Illinois’ finances make state resilient if a recession occurs: report

Some economists are predicting that the country could fall into a recession within the next few years, but if it happens, Illinois is in a better place than it was in December 2007 or March 2020, which saw the "Great Recession" and the "COVID-19 Recession,” according to a recent report by researchers at the Illinois Economic Policy Institute and the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign.

“Despite dire predictions from many economic commentators, a national recession was avoided in 2022, 2023 and 2024,” says the report, ‘Resisting the Next Recession: Measuring Illinois’ Economic Resiliency.’ However, the risk of a recession remains elevated in 2025 and beyond.”

A recession is a downturn in economic activity that is usually defined by at least two consecutive quarters of decreasing inflation-adjusted Gross Domestic Product (GDP) and an increase in unemployment lasting more than a few months.  The worst recession in U.S. history was the Great Depression of the 1920s and 1930s.

The three recessions that have occurred since 2000 were the “dot-com bubble” of the early 2000s, the

Great Recession of 2007-2009, and the COVID-19 Recession, according to the National Bureau of Economic Research.

For Illinois, researchers Frank Manzo IV, Bob Bruno and Grace Dunn examined nine key fiscal and economic metrics "on which the state has made dramatic gains over the past several years."

Manzo, an economist with the Illinois Economic Policy Institute, says, "From significant improvements in budgeting and fiscal management to long-term investments in infrastructure, education, healthcare, and the stability of its pension system, Illinois has developed a far stronger resilience to economic downturns than at any time in recent history. Collectively, these improvements will help to mute the impact of any future national recession on critical public services, employment, and the economy as a whole."

The report concedes that “Illinois would not be immune to a national recession. The Illinois Commission on Government Forecasting and Accountability is currently projecting a $618 million budget deficit in Fiscal Year 2026. Additionally, the state’s unemployment rate remains above the national average.”

The scholars intentionally use the term “resilience,” first used in the 1970s to assess ecological systems. Studies categorize resilience into four different system outcomes: “ability to bounce back,” “ability to absorb,” “positive adaptability,” and “system transformation.” These outcomes in research about regional economic resilience have been defined as recovery, resistance, reorientation and renewal.

The report positive observations include:

* Illinois rebuilt its Unemployment Insurance Trust Fund balance to $2 billion.

“This is due to a $1.8 billion transfer of state funds due to better-than-expected state revenues, which was also used to pay off a federal loan borrowed during the COVID-19 pandemic,” the report says.

* Illinois improved the funded ratio of its State retirement systems to its highest level since 2008.

“Illinois has made important strides in its public pension system by making required contributions that had been jettisoned in prior years, offering $2 billion in buyouts to retiring employees and inactive members and making $700 million in supplemental contributions designed to reduce the system’s unfunded liabilities,” Manzo says. “It is important for the state to continue on this trajectory, which would bring the system 90% funded by 2045—well above the 80% standard used by the Government Accountability Office.”

* Through the expansion of Medicaid under the Affordable Care Act, Illinois has reduced its number of residents without health insurance by nearly 1 million, a 56% decrease.

Illinoisans who are covered increased from 86.2% in 2010 to 93.8% in 2023, the report says – a greater percentage of covered people than the nation.

* Illinois committed to investments in climate resiliency and carbon-free nuclear power that are creating thousands of jobs on the path to 100% clean energy.

* Illinois invested $2 billion more annually in public education—reducing the number of school districts in financial deficit by 55%—while increasing grants to make college more affordable by 77%.

* Illinois established dedicated revenue streams that, together with federal funding, will invest $41 billion in roads, bridges, public transit systems, rail, and aviation infrastructure over the next six years.

“In Illinois, every dollar invested in road and bridge construction returns $1.80, and every dollar spent on road and bridge maintenance returns $2.30,” the researchers say.

* Illinois implemented a work-share program that allows employers to avoid layoffs by temporarily reducing employees' hours while enabling workers to receive prorated unemployment insurance benefits.

* Illinois eliminated the General Fund deficit and bill backlog, earning a total of nine credit rating upgrades since 2020 that will allow the State to borrow at lower interest rates.

