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In the past, I’ve written about small business in Illinois, and today I want to continue that topic with a look at the relationship of small business to government.  Small businesses, I’m sure you’ve heard many a politician claim, are the backbone of the economy.  And they’re absolutely right.  Our state alone “is home to approximately 397,000 small businesses and . . . three out of four Illinois employers are small businesses,” according to a Crain’s article.  Three out of four seems like a high number—but when you think about our corner of Northwest Illinois, the majority of businesses are small businesses—from Union Dairy just down the street from where I write this to Blaum Bros. Distilling Co. in Galena to NITE Equipment in Winnebago County.

So, if small business makes up so much of our economy, what exactly are we as a state and as a country doing to help it?


As it turns out, not much, actually.
Currently, 800 to 900 federal rules affect small businesses—and that doesn’t even include the state rules.  Every new rule is sort of a hidden tax: it represents a new cost that businesses have to pay, either with their money or with their time.  Larger businesses are able to better absorb costs that come with new rules, but, according to an article in a Kansas newspaper, The Wichita Eagle, “the Department of Labor reports that firms with fewer than 20 employees spend 38 percent more per employee to comply with government regulations than firms with 500 or more employees.”  In dollars and cents, that’s on average “$10,585 for businesses with fewer than 20 employees but only $7,755 for businesses with more than 499 workers,” says an article in Small Business Trends.

In addition to the hidden tax of new rules, government regulation creates uncertainty for businesses both large and small.  But because small businesses have limited funds, they are more likely to avoid investing in new ventures and more likely to avoid hiring new employees, according to the same article in Small Business Trends.

So what does that mean for small businesses in Illinois?  Well, for one, our business regulations are pushing businesses out to more business-friendly states.  Take, for instance, the example from The Illinois Policy Institute of Sara Travis, an entrepreneur from Chicago who began a mobile coffee-vending business called The Brew Hub.  After waiting for over a year for a business permit from Chicago and constantly having to worry that she would be fined or harassed for selling coffee, she chose to pick up her business and move it to Austin.  Instead of the more-than-a-year-wait she endured in Chicago, she filled out paperwork, paid for a permit, and received it all in one day.
And, two, regulation costs businesses money and time and can cause some to go under.  Another example—new rules on unpasteurized milk are in the works.  Those rules could and likely will “force small producers out of business or underground by requiring them to invest in the same kind of expensive equipment and processing required of large commercial dairies,” according to an article in The State Journal Register.

So what’s a state to do?

Well, there are a few things that can be done.  First, startup fees need to be lowered.  To start an LLC, you need $500 (as opposed to the $150 needed to start a corporation).  Lowering those fees would give entrepreneurs a bit more money to finance their businesses instead of throwing it into the gaping maw of Springfield.

Second, while some regulations are necessary, most aren’t.  Many regulations are one-size-fits-all band-aids meant to remedy one instance of bad business, and while the regulation may fix the one instance, it ends up doing a whole lot of harm to good small businesses.  Instead of slapping band-aids on all small businesses, maybe it’s time to listen to small business men and women about what helps and what hurts. (Incidentally, Governor Quinn created a position in his administration last January for a small business advocate. As of September, though, that position still wasn’t filled.)

And lastly, what can we in the 89th District do?

First, we can ensure sure that our cities, villages and counties are business friendly, that we’re doing everything we can to retain the businesses we have, and that we continue to create an environment to attract new businesses. And second, we can all work to ensure that our school districts are producing well-educated students who are prepared to enter the workforce.

For a full “legislative agenda for entrepreneurs,” read The Illinois Policy Institute’s article by that name at http://www.illinoispolicy.org/a-legislative-agenda-for-entrepreneurs/.

You know me—I love a good Milton Friedman quote, and here’s one that fits the occasion perfectly: “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”  I’m sure those 800 or 900 federal rules in addition to state rules were created with the best intentions, but the results aren’t pretty.  Let’s rethink this regulation thing and figure out how to free up small businesses to use their limited resources to grow their businesses instead of to comply with government regulation.

As always, you can reach me or Sally at 815/232-0774 or email us at repstewart@gmail.com. You can also visit my website at www.repbrianstewart.com or follow me on Facebook, Twitter, and Google Plus.
Every fall in October, veto session rolls around. Most years, veto session hits before the election, or at least one week of session comes before Election Day. This year, however, all of veto session is scheduled in the middle of November and the beginning of December. My goal this week is to inform you of what issues we will be facing in the days following the election so you, as voters, can be aware of what issues lame-duck legislators may try to push through after they are no longer accountable to voters in their districts.

Of course, the issue that everyone is talking about is making the tax hike permanent. According to a recent article in the Daily Herald, Governor Quinn plans to push for a vote on the income tax hike in veto session come November. He couldn’t garner the support he needed in the spring, but one has to wonder if out-going legislators who previously did not support the tax extension will vote for it now?

Another issue expected to come up in veto session is education funding reform. SB 16 passed the Senate last spring but got held up in the House. The bill is intended to help poorer urban schools and downstate schools. And while it may help some, really all it does is take from the rich and give to the poor. The new funding formula takes into account how much a school district is able to fund itself and, if it can support itself through local taxes, state funding is taken away from that district and redistributed to other districts. The major problem with this bill is that it “penalizes districts that have good local resources, and it penalizes districts that have been fiscally responsible,” in the words of Martin Felesena, a superintendent from La Salle County. The bill also eliminates reimbursement for special education teachers, and replaces that funding with a grant “limited to 13.8 percent of a local school district’s students,” according to the Jacksonville Journal Courier. School districts with levels of special education students higher than 13.8 percent would not receive any additional funding for those students. Illinois school funding does need reform, but the way to do it is not to take from some students and give to others. Perhaps if we cut pork barrel spending in Chicago, we’d have enough money to go around.

