The Economy of Creativity

The Millennial generation has been dealt a difficult hand, especially with regard to finding work and keeping it for any duration of time. Coming of age after the last recession, the Millennials entered a job market much different than the one they were born into.  The outsourcing of jobs, continually diminishing benefits, stagnant wages and the emerging gig economy, based on short-term and temporary work, is all this generation knows.

However, it may be those same forces making it difficult to find and keep a job that create an opportunity for Millennials to utilize their generational talents and qualifications to be excellent entrepreneurs. Millennials were born into an ever-growing technology based environment and economy. They are excellent at multi-tasking and desire independence from traditional office culture and the 9-5 workday. They tend to prefer to use their inherent variety of skills in a variety of different ways.

Not only do these traits fit the aforementioned growing gig economy, but also exhibit the essential traits of strong entrepreneur. While some have termed Millennials as lacking necessary communication skills and work ethic, it can be argued that they simply do not fit “traditional” norms established by Baby Boomers and Generation X’ers, but rather create their own individualized path toward personal and professional success. The uniqueness of the Millennial generation has created an economic environment full of creativity and boundless opportunity.

Statistics also tend to fall in line with the assessment that Millennials are primed to be successful entrepreneurs. According to America’s Small Business Development Centers:

  • 62% of Millennials surveyed said they dream of starting business;
  • About 50% have specific plans to do so within the next couple of years; and
  • 61% of Millennials say that they think that their best job security will come from owning their own business.

Other entrepreneurs started their own business for different reasons. They included creating a more stable financial foundation for their family, the desire to be one’s own boss, having and developing a great idea, and the desire for work independence. However, job security has almost never been associated with entrepreneurship…until now.

Interestingly, this fits almost perfectly with the Millennial creative mind and versatile skill set. For a generation that for the most part has never really known job security, it only makes sense that they realize that the best boss they can have is themselves.

Furthermore, Millennials tend to predominantly make up a region’s or community’s creative class. Often times Millennials themselves do not even know they are a part of this creative class, and therefore need their specific talents drawn-out into the forefront. This creative class of Millennials has given the long-standing dictionary definition of creative industry new life. While this industry has been around for some time, it has in the past 5-10 years taken on more prominence in both urban and rural community settings.

This creative industry is made up of several generalized categories of work, Marketing, Architecture, Visual Arts & Crafts, Design, Film & Media, Digital Games, Music & Entertainment as well as Publishing. While some of these sub-industries are obvious money makers, many Millennials tend to produce these goods and services as a hobby alongside their part or full-time job at the local fast fast food restaurant or cubicle office job. Unfortunately these talents often go unnoticed to community business and government leaders who can help encourage and grow these talents into new business start-ups.

Undoubtedly, it takes some guidance to turn a hobby digital game developer who works at the local Wal-Mart full-time into a professional game developer, just as an example, but with proper guidance, creative Millennials can achieve goals and objectives that far outweigh the expectations of many. This is thanks to their willingness to take what many would call “unnecessary” risks, their inherent ability to adapt to new environments and learn quickly, as well as the unending Millennial endeavor for independence and self-sufficiency on their own terms.

So, without question, the community you live in has numerous individuals working within the creative class that simply need to be found and given the opportunity to express themselves in whatever they do. They can be found at local craft fairs and festivals, Wal-Mart’s electronics department, or sometimes working in their parent’s basements (only partially a joke). They simply need to be sought after, found, and allowed the space to create. In the end, like it is in all walks of life, some will make it and some won’t. The important thing to remember is that Millennial’s are risk takers. One or two failures will not stop them from trying a third time. This is the beauty of the Millennial generation that is often taken for granted. Provide these creatives with the setting to show of what they do and honestly, anything can happen.

Source: USA Today

Illinois K-12 Education Funding

The state of Illinois politics has been and appears like it will continue to be in utter disarray for the foreseeable future. As of the publication of this article, and barring a budget miracle by June 30th 2017, Illinois will have been without a budget for almost exactly 2 years. This has resulted in, as of June 10, 2017, over $14.6 billion in unpaid bills. According to Reboot Illinois, this number could rise to approximately $25 billion in FY-2019, if the current path continues. The issues surrounding the continued budget impasse are innumerable and include issues surrounding state pension system reform, higher education funding, medicaid payment backlog, and raising the minimum wage. The continued impasse, and furthermore lack of state funding, has also prompted substantial layoffs across nearly every sector of state government operation.