Illinois achieved its largest ever Budget Stabilization Fund (or "rainy day" fund) balance at more than $2 billion – almost 700% larger than it was prior to the Great Recession.

“The elimination of the bill backlog and reductions in the General Fund deficit, the improvement in the Budget Stabilization Fund, the dedication to making full pension contributions with supplemental payments when possible, and the rebuilt Unemployment Insurance Trust Fund are each positive factors making Illinois more resilient to the next recession,” says the report. “However, Illinois still lags the national average on these metrics, and lawmakers should consider ways to continue building on this momentum with each budget cycle that passes without an economic downturn.”

 

UIUC Professor Bruno, PMCR Director, adds that “Periodic economic contractions present real challenges to employers, working families, and policymakers alike. While no state is recession-proof, Illinois has prioritized prudence in its fiscal management, long-term competitiveness in its public investments, and has pursued public policies that prior recession resiliency research indicates can minimize the impact of economic disruptions.

“Illinois’ current tax structure is a mixed bag that can be both a help and hindrance when it comes to recessions,” he continued. “Our sales tax system doesn’t cover most services, which can invite fiscal headwinds during lean times. And, while our reliance on property taxes and flat income tax structure promotes more stable and predictable public service funding during downturns, it can also constrain the state’s ability to invest higher-than-expected revenues into rainy day reserves or other long-term economic fortifications during good times.”

‘Moderate’ Republican is Trump’s nominee for Secretary of Labor

The old proverb “In the land of the blind, the one-eyed man is king” seems relevant this month, when the U.S. Senate begins its confirmation hearings for hundreds of Trump nominations to his administration, including Lori Chavez-DeRemer, the former Oregon Congresswoman picked to serve as Secretary of Labor.

Defeated in her swing district in November, Chavez-DeRemer’s supporters point to her co-sponsorship of the labor-reforming PRO Act as a sign of relief, if not hope. But despite opposition from some Republicans and business lobbies, skeptics remain in and around the labor movement.

Chavez-DeRemer actually has backed two of labor’s top legislative priorities (both of which failed): The Protect The Right To Organize (PRO) Act, and the Public Service Freedom to Negotiate Act, plus voting for the Social Security Fairness Act, which will help government workers whose benefits had been limited for years. (It passed the House 327-75 in November, with dozens of Republican No votes, including Peoria U.S. Rep. Darin LaHood.)

The PRO Act passed the Democratic-run House in 2020 and 2021 but was killed by anti-union Senate Republicans threatening a filibuster. Even when Democrats gained a narrow Senate majority in 2020, conservative Democrats Joe Manchin and Kyrsten Sinema opposed it, so Majority Leader Charles Schumer (D-N.Y.) didn’t bring it up in the face of a GOP filibuster

The public service bill, the top legislative goal of AFSCME, would order state and local governments to bargain with unions that win recognition votes, even in so-called Right-To-Work states, effectively making the U.S. Supreme Court’s Janus ruling that make unionizing difficult for public employees.

“Her record suggests real support of workers and their right to unionize,” said Teachers President Randy Weingarten. “I hope it means the Trump [administration] will actually respect collective bargaining and workers’ voices from Teamsters to teachers.”

In her only term in the House career, Chavez-DeRemer cultivated an image of a Republicans willing to work with Democrats. During one House Education and Workforce Committee meeting, she said, “Unions aren’t the

Don McIntosh, editor of Oregon’s Northwest Labor Press, commented, “Unlike most House Republicans, Chavez-DeRemer worked to build relationships with organized labor, but last year said she had concerns about the PRO Act.”

Plus, not being outright anti-union doesn’t ensure a pro-worker voice within a Trump administration.

“One thing to keep in mind is that the [cabinet] secretaries serve at the pleasure of the president,” said Heidi Shierholz, president of the Economic Policy Institute and a former Labor Department economist in the Obama administration.

“It is not an independent role,” she continued. “There’s a real, very clear restriction on how far they can go, away from what Trump and his key advisers want.”

Trump’s first term had a forceful anti-worker tone, weakening overtime protections and workplace safety standards, so if Trump is consistent, Chavez-DeRemer would have to implement his policies or face the consequences.

