INDIANAPOLIS, Ind. — It had been years since I last visited Indianapolis, but when I returned for a visit this past week I was startled by what I found: a vibrant growing city in the midst of a prosperous state.
Between 2009 and 2017, Indiana added 102,700 manufacturing jobs. Illinois, on the other hand, added 3,000 during that same period.
Between July 2013 and July 2016, Indiana’s population grew by 63,951. During the same period, the Land of Lincoln lost 77,966 people.
What is Indiana doing to attract manufacturing jobs and people that Illinois isn’t?
For years, I’ve heard people dismiss Illinois’ population loss as a consequence of our lousy weather. Sure, some Midwesterners move to the Sunbelt to escape the cold. There is no denying that.
But Illinois and Indiana have identical climates.
Why is one state’s population growing while the other shrinks?
Three things worth looking at are: taxes, cost of doing business and labor relations.
According to a 2017 study conducted by WalletHub, Illinois and New Jersey have the highest property taxes in the nation. Indiana ranks in the middle of the pack nationally.
Based on the median local property tax rates in both states, someone owning a $179,000 house in Indiana would pay $1,560 in taxes but in Illinois someone owning a home with the same value would pay $4,105.
One of the biggest costs of doing business for manufacturers is workers’ compensation insurance. In fact, for many employers, particularly manufacturers, it is a bigger cost than state taxes.
Officially, the cost of workers’ comp in Illinois is about 50 percent higher than Indiana. That’s pretty bad, but even that stark disparity masks the severity of the problem. In many areas of manufacturing, the cost of insurance for workers injured on the job can be three or four times higher in Illinois than in the Hoosier State.
Manufacturers looking for a place to build a factory are going to be reticent to invest in a state that is so much more expensive to do business.
And finally, there is the issue of labor relations. Indiana, like a majority of the states, is a right-to-work state. In right-to-work states workers cannot be forced to pay money to a union that they don’t want to belong to.
In compulsory union states, like Illinois, workers can be forced to make such payments.
Fairly or unfairly, employers are using a state’s right-to-work status as a barometer to gauge the labor climate and discern whether it is an attractive place to do business.
Mitch Daniels was governor when Indiana made the switch to right-to-work.
He once told me employers may say publicly that this isn’t an issue that concerns them. But in private conversations with those same business people, he was stunned by how important the issue was for them.
As Illinois’ economy flounders, our leaders would do well to emulate those states that are experiencing prosperity — places like Indiana.
Scott Reeder, a veteran statehouse journalis, works as a freelance reporter in the Springfield area and produces the podcast Suspect Convictions.