While the issues noted above are critically important, I specifically want to touch on Illinois K-12 education. On June 30th, 2016 a stop-gap spending bill for K-12 education was passed by the Illinois Congress and signed by Illinois Governor Bruce Rauner. This was a great win for K-12 education, but has since become big problem number 1. The money promised by the state government to school districts across the has not arrived for a majority of school districts. In sum, the issue is while they did pass a k-12 education spending bill, the State simply could not afford to do so. To illustrate this point for fiscal years 2016 and 2017, it promised to pay $1.76 billion each year, but this year has missed three of its four quarterly payments. The total owed to schools is at least $1 billion, according to the comptroller’s office.

This backlog of payments is due most notably to Chicago area schools rather than the more rural south, which rely more heavily on local property tax revenues than than their northern counterparts. However, that is not to say that rural school districts are unaffected by any stretch of the imagination. Intensifying the problem further, a recent federal court case decision obligates the State to prioritize the $2 billion currently owned to medicaid providers, likely pushing obligations such as education further back in line.

Luckily for rural school districts that depend on a combination of local property tax revenue and General State Aid, the State has continued to keep current with its General State Aid payments. However, now comes the biggest potential problem yet for local taxing bodies throughout the State, but most notably the southern half, a proposed property tax freeze.

While the specifics of a property tax freeze may include ways for municipal governments and local taxing bodies to opt out, there is not way to predict exactly what a property tax freeze bill would look like. It is however fairly easy to predict the detrimental impact it would have on school districts who rely heavily on consistent property tax revenue annually. So what exactly would this mean for public schools?

“In one word, death!” exclaims William Phillips, a professor of  Educational Leadership at the University of Illinois Springfield “No new tax money assumes that all a district’s bills are going to stand still… I can’t believe they’re thinking along those lines. It’s really horrible. I don’t know how school districts can survive with the forces aligned against them,” says Phillips.

According to Monticello Community Unit School District 25 Superintendent Vic Zimmerman, “School districts” expenses increase,” he said. “The property tax is a stable revenue source … If they take away our one stable revenue source, how do they want us to continue to function? Tighten our belts? That’s been going on because of proration over the last several years.”

Without a doubt, a property tax freeze of any sort would be detrimental and in many ways unthinkable for school districts who rely heavily on these local revenue streams. A freeze would undoubtedly lead to measures that reduce the teaching force, special education  programs, extra curricular activities, etc. I dare to suggest that in many cases, it would simply be a fight to keep the doors, which may already be a serious problem for many school districts across the State this coming Fall.

What makes the whole issue of a property tax freeze even more difficult to digest, is the simple fact that these savings in property tax, while great for landowners’ and business pocket books, does absolutely nothing in terms of providing the State with more financial stability. Simply stated, these are local funds and the State does not share in these revenues at all. It can be argues that several areas of the State economy would receive a “boost” from a freeze, but at what cost to the local service providers such as municipalities,  police and fire districts, park districts, and of course, school districts.

While impacts of the State budget impasse have been felt by millions of Illinois residents, Illinois Congress and Governor Rauner have so far avoided catastrophe through stop-gap spending bills and last minute deal making. Unfortunately for all of us residents who have so far not felt the direct impacts of the impasse, the time is coming. In sum, our State government is too politically polarized. There is no better time than today to put politics aside and  find places of compromise for the current and future well-being of the State and its residents.

The Illinois Unemployment Misconception

About one year ago, we published an article called “The Illinois Wage Misconception” briefly detailing Illinois’ appearance of a strong average wage statistic. In reality, the high average wage was a false generalization. The finding’s foundation was built on the fact that the small percentage of high-end wage earners simply averaged more wages than other regional states’ high earners did. This specific finding balanced and further hid the usually low wages of a majority of Illinois workers. This wage dichotomy, or conflict, created an “illusion” of a high average wage for all of Illinois Workers.

