Men at work

I was at a conference last month and the keynote speaker was discussing the current workforce challenges.  She mentioned some statistics that blew my mind but I forgot about it until recently.  I’ve been frantically looking for full-time, non-intern employment for the last year and a half and with my current internship coming to an end soon, have been recently highly stressed and anxious about my prospects.  This chart should make me feel better, but it doesn’t.  See below:

http://www.bls.gov/news.release/empsit.t04.htm

Basically, this chart from the Bureau of Labor Statistics shows that in the current economic environment, those holding a bachelor’s degree or higher are experiencing a 4.9 percent unemployment rate.  Let’s briefly talk about that.  The “expected” or “normal” unemployment rate is 5 percent, meaning, that in a healthy economy this is the level at which the rate should be at.  This means that those experiencing unemployment, generally speaking, are part of frictional or seasonal unemployment, i.e. construction workers during wintertime, people temporarily between jobs, etc.  This type of unemployment isn’t serious and easily remedies itself overall.  Thus, as bad as this economy is, if you have a bachelor’s degree, finding work shouldn’t be that difficult.  Now that said, what this chart doesn’t show are those that are currently underemployed due to being forced to a lower-level position based on the employment situation.

Unfortunately, the scariest part about these statistics is that for persons not holding a higher degree–or any degree at all for that matter, unemployment is at least double the expected norm.  I’m not going to go into major detail here but the major reason for this difference is the lack of unskilled or low-skilled work available.  50 years ago there were well-paying manufacturing jobs available which have since almost entirely left the country.  These positions were replaced by service sector jobs which do not offer decent wages and are often the first ones cut when money becomes tight.  Any unemployment rate over 5 percent means that there is a serious problem, as we are now experiencing, stemming from either an insufficient demand for the supply of goods in an economy or structural issues, such as technology replacing work previously done by people or the extinction of a skill or field.

Again, I could hold a long and detailed discussion here about the causes and effects of this issue which encompass everything from public education to accessibility to college to government policy and business, but I really just wanted to bring these statistics to everyone’s attention.  In the media all we hear about is the almost 10 percent unemployment rate and recessionary economy, but when you see the details, you get a better picture about who this is really affecting and what possible solutions might be.

People’s Court

There has been a lot of discussion lately regarding the Illinois and Chicago budget crisis and I felt as though this needed further consideration.  Now the media has been certainly portraying Governor Quinn’s proposed income tax increase as the worst possible scenario (back when this was still on the table, that is), and I believe most people feel that it is.  The main opinion is that an income tax increase would cause strain on the citizens of the state and that the government needs to just cut spending.  Now, besides for the fact that the proposed 2 percent increase would be barely noticeable to the majority of the population (and those in the lower-classes can receive relief through programs such as the EIC), what isn’t really being discussed is that THERE IS NO OTHER WAY OUT.

I am going to use data directly from the State of Illinois Budget Book so there is no confusion or accusation of receiving skewed information from the media.  My goal is to simply demonstrate how difficult and complicated government budgets are and to hopefully give you a small understanding of why tax increases were being proposed (which they’re not anymore due to political pressure, being in an election year and all).

At last count, the deficit for 2010 is at $11.5 BILLION.  Billion.  The total operating budget is $24.8 billion and the total capital budget is $30.4 billion.  To give you a basis for comparison, the 2009 operating budget was at $31.5 billion and revenues were $27.2 billion.

This is taken directly from the governor’s budget proposal:

“The governor’s fiscal 2010 budget proposes increasing the personal exemption from $2,000 to $6,000 [read: tax savings for you].  The budget also proposes increasing the income tax rate by 1.5 [this has since been increased to 2 percent] percentage points for individuals, and 2.4 percentage points for corporations.

This exemption means that a family of four making $24,000 per year would pay no income tax in Illinois.  Currently a family of four making that amount per year pays $480 in state taxes.

It is estimated that the increase will generate an additional $2.8 billion in individual income tax receipts in fiscal year 2010, and $350 million in corporate income tax receipts.”