However, Chavez DeRemer could influence workers’ issues apart from the National Labor Relations Board (which is an independent agency). The Labor Department could address wage theft enforcement, safety inspections by the Occupational Safety and Health Administration, overtime pay thresholds, and immigration status protections, among other issues, according to the worker-oriented Economic Policy Institute.

“If Trump wants to prove that he is really on the side of American workers, he’s going to have to do more than one cabinet nomination,” commented Farah Stockman of the New York Times. “She embodies the contradiction that is the Trump coalition. It won political power with widespread support from blue-collar workers but has up until this point looked poised to hand the federal government over to business-friendly billionaires.”

The daughter of a Teamster, Chavez-DeRemer had some support from Oregon unions in her 2024 campaign, but several national unions refrained from backing her.

The AFL-CIO’s voting scores give Chavez-DeRemer a 10% lifetime score and the same score for the last year tracked. (The average Republican’s lifetime score is 6%.) Some of her votes were against the AFL-CIO’s positions, affecting her 10% rating. Chavez-DeRemer didn’t agree with labor’s position on companies’ health-care plans or jobless benefits, to name two.

Also, the previous year she declined to support the PRO Act, or other key measure.

“There’s the whole world of all of the other employment rights, minimum wage, overtime, [Equal Employment Opportunity] rights, paycheck equity, and paid leave,” said National Employment Law Project government affairs director Judy Conti, speaking to Vox.com. “And she hasn’t co-sponsored any of those bills.”

So, some observers see her co-sponsorship as symbolic or a campaign talking point.

In a prepared statement, the AFL-CIO said, “Donald Trump is the President-elect of the United States — not Rep. Chavez-DeRemer — and it remains to be seen what she will be permitted to do as Secretary of Labor in an administration with a dramatically anti-worker agenda.”

Trump’s nomination of the 56-year-old businesswoman – who founded a network of medical clinics that’s reported annual revenues of millions of dollars – may be a slight acknowledgment that the U.S. public supports organized labor, or another way to attempt to convince working people the multi-millionaire is on the side of working people.

Even in Oregon, some unions were reluctant to endorse her and have a wait-and-see attitude.

“SEIU in Oregon has had very little experience working with Ms. Chavez-DeRemer since she has declined to engage directly with our 85,000 members,” said Alan Dubinsky, communications director for SEIU Local 49. “If she is successful in her appointment to Secretary of Labor, we look forward to her keeping her campaign promises of supporting Oregon’s unions and working families.”

As for business, some of its prominent lobbies seem to be against even a mild moderate, as shown by misgivings of the nomination expressed by the National Right To Work Committee, the anti-union Coalition for a Democratic Workplace and similar groups, and “her selection is also fueling tension among more traditional Republicans with long-standing ties to business trade groups,” report Lori Aratani and Lauren Kaori Gurley in the Washington Post.

For now, then, organized labor seems to accept Trump’s gesture but expect little, reminiscent of another old saying: “It’s better than a poke in the eye with a sharp stock.”

Thousands of Social Security recipients should benefit from labor-backed reform

Thousands of Illinoisans will see more money from Social Security in the coming months, as President Joe Biden on Jan. 5 signed the Social Security Fairness Act, which repealed two laws that had cut hundreds of dollars in monthly Social Security benefits for more than 2 million Americans.

The act eliminated the Windfall Elimination Provision and the Government Pension Offset. Created in the late 1970s and early ’80s, the WEP and GPO affected workers who’d worked at jobs where they paid into Social Security and had enough covered employment to qualify for benefits, but unfairly penalized those retirees by cutting benefits because they’d also earned public pensions in jobs that didn’t pay into the Social Security system. GPO likewise reduced benefits for those workers’ surviving spouses and family members.

“This historic victory restores retirement benefits for 150,000 public servants in Illinois and millions nationwide, including teachers, nurses, firefighters, and law enforcement officers,” said Illinois Federation of Teachers President Dan Montgomery.

Nationwide, the years-long effort had widespread support from public-sector unions. Many advocates said both programs fell heavily on those who held public-sector jobs that had low pay or a small pension, or those who were left widowed by a spouse with a public pension and received a low survivor’s benefit.

Although the repeal isn’t retroactive any further than 2024, “it gains real justice going forward and is a tremendous victory,” said American Postal Workers Union President Mark Dimondstein.