This article discusses another Illinois economic misconception that is easily hidden by broad statistical generalizations. This misconception, or “illusion” is the State of Illinois’ lowest unemployment rate in nearly a decade of 4.6%. On face value, this record low unemployment rate would likely equate to an increase in both employment opportunities as well as employed individuals throughout the State. However, in Illinois, this is unfortunately not the case.

What is seemingly a state economic success is actually an indication of a deeper issue. The out migration of the Illinois labor force. The path towards low unemployment has not been unemployed workers seeking out and finding new jobs, but rather giving up on finding work altogether. So, simply stated, as unemployed workers quit looking for jobs altogether they are no longer included in the unemployment statistic. Therefore, as motivated job seekers go down, so does the State’s overall average unemployment rate. So the central statistic missing from this equation is the State’s active labor force. If the active labor force goes down alongside the unemployment rate, it becomes easy to surmise that decreasing unemployment signals economic distress rather than success.

Over the last ten years, from May 2007 to May 2017, Illinois has a total of 230,000 individuals leave active labor force and completely end their search for work. Interesting, over the same time frame, neighboring Wisconsin’s labor force is up 70,000 and Indiana’s labor force is up 130,000. Although not regionally adjacent, Texas has seen a labor force increase of 2 million over the last ten years. So it seems three basic conclusions can be made from these labor force statistics, (1) Illinois’ political quagmire has created an unmotivated workforce that is likely causing them to simply give up on searching for work, (2) those individuals who are motivated to work are moving elsewhere to find employment (neighboring states such as Indiana and Wisconsin), and (3) until Governor Bruce Rauner and the Illinois Congress can solve it’s budget crisis and began to dig itself out, these trends are more likely to continue than they are to dissipate.

While problems are easily identified, solutions to those problems take a certain type of courage by politicians that is not based on political leanings, but rather on what is best for the citizens of the State, despite which side of the aisle you sit at. The financial and social burdens are only growing, and to this point, the solutions being proposed are simply not keeping up.

While local leaders and economic stakeholders cannot control or often even predict the actions taken in Springfield, they do have the ability to make a difference in their community, no matter how small it may appear. First, it is absolutely critical to maintain regular contact with community employers. Engaging in economic development retention techniques allows the community to understand the needs of  local business and industry, and help both the community and the business plan for the future.

In some cases,  local business and industry may be planning an expansion of operations that could range from an additional 1-2 employees all the way to a multi-million dollar expansion and 20-40 new employees. With this type of information in hand, local stakeholders can reach out to area community colleges and universities to engage in curriculum discussions to help fill the future needs of the communities employers. While I am simplifying these often arduous conversations down to a few sentences, making a difference can happen locally, you simply have to take the first step.

Source: Illinois Policy Institute

Forgotten Illinois: Newton and the reality of America’s heartland

Members of the Newton, Ill., Rotary Club meet for lunch every Tuesday at noon in a backroom of Parklanes, a local bowling alley.

Meetings begin with a prayer, a group rendition of “My Country, ’Tis of Thee,” and handshakes throughout the room. You can hardly hear the bowling pins falling while community leaders and concerned
citizens eat their lunches and discuss with each other the happenings of the city.

They’re focused; brought together out of concern for their nearly 200-year-old city. Newton faces many of the same trends as other downstate communities. Jobs have left, residents have moved, and politicians aren’t listening.

The sense of community, though, remains strong. Jonathan Broscious, a pastor at Newton’s New Hope Church, moved to the city in 2013 after attending school in Pennsylvania and growing up in the Washington, D.C., area. His wife grew up in Newton, and the city’s strong sense of community has made Broscious happy to call Newton home.

“I went to the bank – this was maybe six months after I moved here – and I went to make a deposit,” Broscious recalled. “I’m not the kind of person who has his account numbers memorized or whatever, so I walk up to the teller – and I’ve never talked to this girl ever before in my life. And I walk up to her, and I say, ‘Hey, I need to make a deposit but I don’t know what my bank account number is. I can give you my driver’s license or my debit card or something if you needed to figure it out.’

“And she said, ‘Oh no, I got it; what account do you want me to put it in?’ She knew exactly who I was because evidently she’d seen me walking with my wife and knew who my wife was.”

It’s not difficult to recognize people in Newton, a city of 2,800 people covering less than 2 square miles. The close-knit feeling is everywhere.