The goal of the above proposal is to ensure that those that can’t afford to contribute more in income taxes won’t.  And those that are living much more comfortably, will contribute more, but in all reality, not that much more.  2 percent.  Think about that.  If your boss told you that you were getting a 2 percent pay raise, you would laugh in their face.  You know why?  Because that amounts to virtually nothing noticeable.

Now please understand that this does not mean that spending cuts should not also happen.  And they have.  Again—this is taken directly from the budget proposal.

“Spending cuts:

Requiring state employees to take four furlough days:  $36 million

Increasing healthcare contributions for state employees and state retirees: $200 million

Targeted reductions and other efficiencies throughout various agencies: $1.2 million annually

Across-the-board 2 percent reductions in grant programs: $80 million”

These are just a few of the cuts that will be made.  There are many, many more.  However, I want to play a little game entitled: You be the governor.  Here’s how it works.  Below is a snapshot of the operating appropriations for 2010.  I want you to go through and decide where cuts should be made.

Now, there are some obvious areas that I believe most people would agree can not afford any additional cuts—education and public safety come to mind.  Human services includes providing services to the disabled, mentally ill, poor (this encompasses public housing, SNAP benefits), WIC, benefits to children, homeless, and many others.  The reason why this category is so high in Illinois is because the All Kids program offering health coverage to all uninsured children in the state is considered part of this budget even though there is a separate category for healthcare and family services.

Medicare and Medicaid, as well as child support enforcement are under the Healthcare and Family Services umbrella.  Again, I think we would agree that these are important programs that are already stretched and need every dollar they can.  To be fair, perhaps you think these are exactly the programs that should be cut, but then let me paint you a picture.  Let’s say we retract the All Kids program to save funds.  Now we are left with millions of uninsured children, many of whom desperately need health care.  Not only will their parents go into severe debt from healthcare bills, causing a major strain on both families and the economy as a whole, but thousands of these children will actually die from lack of care.

Still want to cut healthcare?

How about benefits to the unemployed and poor?  So I lose my job, and I don’t receive unemployment pay, SNAP or healthcare.  Due to the struggling economy, I am not able to immediately find work.  I have to choose between paying for rent or buying dinner, but eventually, I receive the eviction notice from my landlord.  Where do I go?  If I’m lucky, I have family to take me in.  But many do not have this luxury.  So they end up on the street or perhaps in an already crowded and strained homeless shelter.

So let’s move to Economic Development and  Infrastructure.  Alright–maybe we don’t fix bridges this year, or repair aging pipelines.  Meh.  We can just take our chances and hope we don’t end up with a Minneapolis-type infrastructure disaster.  What about economic development? Seems to me that in a tough economic time, we probably need to invest in attracting businesses that will bring plentiful jobs to the state.

The Environment and Business Regulations includes the Dry Cleaner Environmental Response Trust Fund, Environmental Protection Agency, Human Rights Commission, Illinois Commerce Commission, and the Illinois Workers’ Compensation Commission.  Now I think that you probably scoffed at the Dry Cleaner Environmental Response Trust Fund, but hold on a minute.  Their purpose is to “assist Illinois drycleaner operators in the
cleanup of soil and groundwater contamination caused by dry cleaning solvents.”  I don’t know if you’re aware, but dry cleaning is actually extremely harmful to the environment.  The chemicals they use are highly toxic.  I’m pretty sure I want them to keep keepin’ on as I don’t particularly want these chemicals in my water.  And if you’re looking at this from a solely fiscal standpoint, they only get $5.3 million a year anyways, which in terms of the total budget, is basically nothing.  The Human Rights Commission protects Illinoisans from unlawful discrimination,  the EPA protects our environment, the Illinois Commerce Commission works mainly in energy and telecommunication–both of which we need.  Aaaaand I think we all agree that the Workers’ Compensation Commission is necessary to protect us from our own workplace.

