Tere are three basic components o private sector job creation: the births o new establishments and the deathso existing ones, the migration o businesses into and out o Illinois, and the expansion and contraction o existingbusiness establishments. Te most important component o these is the net jobs created rom the births o new establishments and the deaths o existing ones. Tis new report presents detailed data related to the three basiccomponents o private sector job creation.
Illinois increased the tax burden on businesses in 2011 by hiking corporate income taxes 46 percent. Inresponse, Sears and CME Group threatened to leave Illinois or states with lower tax rates. Tesecompanies wanted the state government to grant them special tax breaks to stay in Illinois. Fearing a mass exoduso jobs, state ocials agreed to their demands.When companies such as Sears and CME Group threaten to leave Illinois, there is real reason or concern. Bigcorporations employ a lot o people. Tey pay large tax bills. Tey can make or break a community. No one wantsto see yet another business head or greener pastures.State ocials have doled out hundreds o millions o dollars in tax breaks and other incentives to keep Fortune 500names and other big businesses rom eeing Illinois. But were state ocials ocused on the right targets? Who andwhat matters most in job creation?
Te Institute’s new analysis fnds the key to job creation in Illinois is jump-starting new establishment jobcreation. Creating an environment conducive to starting new businesses is vital to increasing the number o jobs available to Illinoisans. Company migrations and expansions play a role, but they pale in comparisonwith the net job creation resulting rom business “births” and “deaths.”
Tis nding is derived rom the latest release o the National Establishment ime-Series, or NES, a poweruldatabase o Illinois’ businesses.
Based on the ar-reaching Dun & Bradstreet marketing inormation le, thisdatabase tracked more than 41.7 million business establishments nationally between 1989 and 2009.
Te letracks businesses via an assigned “DUNS number,” which is the business equivalent o a Social Security number.
As such, the NES database is the most comprehensive establishment-level census available.Te NES database paints a dismal job creation picture in Illinois rom 1995-2009. Te state was 48
in thecountry in generating jobs rom the creation o new businesses. Tose losses urther were compounded by jobslost rom ailed establishments, which Illinois ranked 19
.Tis combination, ewer jobs rom new companies and job losses rom the closure o others, contributed most toIllinois being one o only six states to lose jobs in the nation between 1995 and 2009. Overall, Illinois ranked 50
– dead last – in total job creation (See Appendix 1). Graphic 1 shows how Illinois compared with its neighbors, allo which showed job growth during that period.