Illinois State Representative Grant Wehrli's Legislative Survey

Representative Grant Wehrli:

I responded to your online legislative survey today, but your survey does not address other important challenges of the state; nor does it offer the best solutions (or choices) for the state's complicated issues. Most unfortunately, the survey asks constituents to make simple choices to complex questions, questions that are constructed in a way that demands no scrutiny in order to answer intelligently, and with no understanding of the consequences for responding to an inane “yes/no/undecided” format. Take for instance the following three questions in your legislative survey.

Question #1: “There are many important challenges facing our state. Please rank the following in order of importance to you. –Creating Jobs, -Reforming State Pensions, -Improving Education, -Rebuilding Infrastructure, i.e. Roads and Bridges, -Reducing State Debt.”

The survey omits raising revenue in Illinois and re-amortizing the unfunded liability as important choices. (Please read how to raise more state revenue and how to re-amortize the flawed pension ramp again. Click here. I gave you some of that information when we met in your office on Monday, March 13).

Question #4: “Do you support moving away from state funded pensions and towards an independent 401-k system?  -Yes, -No, -Undecided.” 

The survey omits the dire consequences of “moving away from state funded pensions and towards an independent 401-K system.” Most constituents do not know about these consequences. According to the Teachers’ Retirement System of the State of Illinois:

“The Teachers’ Retirement System of the State of Illinois annually distributes approximately $3.8 billion in pensions and benefits to men, women, and children in every corner of the state, creating a sustained economic stimulus that helps drive the economy in all 102 counties. This study is based on recurring payments to retirees, survivors, and disability benefit recipients living in Illinois. Lump-sum payments for refunds and death benefits are excluded from the analysis since they do not provide a continuing source of income. Net, rather than gross, benefits are used in this analysis because the net benefits are what stimulate the state economy. The multipliers were produced by the Regional Product Division of the U.S. Bureau of Economic Analysis.

“The positive ripple effect of TRS benefits jumps by 46 percent to more than $5.584 billion in total economic activity throughout Illinois - new full-time jobs, salaries earned, and new goods and services produced across the state.

“The study, conducted by TRS using benefit statistics from February 2015 benefit payments, found that:

• Eighty percent of the System’s 89,817 total benefit recipients live in Illinois.

• The $3.8 billion in pensions and benefits paid to Illinois residents is 83 percent of the total pensions and benefits distributed by TRS annually. The statewide economic impact of TRS pensions and benefits can be measured in real terms:

TOTAL OUTPUT - $5.584 BILLION

This is the overall measure of economic activity in Illinois stemming from TRS pensions and benefits. It includes all TRS payments, salaries earned in those jobs, and increases in the state’s Gross Domestic Product.

JOBS SUPPORTED – 41,725

This is the total number of full-time jobs supported by the $3.821 billion in TRS pensions and benefits pumped into the Illinois economy.

EARNINGS CREATED - $1.562 BILLION

These are the total salaries earned by persons employed in Illinois jobs that are fueled by TRS benefit payments.

ILLINOIS GDP VALUE - $3.272 BILLION

This is the amount added to the Illinois Gross Domestic Product – the total value of goods and services produced within Illinois – due to TRS pension and benefit payments.

Furthermore, according to TRS, “making newly-hired teachers pay into Social Security and allowing them to be eligible for benefits would affect all current and retired teachers. Illinois teachers have never been part of the Social Security system. Most teachers rely almost solely on a TRS pension during retirement. Active teachers [currently] contribute 9.0 percent of their paycheck to help fund TRS and school districts contribute 0.58 percent of every teacher’s salary to the System. Last year, all told, teachers contributed $917 million to TRS and school districts contributed $155 million.

“For new teachers to become part of Social Security this scenario would mean a mandatory 12.4 percent payroll deduction split evenly between the member and the employer, which in the case of Illinois teachers is school districts and state government. Teachers would still be required to contribute 9.0 percent of salary to TRS.

“For school districts, the cost of teacher pensions would immediately rise by a considerable amount. Instead of contributing 0.58 percent per new teacher, every district would have to contribute 6.2 percent per teacher. It is estimated that this increased cost would equal $41 million for Illinois school districts in the first year and more than $2.4 billion over 10 years. Plus, districts would still have to contribute 0.58 percent for each participant in the current system.

“Finally, a 1999 study by the General Accounting Office found that adding teachers and other public employers from around the country who are not currently in Social Security would create, at best, a temporary surge in revenue for Social Security. Over the long term, adding teachers to Social Security would only increase the System’s total obligations and deepen the long-term funding problem” (TRS).

Perhaps the survey should also be asking your constituents whether the State of Illinois ought to keep a constitutional promise: in other words, whether a politician can break a constitutional contract with ANY citizen in Illinois if it suits a politician’s advantage. Moreover, how about asking whether a politician should continue to hurt the lives of people who were not responsible for the state’s pension debt and lack of revenue? And how about asking whether so-called pension reform, or the breaking of a constitutional contract, is moral and legal, and whether it is right to ignore the State and U.S. Constitutions again and again?

Question #6: “Most of Illinois’ neighboring states have in recent years adopted ‘right to work’ laws. Would you support initiatives to make Illinois a ‘right to work’ state to help us compete for jobs? –Yes, -No, -Undecided.”