IMG_4196-1024x683.jpg“One thing that’s always amazed me about Newton is how people take care of each other,” said Scott Bierman, who owns PS Realty in Newton with his wife, June. “There was an older guy here recently who was really beloved by a lot of people but he got sick. They raised $68,000 for him in one night. In one night. It’s always really cool to see people come together like that.”

But while Newton boasts small town camaraderie, it also suffers from the same problems as many other Rust Belt communities. The city has a largely blue-collar economy, which has suffered mightily over the past several decades.

Much of Newton’s story probably sounds familiar to other towns across Middle America.

In 1977, a coal plant opened, providing revenue and jobs for Newton, which then had a little more than 3,000 residents. Five years later, the plant expanded, adding a second unit and creating more jobs. For years after, the dual-unit, 1,200-megawatt coal plant accounted for a plurality of Newton’s property tax revenue.

A partial shutdown of the coal plant in 2016 accounted for nearly 50 lost jobs and a drop in tax revenue, but the plant is still a large part of the community’s economy.

Concerns falling on deaf ears

“That power plant pays 45 percent of our property taxes,” Newton MayIMG_4178-1024x683or Mark Bolander said. “So when [Democratic presidential candidate Hillary Clinton] stands up and says goodbye to the coal industry, that’s insulting to us. That hits home.”

Bolander referred to a comment Clinton made in May 2016 that if elected, her administration was “going to put a lot of coal miners and coal companies out of business.”

Whether it’s coal jobs vanishing or manufacturing jobs relocating over the nearby Indiana border, the feeling is the same. The concerns of this tight-knit community often fall on deaf ears in Springfield and Washington, D.C.

Newton may be being ignored because of the political makeup of the state – where the voting patterns of the heavily populated Cook County and Chicagoland area dictate many policy outcomes – but residents in Newton are in tune with what’s happening downstate and throughout the country.

“This county used to be blue,” Bolander said, “and it’s very much red now because of attitudes like (Clinton’s).”

That’s not an exaggeration. Jasper County went for the Democratic presidential nominee as recently as 1992, and stayed relatively competitive in subsequent elections. But in the 2016 presidential election nearly 80 percent of the county voted for Republican nominee, and now president, Donald Trump.

People in Newton have largely stayed the same, but circumstances haven’t. Bolander, like many of his neighbors, has lived in Newton his whole life, but was finally spurred to action 12 years ago, when he and a group of concerned citizens decided to run for local office.

“I wasn’t happy,” Bolander said. “Businesses were closing, young people leaving for college and not coming back… I didn’t feel like we had the right mindset to grow our community.”

Uncompetitive in the Midwest

Newton, though declining in population since the 1980 census, is the only city in Jasper County. Founded in 1835, it’s also the seat for a county less than an hour’s drive from Indiana, and just a few hours from Kentucky.

Bolander owns a manufacturing business and has some operations in Indiana. He sees the discrepancy in competitiveness between Illinois and Indiana firsthand. Bolander said he pays $5 per $100 payroll in Indiana for workers’ compensation costs, versus $15 per $100 payroll in Illinois.

But leaving Newton isn’t something to consider for lifelong residents, many of whom are concerned about the area’s jobs climate and prospects.

“Most of the people here have lived here in Jasper County their whole life,” Scott Bierman said.

Working in realty, Scott and June have noticed the business climate change, and what might be contributing to it.

“The biggest concerns (for residents) are probably that our jobs don’t leave and the property taxes being too high,” Scott said.

Newton has an average property tax rate of about 1.3 percent, meaning a homeowner with a $150,000 house would pay about $2,000 annually in property taxes. That’s actually better than some of the surrounding counties and statewide, but it’s much higher than Terre Haute, Ind., just about 40 minutes away. And it’s more than twice as high as Paducah, Ky., which is only a few hours south.

Keeping the community together

“The big concern is everything leaving,” said Roni Myers, owner of local bar MVP Happy Holler. “People do move out, businesses leave and the taxes go with that. But we all try to stick together.”IMG_4131-1024x683

“Our community is wonderful. They will stand by and help anyone who needs it. If someone’s sick, if anyone needs help, people really chip in.”

