The difference between the regulatory and business climates in Iowa and Illinois couldn’t be more stark.
The most vivid example is the recent passage of a Family Medical Leave Act in Illinois that requires employers with more than 50 employees to provide 12 weeks of unpaid leave for employees to deal with family illness or injury without losing their job. Iowa has no such law.
It is no secret that Illinois is dominated by Democrats. Iowa is dominated by Republicans. This dichotomy, unfortunately, poses serious challenges for businesses and regions like the Quad Cities that straddle both states. For example, Illinois’ minimum wage is $13 per hour. Iowa’s minimum wage is $7.25 per hour. The average price of regular gasoline in Illinois is $3.68. The average price of regular gasoline in Iowa is $3.33.
Illinois approved a constitutional amendment guaranteeing collective bargaining rights, setting a new high bar for labor policy. Iowa is a right-to-work state.
Business rankings for the two states tend to reflect the regulatory environment. CNBC ranked Illinois number 19 in the top states for business in 2022. Iowa was ranked number 12.
Based on polling by Chief Executive magazine of nearly 700 U.S. CEOs and business owners, Illinois ranked 48th in the country for best business states in 2022. Only California and New York fared worse.
Ted Dabrowski, president of the nonpartisan, nonprofit organization Wirepoints, said in an article in The Center Square, there are several reasons why Illinois is not business friendly.
“We’re too corrupt. Our taxes are way too high. We have way too many regulations and we have massive debts, and that is plenty of reason enough for companies to not want to locate in Illinois, not to mention the state is shrinking in population so it’s not a growth state to put your business in,” Mr. Dabrowski said.
We point out these discrepancies because it is important for policymakers, especially in power centers like Chicago and Springfield with myopic views about cross border competition, to understand the challenges business have when operating near the border of another state with less burdensome regulation.
To be clear, we think that employees should make a livable wage and that providing employees with unpaid leave for family emergencies is the right thing to do, but we don’t think that these should be imposed on private enterprise by government fiat.
There was one ranking by Forbes magazine in 2022 that had Illinois at No. 8 for the best state to start a business. Iowa was ranked No. 35.
This is good news for Illinois, but there is a clear difference between starting a business and operating a business for long-term success.
We want Illinois and Iowa to both be successful. When that happens the entire Quad Cities region is more likely to be successful. When one state has a better business climate (or perceived better business climate) than its neighboring state, it causes business owners to make economic and geographical shifts.
Right now Iowa clearly has an advantage.
