McHenry Times

The manufacturing industry in Illinois continues to show job losses, despite October's net gain of 1,600 jobs.

The preliminary data released by the Illinois Department of Employment Security (IDES) shows the first small gain since June, although the overall manufacturing-jobs data shows a net loss of 10,000 jobs in the past year.

Of the 812 layoffs in October, 429 were in manufacturing, and 400 of those jobs were in the city of Belvidere in Boone County. Three firms permanently closed: Android Belvidere II, Ventra Belvidere LLC and Eberspaecher.

“High costs and competition from surrounding states continue to drain manufacturing jobs from Illinois,” Illinois Department of Commerce and Economic Opportunity acting Director Sean McCarthy said in a statement. “We saw several manufacturers move across the border to Wisconsin in October. Sixteen-hundred new manufacturing jobs is a start, but it is a drop in the bucket compared to the 10,000 manufacturing jobs Illinois has lost over the last 12 months – an average loss of nearly 200 jobs per week.”

Illinois has struggled to recover since the 2007-09 Great Recession. Manufacturing was particularly hard hit by the recession, and while neighboring states have recovered from most of its effects, Illinois' recovery has been slow.

"The recovery has been uneven among the various sectors, as Illinois still lags in manufacturing, construction and financial activities, as well as trade, transportation and utilities," Illinois Department of Employment Security (IDES) Director Jeff Mays said.

Among the factors affecting Illinois' recovery are high workers' compensation insurance costs. Manufacturing has higher insurance costs than other industries. While this affects manufacturing in general, Illinois workers' compensation rates are double or triple those of businesses in surrounding states.

In Illinois, if the workplace contributes to an injury in any way, even if it is determined to be 1 percent at fault, the insurance pays full benefits to the employee. Gov. Bruce Rauner and Republican lawmakers are seeking reforms in workers' compensation to help lower costs and make the state more business-friendly. They support a stricter standard requiring that the workplace be determined the main cause of the injury for an employee to collect full workers' compensation benefits. Reforms face continued opposition from long-time legislators, such as Illinois House Speaker Mike Madigan (D-Chicago) and his colleagues.

Technology also has been a factor in the loss of manufacturing jobs. New businesses and existing businesses that are upgrading their manufacturing facilities use new automated technologies that require fewer workers. The manufacturers' output increases, but fewer jobs are available to blue-collar workers.

The loss of research and development (R&D) tax credits in 2015 also affected manufacturing. Between 2010 and 2014, manufacturing earned 60 percent of the R&D tax credits in the state. R&D tax credits draw investment into manufacturing and other industries. New and improved products that add to the global market and bring funds back into the state are a direct result of investing in R&D.

High property taxes, restrictive and expensive business regulations and the ongoing state budget crisis are also cited by Republican legislators and conservative think tanks, such as the Illinois Policy Institute, as factors in Illinois' slow recovery and continued exodus of jobs and skilled workers.

Manufacturing is not the only industry affected by the high cost of doing business in Illinois. The construction, financial, transportation and utilities industries also have seen job losses over the past year.

Professional and business services, however, saw a surge in new jobs. The industry added 31,400 jobs between October 2015 and October 2016. Education and health services, leisure and hospitality, and government also saw increases in jobs.