From the Desk of State Senator Brian W. Stewart (March 1): “Let’s Do Economic Development Right”

I like Dave Ramsey. He’s a man who has faced life’s challenges head on and persevered. He didn’t give up and I admire that. Like him or not, he is often right on the money when writing about money. For example, he wrote, “Unless you control your money, making more won’t help. You’ll just have bigger payments.” I’ve been there, especially when I was young. I had to learn some lessons the hard way, and like Ramsey, persevered.

I view our state budget in much the same way. Yes, it’s vastly more complicated than the average household; and while the devil is often in the details, guiding principles still apply. Last week, I wrote about spending and revenue questions working families deserve to have answered before their Representatives and Senators vote on the budget. Today, my questions are about my own personal passions creating jobs, developing our workforce, and expanding small businesses.

If you’ve read Governor Pritzker’s speech, creating jobs was mentioned after refusing to cut spending. Let’s hope this does not mean that the Governor would rather spend tax dollars than create jobs. Another concern is the opportunities the Governor identified to “grow jobs.”

First he said we need to grow jobs by attracting talent from all over the country. Second he said we need to take advantage of our diversity. Lastly, he mentioned creating new programs for a Downstate Revitalization Plan.

What should the focus be? It was President Obama who said, “Our economic dependence depended on individual initiative. It depended on a belief in the free market; but it has also depended on our sense of mutual regard for each other, the idea that everybody has a stake in the country, that we’re all in it together and everybody’s got a shot at opportunity.”  In my view, a successful plan will avoid tunnel vision and entrenched ideology. It will not bow to “pay to play” politics but instead emphasize public good for working families throughout our whole state.

How do we do that? President Reagan said, “Small business is a tonic for what ails this country. I believe it is a tonic for what ails Illinois too.  According to Bureau of Labor Statistics in 2016, small businesses have created “62% of all private sector jobs since the great recession,” and employ more workers in our country overall. I am firmly convinced a job growth plan should include a focus on growing small business and creating new small business opportunities.

It sounds as though Governor Pritzker is focused more on attracting start ups than focusing on growing and creating small businesses. This may be a serious error. A few years ago focusing on start ups and larger companies made sense. According to a 2013 Washington Post article, “a growing contingency of economists believe start-ups are the most reliable job creators.” The article goes on to address two challenges startups have when creating jobs, “Census data shows that fewer than half of the positions created by start-ups still exist after five years,” and “employees at start-ups generally earn only about 70 percent as much as those at existing firms.”

The Bureau of Labor Statistics also tells us that startups are creating fewer jobs through 2016 than the trajectory they were showing in 2013. It reports that “66% of private sector new jobs were created by existing business (not startups),” since the great recession. They also demonstrate that the data is even more skewed the further back you go, saying, “Existing businesses created 9 out of 10 new private-sector jobs.”

We also need to think outside the box, or just get rid of the box entirely, when it comes to incentives to create jobs. Research published this year by the University of Texas has found that incentives account for 10-15 percent of location decisions made by businesses that are expanding or relocating. Professor Nathan Jensen, who led the study, says, “Quality of workforce, quality of infrastructure, and quality of life rank way higher than incentives for attracting companies.”

Both Jensen’s study and the Bureau of Labor Statistics data support a report issued by the Brookings Institute in 2016, “Remaking economic development: The markets and civics of continuous growth and prosperity.” In the report, author Amy Liu articulates 5 action principles governments should apply to economic development programs 1. Set the right goals, 2. Grow from within, 3. Boost trade, 4. Invest in people and skills, and 5. Connect.  Economic development runs far deeper than incentive programs.

We need to focus on growing and attracting the right businesses in the right places with the right workforce and physical infrastructure to support long term job growth. Small businesses need to be free to hire, train, and retain more staff. The Governor’s proposed increase in the retail tax administrative costs, and the higher minimum wage doesn’t help achieve that goal.

Next week we will dive in to how to support each community’s unique qualities that will create jobs and improve the services our communities provide.

If you have any additional thoughts or ideas, you can visit my website at and use the form to send me an e-mail. 

Brian Stewart

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