Believe it or not, the Government Services section encompasses the largest amount of departments and commissions (34 in all), but receives the smallest portion of the operating budget.  (Check out page 343 of the budget to see the entire list.)  Now at about 7.5%, that means they utilize approximately $1.7 billion, which definitely is a lot of money.  HOWEVER, after taking into consideration that these funds are shared by 34 entities (1.7/34) that means if they all received the same amount (which they don’t), it would equal about $51 million for each.  Now, just for the sake of argument, let’s say we determine that we can eliminate this entire budget item (which would be impossible for various reasons), we would only have freed up $1.7 billion of an $11.5 billion deficit.  I’m no mathematician but something tells me it’s not going to be enough.

I am talking in generalities here because it would obviously take volumes of novels to go into the explicit detail needed, but the point I’m trying to make here is that we’re in trouble and while cuts and responsible spending are definitely needed, what’s also needed is a balanced budget that doesn’t risk our livelihood.  At this point, the only way out is to increase income taxes.

Of states with flat rate income taxes (which I am aware is very regressive), we have the lowest income tax in the country.  Just as a comparison, New York State has 7 tax brackets that range from 4 percent to 8.97 percent.  Even at the lowest end they are higher than us.  California has 6 brackets, ranging from 1.25 to 9.55 percent.  While the low end is very low, hang on for a minute, because their exemptions are only $98 for filing single and $198 for married.  In Illinois it is $2,000 and $4,000 respectively and if you recall, the Governor is actually looking to increase those amounts.  Let’s look quickly at our neighbors, Indiana.  They also have a flat tax rate, just slightly higher than ours at 3.4 percent.  But, their exemptions are only $1,000 and $2,000.  And it’s Indiana.  Yuck.

I really hope that you made it to the end here and have learned a little something.  I think it’s really important to have the entire picture before making a judgment, particularly when it comes to government.  The media, politicians and interwebs can get things jumbled and before you know it, you’re watching a video of a monkey mouth raping a frog.  Wait…what?  If you have differing opinions, I’d love to hear them and then I’ll slap you…keeding.

Ain’t no free lunch

I’m going to assume that you (the reader) are my friend, and as my friend, I’m going to ask for a favor right now.  Regardless of your personal opinions of this particular subject, I would really like for you to read what follows this plea because it is especially close to my heart and important to not just me, but all of us.  This is something that is currently and will continue to affect all of our lives for years to come.  Here we go…

I have been lucky enough to have my government administration class this quarter be taught by the infamous David Orr, Cook County Clerk and one-time City of Chicago Mayor.  We have had a myriad of incredible speakers each week, from the president of SEIU to the 49th Ward Alderman.  This week, I knew that our guest would be Ed Burke, Alderman of the 14th Ward, but I had no idea the magnitude this particular visit would be.

“Those who know Chicago politics know there’s one man who’s more powerful than Mayor Daley, Alderman Ed Burke.”

Let me give you a brief biography of Ed Burke: He has been an alderman in the Chicago City Council for more than 40 years, which he currently holds the record for in consecutive terms.  Ald. Burke is also the Chairman of the Finance Committee, arguably the most powerful committee in the city.  I could continue, but I think you get the idea.  I highly recommend reading the links above if you’re not familiar with his work.

Now, I’m not trying to start a debate about whether Ald. Burke is an effective or good politician.  Whatever your personal feelings are about his brand of politics, there is one undeniable fact: this man knows Chicago politics, budgeting and the realities of such better than anyone else in the state.  Nay, in the country.  This is important in order for you to understand the heaviness of what he said this evening.

After speaking for approximately thirty minutes, mainly about the history of Chicago (he’s a history buff and author), Ald. Burke opened it up to the class for questions.  Mind you, this is a graduate level public administration class, so people were pretty tough on him.  One woman asked him about the budget crisis and what alternatives Chicago has for increasing funding.  His response was basically that he has attempted to introduce innovative fees such as the commuter tax to close the budget gap which was not received well.

