens income inequality. Mass job displacement can have significant effects on the national economy and public budget. This report focuses on the impact of trade on Illinois’ manufacturing sector. As the 5th-largest exporter state and the 6th-largest importer state in the nation, Illinois is particularly exposed to international trade. Imports and exports help make Illinois the transportation hub of America. Illinois, however, has lost more than 100,000 total manufacturing jobs over the past decade.

THE IMPACT OF PREVAILING WAGE LAWS ON MILITARY VETERANS: AN ECONOMIC AND LABOR MARKET ANALYSIS

Over the past five years, more than 1 million veterans have exited the military and entered the civilian workforce. Ensuring that those who served the country are able to secure stable civilian employment is a priority for the country. Construction, a fast-growing industry where employers report widespread skills shortages, is a vital option for blue-collar veterans who are either unable or uninterested in attending college. Despite the fact that construction is a popular sector of employment for veterans when they return home and enter civilian life, no economic research has explicitly investigated the impacts that prevailing wage laws have on the economic and labor market outcomes of veterans. This report is a statistical exploration of the impact of state prevailing wage laws on America’s veterans.

AN ANALYSIS OF THE IMPACT OF PREVAILING WAGE THRESHOLDS ON PUBLIC CONSTRUCTION: IMPLICATIONS FOR ILLINOIS

A state prevailing wage law supports construction workers employed on public infrastructure projects. The policy requires that workers employed on projects funded by taxpayer dollars are compensated according to hourly wage and benefits rates normally paid on similar private and public projects in an area. This report is an evaluation of contract thresholds for project coverage under the prevailing wage law. The report reviews the academic and policy research on the effects that increases in state contract thresholds have on business, the labor market and economic outcomes. The analysis is subsequently applied to Illinois to forecast effects if Illinois were to introduce a prevailing wage threshold.

A FLOWING ECONOMY: HOW CLEAN WATER INFRASTRUCTURE INVESTMENTS SUPPORT GOOD JOBS IN CHICAGO AND IN ILLINOIS

Clean water infrastructure investments are critical to a healthy economy. A sustainable system of clean water distribution and treatment is not only necessary to prevent contamination, restoring natural waterways, eliminating flood damage, and mitigate the potential impacts of climate change, but clean water infrastructure contributes to long-term economic growth. This report provides an analysis of clean water infrastructure in Illinois, especially in the Chicago area.