Myers, whose bar is just within the city limits, has battled the state over liquor and gaming licenses. Nevertheless she’s been able to create a successful, popular business in the Newton area. On some nights, she’ll have as many as 400 or 500 customers at a time, many of which are regulars and many who call Newton home.IMG_4160-1024x683

Sticking together is commonplace in the 182-year-old city. Still, some of the tougher conditions of the state and region are visible, though not defining.

“Every Tuesday morning, I help out at the food pantry in town that one of my congregation members started,” Broscious said. “It’s amazing how many people are coming through there and what percentage of our county is at or near the poverty level. People are doing everything they can but a lot of the times it seems like the deck is stacked against them.”

“I love the town. I love the people,” he continued. “I think that it’s a great town, but there is sometimes just dryness to it. There’s just a dry feeling there – spiritually, emotionally; it’s just tough. Money doesn’t fix any problems, but sometimes it can mask them… If you have money you can distract yourself a lot easier, it doesn’t necessarily mean the problem goes away. But when you’re living in poverty, which a huge section of our county is… well, that makes that process a lot tougher, and you have nothing to mask your problems with. And they become a lot more evident and there’s a desperation that starts bleeding through. I see that.”

It’s politicians who don’t see that. Residents of Newton – working together, helping each other out and bonding, whether at Rotary Club meetings at Parklanes, MVP Happy Holler or anywhere else – see the reality in front of them.

Source: Illinois Policy Institute

Agriculture and the Illinois Economy

Agriculture’s impact on the state’s economy ripples beyond fields and livestock buildings to the industries and services that support farmers. In turn, those industries and services provide jobs and economic stability across Illinois, especially in rural areas.

Illinois agriculture accounted for one of every 17 jobs in the state and contributed $120.9 billion in sales to the state economy, according to a 2015 Decision Innovation Solutions study.

Agpic.jpg

Some major agribusinesses are well known here and elsewhere, while others’ recognition resonates in the agriculture sector they support and the communities they call home.

For example, Automated Production (AP) System ships swine feed storage and delivery systems across the country and to global customers from Christian County. Its parent company, Grain Systems Inc., operates its global headquarters and a 1-million-square-foot plant in Assumption. In Illinois, the company employs 750, including 200 in Taylorville.

“We ship globally from the Taylorville plant to South America, Europe, Asia and North America” to customers whose orders specify “U.S. quality,” said Tom Stutham, AP swine product management director. The Taylorville plant, which opened in 2007, annually ships $100 million worth of products, according to Stutham.

Effingham County serves as home base for FarmWeld Inc., which manufactures swine equipment, including feeders, waterers, gates and flooring. A large portion of the company’s sales is centered in Illinois, but FarmWeld also sells to farmers throughout the Midwest and the U.S., as well as some international ones, according to Frank Brummer, president of FarmWeld. In 2016, FarmWeld enjoyed a “positive year,” and Brummer attributed part of that success to long-term employees who function as a team.

Operating in Teutopolis since 1979, FarmWeld employs 45 people in positions ranging from sales and marketing to engineers, welders and general laborers who reside in seven counties.

The vitality of the pork industry is critical for both downstate companies.

“As more barns are built in Illinois, it increases our chance to supply equipment within our own state,” Brummer said. “FarmWeld is looking to expand our facilities in 2017, and bring some outsourced processes inhouse and add more great people to our team to support our growth.”

Stutham added: AP “enjoys great success in Illinois, from producers who desire to work with local companies. We’re very interested in seeing livestock production grow in Illinois. When swine (production) expands, we definitely feel it and prosper.”

Based on sales volume, Iowa and Minnesota comprise the largest markets for AP swine products, he noted.

Given the status of Illinois’ economy, especially in rural areas, supporting local business is crucial, both executives noted.

“We employ a lot of your neighbors and your customers in our factory,” said AP’s Stutham. “The animal agriculture industry is a major contributor to Illinois and to rural communities. We’re proud to employ these citizens in our factories. Trade with our company and others like ours.”

Brummer agreed: “Supporting local businesses in rural Illinois invests part of your dollars back into your state to help build infrastructure, better schools and more. Buying from Illinois companies is the easiest humanitarian effort you can take part in, and it will positively affect your neighbors and community.”