Other issues we’ll likely address this fall?


  • Pension reform. The Speaker of the House will probably attempt to again push the burden of pension off the state and onto local school districts.

  • Raising the minimum wage. It’s a referendum on the ballot, so we’ll probably hear more about it in session after the election. While some might believe that minimum wage helps reduce poverty, a 2010 study done by economists from Cornell and American University “found no evidence that the wage hikes had accomplished [a reduction in poverty],” according to a Crain’s article from September of this year.

  • Millionaire tax. This tax is another ballot referendum that will likely be broached in veto session. Keep in mind that while it sounds nice to tax the rich, this tax will also include individuals who own their own businesses that gross one million a year. These folks certainly don’t take home one million a year, but because they gross that amount, they will be taxed.

  • Illiana Road project. The Governor will probably push for more action on the Illiana Road project this coming veto session. He was not successful during the spring session, but it is likely that he will renew his efforts this coming November. Perhaps we could use the billion or so dollars it will cost Illinois to build this road for education funding instead.

Mark Twain lived over a century ago, but he has some words that sometimes make me wonder if he could see the future: “no man’s life, liberty, or property are safe while the legislature is in session.” Much of what Twain said was said tongue-in-cheek, but keep those words in mind this upcoming election season and then during veto session in November. This coming session the legislature may try to slip some things by that will take more of your property (aka tax dollars) from you.

As always, you can reach me or Sally at 815/232-0774 or email us at repstewart@gmail.com. You can also visit my website at www.repbrianstewart.com or follow me on Facebook, Twitter, and Google Plus.
We’ve seen some pretty good unemployment numbers in recent days and months. A Chicago Tribune article reported on September 18 that Illinois unemployment was down from 6.8% in July to 6.7% in August. A tenth of a percent in a month isn’t a huge decline, but if you consider where we were last August, at 9.2%, that’s a huge drop. In fact, it’s the largest year-over-year decline Illinois has seen since 1984. And, we’re just 0.6% above the national unemployment rate (6.1%), which is pretty good for us. In August alone, we added 13,800 jobs, according to the Illinois Department of Employment Security website, with the Leisure and Hospitality industry leading the pack at 5,000 jobs created, the Trade, Transportation, and Utilities industry right behind them with 4,300 jobs created, and Professional and Business services in third with 3,300 jobs created. While a few industries did lose jobs, those 13,800 jobs we gained finally gave our state a positive net gain in jobs for 2014.

Overall, those numbers look good for the state, don’t they? But before we assume Illinois is starting to make a brilliant comeback, let’s make sure we have all the facts.

First, a key factor in the unemployment rate numbers is labor force participation. If workers leave the workforce and our labor force participation rate shrinks, unemployment will drop—and, to put it bluntly, that’s not a good thing. In August alone, our workforce shrank by 19,000 laborers which brought the total dropout rate for the last five months to 82,000. Gary Burtless, a Brookings Institute economist quoted on Watchdog.org, said that “Illinois has mirrored the country as a whole in this regard. . . . The rate may technically be going down, but that doesn’t mean more people are working.” Many, including the Director of Illinois Department of Employment Security Jay Rowell, attribute the shrinking workforce to baby boomer retirement. Retirement aged folks are not included in the labor force participation rate, however; only working age people (16-64) are. That shrinking workforce, then, is not due to baby boomers retiring in droves. Working age people are leaving the workforce simply because they can’t find a job. Here’s the thing that scares me: our labor force participation is at a 35 year low—under 65% of working age people are actually working—that’s fewer people working or looking for work than were working or looking for work in the middle of the recession. That’s not what economic recovery looked like after the Great Depression nor after any recession we have been through since. And here’s the even scarier thing: for every one job created, two more Illinoisans enroll on food stamps, according to an Illinois Policy article.

Second, and related to the labor force participation rate is that fewer prime age workers are working than ever before. In fact, seniors are the only demographic that has seen an increase in laborers because they simply “can’t afford to retire,” according to a USA Today study cited on IllinoisMirror.com. Youth workers (16-24), prime age workers (25-54), and male minority workers have seen a significant drop in employment rates, according to an Illinois Policy article:


  • Youth workers: - 8.4%, only 26.3% currently hold jobs
  • Prime age: -4.3%
  1. Only 59.4% of 20 to 24 year olds currently hold jobs
  2. Between 76% and 77% of 25 to 54 year olds currently hold jobs (pre-recession was in the mid eighties).
  • Latino men: -8.7%, around 70% to 75% hold jobs
  • Black men: -10%, fewer than 50% hold jobs

While the shrinking youth worker participation rate can be explained away by education, the drop in participation of those older than high school or even college leaves me scratching my head.

Let me leave you with a quote and a question. First, the quote—Milton Friedman in Chapter III of his book Capitalism and Freedom said that “the Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.” Last, the question—what can the state of Illinois do and what can the citizens and prime-age workers of Illinois do to remedy the shrinking workforce participation rate? I got a novel idea…..What if we reduce personal, corporate and property taxes, lower workers compensation rates, lower the fees to start a business, reduce fraud in entitlement programs and cut government spending?

As always, you can reach me or Sally at 815/232-0774 or email us at repstewart@gmail.com. You can also visit my website at www.repbrianstewart.com or follow me on Facebook, Twitter, and Google Plus.