The repeal was supported by the AFL-CIO, the International Association of Fire Fighters (IAFF), the American Federation of Teachers (AFT), and the National Education Association, among others.

Another union supporter, the American Federation of State, County and Municipal Employees (AFSCME), reported that the states most affected are Alaska, California, Colorado, Connecticut, Illinois, Louisiana, Maine, Massachusetts, Missouri, Nevada, Ohio and Texas. Local governments likely to be most affected are Los Angeles and Los Angeles County, and Chicago and Cook County, AFSCME added.

“The bill I'm signing today is about a simple proposition,” Biden said during the White House signing ceremony at the White House. “Americans who have worked hard all their life to make an honest living should be able to retire with economic security and dignity – that's the entire purpose of the Social Security system.”

The law says it will apply to benefits paid after December 2023, apparently meaning that any reductions reflected in Social Security benefits last year will be calculated and sent to beneficiaries this year. Beneficiaries affected by the measure could receive thousands of dollars in one lump-sum payment to cover 2024’s shortfall.

As soon as the Social Security Administration updates its system, recipients will start to get their full, restored benefits. Biden said that Social Security benefits will increase by an average of $360 a month for more than 2 million recipients.

"That's a big deal in middle-class households like the one I grew up in and many of you did," he said.

The bill – the White House said it’s the first Social Security reform in 20 years – passed the House of Representatives by a 327-75 vote on Nov. 12, and was approved in the Senate by a 76-20 vote Dec. 21.

Hundreds of lawmakers felt it was unfair to reduce retirees’ earned benefits because they had public pensions. After all, the vast majority of U.S. workers get their full Social Security benefits, while also receiving funds from their 401(k) and IRA contributions over their working years.

Still, co-sponsor U.S. Sen. Sherrod Brown said he was surprised that the approval was so lop-sided.

“We expected pretty much 49 Democrats and a dozen – 15 at the most – Republicans,” Brown said. “We got to 76 votes because people understand the fairness of this, of fixing this.”

The vote came a day after Brown gave his farewell address in the Senate, losing his seat in November to Trump-backed Bernie Moreno. Brown stressed his focus during his 30-year career on Capitol Hill has been on unions and workers’ rights, and after years of pushing the Social Security Fairness Act, helping to pass it was especially pleasing, he said.

“It's a wonderful way to end the year,” he said. “It really is to me about the dignity of work and fighting for workers.”

Voting for the bill were 76 senators (46 Democrats, 27 Republicans and 3 independents). The 20 No votes were all Republicans; four senators did not vote.

Illinois lawmakers overwhelmingly supported the bill. Both Tammy Duckworth and Dick Durbin voted Yes, as did 15 of Illinois 17 members of the House – all 14 Democrats including West Central Illinois’ Eric Sorensen (17^th Dist.) and Nikki Budzinski (13^th), plus Republican Mike Bost (12^th).

The only No votes from Illinois’ delegation were Republicans Darin LaHood (16^th) and Mary Miller (15^th).

Brown’s co-sponsor, Maine Republican Sen. Susan Collins, said, "I have fought for this change since 2003, when I held the first-ever Senate hearing on repealing the WEP and GPO, and I am proud that this law will ensure public service no longer comes at the expense of the retirement benefits earned by an individual or their spouse. This is a win for fairness and for those who have dedicated their lives to serving their communities."

According to the Social Security Administration, those who have previously filed for Social Security benefits don’t need to take any action if the agency has your current mailing address (or direct-deposit information, especially if your address has recently changed). Most beneficiaries would be able to verify this on their personal "My Social Security" account without calling or visiting a Social Security office. The agency recommends visiting www.ssa.gov/myaccount to sign in or create your account.

Investment adviser Terry Savage, co-author of the book “Social Security Horror Stories,” recommended, “If you want to know the ‘correct’ benefit you should receive (without the WEP or GPO), you can go to www.MaximizeMySocialSecurity.com and – for a $49 fee – run the software, without including the fact that you have a public pension. That should give you the correct calculation of future benefits.”

It's going to be a year...