Asked how policymakers can support rural companies such as theirs, Stutham and Brummer took different approaches.

“Grants are a way to support businesses in rural Illinois,” Brummer said. “Invest in those that are investing in themselves.”

Stutham mentioned his customers: “Animal agriculture needs a common-sense approach to siting … Everyone wants to be good stewards. Make regulations that are common sense, and understand how legislation can have unintended and severe impacts.”

Source: FarmWeekNow

Illinois: Highest Overall Tax Burden in the Nation

A March 14th, 2017 report has found that the State of Illinois has the highest combined state and local tax burden among all 50 states and the District of Columbia. This report combines state and local  taxes to create an overall effective tax rate for the median household in each state.

According to the report, the median Illinois household pays approximately $8,162 in annual state and local taxes, including sales taxes, property taxes and income taxes. This includes the highest combine state and local tax rate in the nation of an effective 14.76 percent on the average median household. This tax rate is found to be 37.66 percent larger than the U.S. state average.

Wallet Hub also developed an interactive map illustrating the tax burden ranking for each U.S. State and the District of Columbia. The ranking goes from “1” to “51”, with “1” being the lowest tax burden and “51” being the highest. Please click the link below to view the interact map.

Interactive Tax Burden Map

WalletHub used several taxes to calculate Illinois’ percentage; however, the most damning was the property tax. Illinois ranked second-worst in the nation for property taxes. People in homes with the U.S. median home value pay $4,105 annually in Illinois, according to WalletHub. Illinois’ crushing property taxes combined with income and sales taxes make the Prairie State the most taxed in the country. 

And high taxes are driving Illinoisans to the border. From 2006 to 2015, a net 700,000 people migrated out of Illinois. Polling by the Paul Simon Public Policy Institute showed 47 percent of Illinoisans want to leave the state, and the single biggest reason is Illinois’ high tax burden. 

Source: Illinois Policy

State Still Deadlocked on Budget

Illinois will ring in the new year with a familiar tune: Deadlock in the Capitol and no state budget.

The only spending agreement reached in two years between bickering Republicans and Democrats, a six-month temporary fix, expires Sunday.

Not only is there no arrangement to fill the void, Gov. Bruce Rauner and his Democratic opponents controlling the General Assembly have hardly talked about it.

Funding for elementary and secondary education was provided through June. But colleges and universities will see state spending dry up. And even though billions of dollars for Medicaid health care is assured, the backlog of bills is so great that hospitals are having an increasingly tougher time staying ahead.

State workers will continue to be paid, but there’s no money to pay utility bills or buy commodities; vendors continue to wait for payment. Those needing mental health, addiction treatment, or senior-living programs will likely wait, too. The private agencies that provide those services continue to wait months for checks to arrive.

“In a lot of areas, things are just breaking apart,” Senate Appropriations Chairwoman Heather Steans, a Chicago Democrat, said.

Rauner spokeswoman Catherine Kelly insisted lawmakers must jump aboard with the governor and his agenda for reducing business costs, freezing property taxes and limiting politicians’ power. Those will save money and boost Illinois commerce, says Rauner, a wealthy former private-equity investor.

She challenged Democrats to “break from” House Speaker Michael Madigan “to reach a bipartisan, balanced budget with reforms or continue to force a crisis and higher taxes.”

The two sides have met just a handful of times since last fall and Democrats criticized Rauner for canceling a scheduled conference Dec. 12. He wanted a spending plan from Democrats, but as Madigan spokesman Steve Brown said Thursday, “We need to hear from the people who are actually going to spend the money on how they want to spend it and how much they want to spend.”

Madigan, the steel-willed Chicagoan, says Rauner’s ideas shouldn’t be tied to a budget deal.

The Legislature returns to Springfield on Jan. 9 for two final days of the current session before a new General Assembly is sworn in.

John Patterson, spokesman for Senate President John Cullerton, said the Chicago Democrat was surprised by the governor’s nixing the last meeting but hopes they’ll sit down again soon.

“Businesses that work and provide services on behalf of the state deserve to be paid,” Patterson said. “We need to be investing in higher education and preserving our safety net. These are all vital to Illinois being the competitive and compassionate state.”

Source: Springfield, Illinois AP – John O’Connor