Mar 08, 2011 4:06 PM GMT
So why isn't Illinois doing better when it has thriving companies like Caterpillar that still call it home? Maybe it's because of an environment that doesn't encourage new investment.
When asked recently by Neal Cavuto on Fox News about the recent tax hike pushed through by Gov. Pat Quinn, Caterpillar CEO Doug Oberhelman observed that "having the 36th highest tax rate, overall, out of 50 states in the U.S. is not good, and it doesn't promote job creation." He went on to add that while the company is not aiming to leave its home, Illinois will have to compete hard for new investment.
When companies stop investing in a state, their workers take the first hit, whether they're unionized or not. Because members of public-employee unions draw their pay and benefits from governments, there is a much longer delay before they feel any pain from an economic downturn. Sooner or later, however, a declining private sector will mean a declining tax base, and a squeeze on public finances.
That's exactly what's happening in the Midwest, once the heart of American industry. The more successful business leaders have largely done what Caterpillar has done: expand operations to friendlier climes. Governors and mayors, however, are stuck. Their employees work for public monopolies. The only time a governor gains any bargaining leverage is when the money well runs dry, and overly generous public pay and benefits begin to crowd out core government services such as education or law enforcement.
In the midst of tough budget negotiations forced by tough economic times, Mr. Tillman hopes that public-sector unions may finally learn something the members of Caterpillar's UAW had forced on them a while ago: Without growth, there will be nothing to fight over.
"We can fight over the pie," he says. "But first we need to bake it."