This seemed a bit odd to me.  As a Chicago historian, compiled with his extreme level of power, it seems that he would develop a solution and force policy through to fix the city’s budget problems.  So I asked the following question:

“You’ve said that you have tried to introduce policy to solve the budget crisis to no avail and that raising taxes is really the only solution at this point.  While these ideas are nice, what do you realistically see happening to our future?”

Ald. Burke said pointedly that due to this being an election year, it is unlikely that an increase in taxes would happen.  He continued to state that he felt things would continue down the road we are currently on (read: a widening budget gap) until we finally hit rock bottom and the only way out will be a federal bailout ala New York style (quickly: in 1975, the feds bailed NY out of their severe budget crisis by offering them an annual $2.8 billion loan for three years. Total: $8.4 billion).

Now, I have been personally affected by the economic crisis and I knew that it was bad.  You can’t turn the corner without hearing all about it for the millionth time (if I only had a nickel for everytime…).  Call me naive, but I honestly believed that this was a temporary situation and in a couple of years, we’d all look back at this as that silly bump in the road that forced us all to shop at Jewel instead of Whole Foods.  I think it’s the Cubs fan in me that always thinks the next win is just around the corner.

But when Ald. Burke said “FEDERAL BAIL OUT”, it was liked being slapped in the face by my airbag all over again.  Holy.  Shit.  We are in trouble.  This is like a death sentence.  Between the time that the city stalls to find a viable solution and a federal bailout, this city will see suffering like it’s never known.  Think Chicago fire proportions.

Ironically, a few weeks ago, Forbes named Chicago one of the top ten most miserable cities to live in.  I baulked at this title and even engaged in a twitter discussion with my dear friend, bokeen, about why this is invalid.  I’ve been all over this country and I’m sorry, but NO CITY even comes close to the rich culture, history and architecture Chicago has to offer.  I love this city with reckless abandon and will defend it till my last breath.  So to hear about it’s potential impending disaster puts a fear in my heart that calls for something to be done.

Now let’s explain a few things.  Firstly, I constantly hear people talk about how the city should make more cuts, and stop wasteful spending.  As someone that has devoted six years of my academic career to government, I can say with certainty that this is no longer the answer.  Yes.  We need to work towards eliminating needless spending and taking a long, hard look at our budget.  However, the deficit is too large for simply making cuts.  We HAVE to increase funding.  There is no other way.  We could debate all day long as to what is the most appropriate way to do this and there are a multitude of opinions.  But the bottom line is the city and state’s income is down, and if you’d still like to not just receive services from the government but continue our legacy as one of the greatest cities on Earth, then something has to be done.  Services cost money.  Snow and trash removal, street maintenance, safety and fire, social services…these things aren’t free.

Doing nothing means that our city will disintegrate, people will move away, jobs will leave and the beautiful city we once knew and loved will just be a distant memory.  I refuse to let this happen.  So I need your help.  Firstly, I’d like to hear your opinions on this matter.  I think an open and honest discussion about your thoughts, fears and hopes are a good start.

Next, what I’d really love is for you to write your representatives and tell them you support…well, whatever you support.  I personally hope that you will ask them to work towards increasing income tax in Illinois.  Without going too far into this topic, know that in Illinois, we have a flat 3% income tax.  It is highly regressive which is unfortunate but it is also one of the lowest in the country.  Quinn has proposed a 2% percent increase which honestly, is virtually nothing for most of us.  And if you make under $30,000, that’s what the EIC is for and you won’t pay income tax anyways.  You know why politicians don’t want to get behind this even though they all know that it’s the solution?  Because they think YOU will vote them out of office if they do so.  So let them know what your thoughts are.  Politicians and officials do listen when people make noise.  And I know we have it in us to save this city.  For the love of god, we believed the Bears were going to make a comeback until game 13.  This has actual repercussions and we have the chance to change history.  We can and will come out of this stronger and better.

In the immortal words of Buffalo Springfield: I think it’s time we stop, children, what’s that sound, Everybody look what’s going down.