Well, 2025 started out with violent incidents that few people hope are omens. Then, days into January, billionaires advising Donald Trump outlined government cuts clearly harmful to regular Americans. That was followed by a self-serving willingness to support immigration that would let foreign workers replace U.S. workers, earn less wages, and be virtual wage slaves to the whims of influential employers.

Also on Jan. 1, Congressman Jim McGovern (D-Mass.) said that House Republicans are "doubling down on their extremism" with an agenda that rewards billionaires and large corporations.

“Here’s what I see,” McGovern commented. “Nothing to help workers. Nothing to bring down grocery prices. Nothing to lower rent or make housing more affordable. Silent on inflation and health-care costs. Next to nothing on jobs and the economy.

"Instead, I have no doubt they'll find time to pass tax breaks for billionaires and massive corporations at the expense of everyday Americans."

An American Electorate Voter Poll backed by SEIU and other groups, conducted by BSP Research, showed about 60% of Americans fear that the incoming administration with “promote hate and division,” sparking violence and bloodshed.”

That seemed understandable New Year’s Day, when a 42-year-old Texan and Army veteran who said he backed Islamic State terrorists plowed a truck into New Orleans pedestrians, killing 14 and injuring 15 before dying in a shootout with police. Hundreds of miles west, a 37-year-old Colorado man and active-duty special forces soldier triggered a blast in the Tesla truck he’d loaded with fireworks and fuel outside a Trump hotel in Las Vegas, shot and killed himself, leaving behind notes suggesting a takeover of Washington, D.C.

Meanwhile, Trump’s wealthy inner circle is considering butchering the budget not to prevent inefficient spending like the infamous $50 hammer, but to trim enough spending to get Congress to extend Trump’s notorious 2017 tax cuts that mostly benefited corporations and the already-rich. According to the centrist Committee for a Responsible Federal Budget, Trump advisers propose eliminating the Education Department, repeal clean-energy programs, impose work requirements on Medicaid recipients to discourage the needy from using it, block obesity treatments from Medicare coverage, enact tariffs (which would cost consumers more since affected importers would raise prices), and cut food-stamp benefits, among other notions.

(Food stamps – the Supplemental Nutrition Assistance Program – makes up more than 70% of USFDA funding, but less than two-tenths of 1% of the federal budget.)

Such ideas have dire consequences for public services and working people, according to Everett Kelley, president of the American Federation of Government Employees (AFGE), who said, “The American people should brace themselves for cuts to their benefits and services if President-elect Trump implements his anti-families policies.”

Listing austerity policies such as weakening job safety and labor rules and enforcement, rejecting EPA recommendations, cutting school lunches, outsourcing veteran health care, and eliminating three-fourths of the federal work force, Kelley remained defiant, adding, “We've faced challenges like this before, and we know what’s at stake. We know what’s coming – and we’re ready.”

The non-governmental “Department of Government Efficiency” led by Elon Musk and Vivek Ramaswamy has reportedly targeted federal “discretionary” spending, which Congress must authorize. “Mandatory” spending, incidentally, means ongoing commitments, including Social Security, veterans benefits, Medicare, jobless benefits and interest payments on the national debt.)

As for immigration exemptions: When Ramaswamy and Musk aren’t plotting how to enrich the wealthy at the expense of everyone else, they’re scheming how to specifically line the pockets of their ilk. But they ignited a firestorm of Tech Titans vs. MAGA faithful through H-1B guest-worker visas.

People across the political spectrum said H-1B workers are used as leverage against U.S. workers competing against tech workers from other countries who accept lower pay and must comply to almost anything or risk deportation.

Journalists report that last year Musk laid off thousands of workers and then requested thousands of H-1B visas for non-citizens.

Musk’s pushback to critics or Trump’s base crying betrayal revealed a petty tyrant when he posted, “Take a big step back and F*CK YOURSELF… I will go to war on this issue the likes of which you ca not possible comprehend.”

U.S. Sen. Bernie Sanders wasn’t deterred, saying that H-1B visa are a way for employers to exploit workers and pocket savings.

“The main function of the H-1B visa program and other guest worker initiatives is not to hire ‘the best and the brightest’,” he said., “but rather to replace good-paying American jobs with low-wage indentured servants from abroad. The cheaper the labor they hire, the more money the billionaires make."

It’s going to be a year.