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News Release

Contact: Joe King, NIU Office of Public Affairs
(815) 753-4299

December 8, 2005

NIU report finds buying power shrinking

DeKALB, IL -- If the heady days of the economic boom of the 1990s seem like little more than a fuzzy memory, it is not your imagination. According to the “ State of Working Illinois” report recently released by Northern Illinois University’s Regional Development Institute the economic gains of that era have been all but erased for many.

“When you analyze the economic data for the last 15 years, it is as if the 1990s boom economy never happened,” says Robert Gleeson, associate director of RDI and director of the Center for Governmental Studies. “Since 2000 we have essentially backtracked. Based upon the measure of median household income, adjusted for inflation, the buying power of the average family in Illinois is the same as it was in 1989.”

That was one of several worrisome findings of the report, which was developed by the RDI, NIU’s Office for Social Policy Research, and the bi-partisan Center for Tax and Budget Accountability. Funding for the project was provided through a grant from the Joyce Foundation. The full report is available online at www.stateofworkingillinois.niu.edu.

The study was one of the most extensive and focused looks ever at the Illinois economy. In particular, it examined how the nation’s fifth-largest economy is faring in a global economy in which factory jobs are rapidly being replaced by service sector jobs. While many have documented and commented on that trend, no one had pulled together such a wide array of data or performed such a comprehensive analysis.

“When we compiled all of the data in one place, the picture it painted surprised even veteran observers of the Illinois economy. The situation was graver than even they realized,” Gleeson says.

Among the findings:

  • The average median family income in Illinois (adjusted for inflation) declined by $6,000 over the last six years. That decrease of 12 percent was the second largest in the U.S., exceeded only by a 19 percent decline in Michigan. The decline in Illinois is triple the national rate for that period.
  • While Illinois has the fifth largest economy in the nation, it has experienced below average economic growth since 1990, ranking 35 th among the states in growth of Gross State Product.
  • Since 1990, Illinois has created about 37,000 jobs per year. Most of those, however, were low paying service sector jobs which took the place of high paying manufacturing jobs. A total of 222,500 Illinois manufacturing jobs were lost between 1990 and 2005.
  • Minorities in Illinois have been hit hardest by negative economic trends. More than 70 percent of African Americans and 60 percent of Hispanics earn less than $50,000, compared to more than half of whites earning $75,000 or more.
  • Education and union membership appear to be the most effective buffers against economic loss. The median wage for those with less than a high school diploma fell 25 percent between 1980 and 2004, while those with a high school diploma saw a drop of 6.2 percent. Those with a college degree saw their median wage increase by 16.7 percent during that period. Average weekly earnings of union members are 18.4 percent higher than non-union members in similar jobs.
  • Looking ahead, only the Chicago region, and the portion of the St. Louis region that is inside Illinois (the Metro East area), are expected to create more high wage jobs than low wage jobs between now and 2012. Only four counties outside of northeastern Illinois are expected to meet or exceed the state’s overall rate of job growth.

The full report divides the state into 10 distinct economic zones and provides an in-depth analysis of each, including: a demographic profile; a comparison of employment between 2000 and 2005; a look at the industry structure; and projected growth industries for the region.

The goal of the report, Gleeson says, is to provide policy makers and others with a comprehensive, objective set of data to provide context as they plot the economic course of the state.

“Policy makers are charged with spending billions of dollars a year trying to fine tune the education system to steer people into jobs where they can earn a decent income that supports a high quality of life. Hopefully, this can help inform that process.”

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