Nobody likes “For Lease” signs filling the windows on Main Street. The result of a bust in the economic cycle, mass business closures and unemployment are the extreme conclusion that political candidates swear to fight every time we have an election.
But as our state and national economy move into a recession, it’s alarming that elected lawmakers are seemingly doing more to bring on the hardship than prevent it.
Much has been written about the Federal Reserve raising interest rates and the current Congress’s propensity to approve astronomical stimulus spending. What I’m not seeing much of is a proper discussion about our own state government’s role in burdening business owners to the point of near failure.
As the owner of a small business in Illinois, I’ve seen firsthand the detrimental effects that excessive costs can have on simply remaining solvent, let alone thriving. Opening and running a small business is difficult, and only about 1 in 3 small businesses survive past the 10-year mark. In spite of this, over the past few years, we’ve all had to endure costly changes to worker’s compensation, labor regulations, and inflation that are stacking up and making it difficult for businesses to stay afloat.
Our state lawmakers need to take action to reduce these types of costs so that the Illinois economy has a chance to survive the current economic contraction.
The high cost of worker’s compensation is a good example of a significant burden for businesses in Illinois that lawmakers aren’t addressing. While it is very important that workers injured on the job are given proper healthcare, Illinois has a more expansive definition of a work-related injury and more extensive benefits than most other states – therefore raising costs. In addition, loopholes that allow workers comp laws to be exploited by predatory lawsuits pushed by trial lawyers create additional costs that hurt employers and consumers alike.
As a result, businesses are forced to pay out more in worker’s compensation costs, which raises the price of doing business in Illinois and makes it difficult for companies to compete with those in other states.
In addition to the high cost of worker’s compensation, businesses in Illinois are also burdened by excessive labor regulations. For example, Illinois’s minimum wage and employee health insurance regulations are more costly than in other places and make it difficult for them to compete with businesses in other states that do not have such strict requirements. Additionally, lapses in defendant protection laws make these areas rife for further lawsuit abuse and a prime way for predatory attorneys to cash in on the hard-earned income of everyday families. All of these higher business costs usually have to get put back on the consumer through higher prices in order for the small business to keep its doors open.
Mismanagement by the state of Illinois can be costly as well. A state audit from June 2022 found that almost 2 billion dollars of unemployment claims paid out from July 2020 through June 2021 were fraudulent. Because of this, unemployment taxes subsequently increased for many small business owners each month – making it even more costly to do business.
Finally, Illinois is struggling because of the rising cost of living. Historic inflation rates are no longer a secret to anyone who made a purchase over the last year. And while you might think this has been good for people like me, it hasn’t. My business has seen our purchasing power reduced, our necessary expenses like rent and utilities rise significantly, and our business can’t raise prices quick enough to keep up with the skyrocketing rate of inflation.
Any increase in revenue that we do have has been quickly siphoned away by the increased price of rent, energy, labor, raw goods, and litigation payouts.
The costs associated with doing business in Illinois are becoming increasingly burdensome for small businesses. State lawmakers need to take action to reduce the costs of worker’s compensation, labor regulations, and inflation so businesses can continue to thrive in our state. There is a path to renewal for the Illinois economy, but it must come through free-market and fiscally responsible policies that cut excessive regulations and encourage small business growth.