You omitted what “right to work” laws would do to the State of Illinois. Besides not helping the state “compete for jobs,” according to the Illinois Economic Policy Institute and the University of Illinois:

“Efforts to create local ‘right-to-work’ zones would have negative impacts on workers and the economy in Illinois. The preponderance of evidence finds that worker incomes are lower in economies with ‘right-to-work’ laws and that employment effects are minimal at best. 

“For instance, average worker wages are $2.90 per hour (13 percent) higher in Illinois than in ‘right-to-work’ Indiana, and Illinois added 14,000 more jobs in 2014. At the same time, the unemployment rate in eastern Illinois counties was lower than in ‘right-to-work’ counties across the Indiana border in December 2014.

“The proposal for local ‘right-to-work’ zones is based on the assumption that high union density hampers local economies. An analysis of the 102 counties in Illinois, however, reveals that this presupposition is unfounded. 

“Higher county-level unionization rates within Illinois have no discernible impact on employment growth, establishment openings growth, and average household income growth. The evidence that unionization raises the unemployment rate in Illinois is also weak. The claim that ‘right-to-work’ is an effective way to put people to work is not supported by the evidence.

“Incorporating estimates from previous policy research, economic impact analyses are performed to determine the effect of adopting local ‘right-to-work’ laws in half of Illinois’ counties, excluding Cook County. The models randomly select 51 counties to become ‘right-to-work’ zones and demonstrate the negative consequences of the proposal. If half of the state’s counties (excluding Cook County) became ‘right-to-work’ zones: 

• Total labor income would fall by $1.3 billion;

• The economy would shrink by $1.5 billion;

• State and local tax revenues would be reduced by $80 million;

• Labor unions would experience a loss of 200,000 members;

• Racial income inequality and gender income inequality would both increase; and

• The number of workplace injuries and fatalities would rise.

“In the seven integrated county economies with over 100,000 workers in Illinois, predicted impacts are generally similar. If local ‘right-to-work’ zones were only passed in the Chicago six-county area, the regional economy would experience over 5,500 jobs lost and an economic contraction of $2.6 billion. 

“Both businesses and workers would relocate to other parts of the state with better incomes and higher consumer demand. Similarly, local ‘right-to-work’ laws would reduce total worker earnings by around $40 to $60 million in the Champaign-Urbana, Quad Cities, Rockford, and Springfield-Decatur regions. 

“Labor income would also be predicted to decline by $16 million in the Peoria-Bloomington community and by $104 million in the St. Louis region. Local ‘right-to-work’ zones would eradicate good middle-class jobs, replacing them with low-wage employment openings and redistributing income from labor to capital.

“Ultimately, economic analysis reveals that local ‘right-to-work’ laws would reduce worker earnings and decrease state and local tax revenues…       

  

“Local ‘right-to-work’ zones would have overall negative impacts for Illinois workers. First, workers earn more in fair-share collective bargaining economies. The preponderance of evidence indicates that incomes are between 2 and 6 percent lower in ‘right-to-work’ states. Compared to their counterparts in Indiana, a neighboring ‘right-to-work’ state, Illinois workers earned 12.8 percent more in average hourly wages in 2014. 

“There is also no evidence that higher unionization rates are associated with slower income growth across Illinois. Moreover, if half of Illinois’ counties adopted ‘right-to-work’ regulations, total labor income in the economy would fall by $1.3 billion throughout the state.

“Second, the impact of ‘right-to-work’ laws on employment outcomes is mixed. Previous estimates suggest a marginal 0.4 percentage point increase in jobs due to ‘right-to-work’ laws, but an effect of zero cannot conclusively be ruled out. 

“The unemployment rate in western counties in ‘right-to-work’ Indiana is higher than the unemployment rate in bordering eastern Illinois. Additionally, there is no evidence that a higher county-level union membership rate leads to smaller employment growth rate or establishment growth rate in Illinois counties. The predicted impact of 51 counties becoming ‘right-to-work’ zones in Illinois is a small 2,348-job increase in the state.

“A definitive consequence of enacting local ‘right-to-work zones’ would be further erosion of Illinois’ middle class. Labor unions would be expected to experience a loss of 200,000 members if half of the state’s counties (excluding Cook County) became ‘right-to-work’ areas. 

“Since unions provide greater income benefits for nonwhite and female workers than for Caucasian males, this causal impact of ‘right-to-work’ would increase both racial income inequality and gender income inequality. 

“Good middle-class jobs would be replaced by low-wage openings in ‘right-to-work’ counties, and employee income would be transferred to wealthy employers. As result, total economic output in Illinois would fall by $1.5 billion and cash-strapped local governments would experience a revenue loss of $80 million.

“Ultimately, economic analysis reveals that local ‘right-to-work’ laws would encourage free-riding, lower worker earnings, and reduce state and local tax revenues. The likely result would be a weaker Illinois economy. Improving the entire Illinois economy by increasing consumer demand, raising worker wages, and making investments in education and public infrastructure are better policy prescriptions with proven track records to help all counties in the state…”

(Read comment posted on Right-to Work case).

-Glen Brown