By investing in workforce, Illinois is delivering higher profits for businesses

Productive workers and competitive businesses continue to make Illinois the economic engine of the Midwest.

Last month, the U.S. Bureau of Labor Statistics revealed that Illinois was one of only 13 states where labor productivity increased in 2022. And from 2019 through 2022, Illinois' worker productivity grew faster than nearly every border state - surpassing gains in Wisconsin, Indiana, Missouri and Kentucky.

In fact our workforce has punched above its weight and outperformed the nation. While Illinois accounts for just 4% of the American economy, our workers have been responsible for more than 7% of all labor productivity growth in the United States since 2019.

Illinois businesses have reaped the rewards, with the profits of Illinois' corporations more than doubling and the profits of Illinois' small business quadrupling in just three years.

That's not just good for businesses - it's good for communities as well.

For example, in fiscal year 2019, Illinois' General Fund received $2.4 billion in net corporate income tax revenues. By last year, they soared to $5.4 billion - an increase of 126%, or more than seven times the rate of inflation.

Illinois' small businesses fared even better. According to data from the Illinois Comptroller and Illinois Department of Revenue, business partnerships and small business enterprises paid $1.0 billion in total state taxes in 2019 and $5.0 billion last year - an increase of 395%.

Indeed, business tax receipts continue to come in above last year's levels, leading the nonpartisan Commission on Government Forecasting and Accountability to forecast even higher corporate tax revenues for fiscal year 2023. Translation: higher profits are ahead for Illinois' corporations.

Again, taxes are only paid when profits are earned.

There are many factors that can drive corporate profitability. One of the most significant is workforce productivity. It means businesses are delivering more products, more services, and more sales per dollar. This can be reinvested in workers, workforce training and job quality.

Recent research from the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign illustrates the point, by concluding that workforce productivity is between 12% and 28% higher than neighboring states.

This has helped Illinois become just the fifth state to reach $1 trillion in annual economic activity - following California, New York, Texas and Florida. Illinois' gross domestic product is larger than 13 other U.S. states combined.

At a time when our unemployment rate is around 4% and the state still has more job openings than people looking for work, Illinois lawmakers have passed a state budget that will help lock in these competitive labor market advantages.

The budget increases funding for the University of Illinois System, provides tuition-free community college for low-income students, and increases the state's investment in K-12 public schools under the evidence-based funding formula.

The state also passed its fifth balanced budget in a row and added to the Rainy Day Fund. This provides an additional level of certainty for businesses and investors.

But Illinois should not stop there. The state can build upon this progress and position itself as a skilled labor hub with additional policies that promote job quality.

For example, Minnesota recently became the 12th state to pass paid family and medical leave and the 13th state to create a refundable Child Tax Credit. Research shows that these laws are not the burdens their opponents claim, but rather are vital policy instruments that strengthen families, boost labor force participation, and increase the workforce productivity on which our businesses rely.

Illinois already has the most productive workers in the Midwest. With sound public policies, we can continue to attract, develop and retain a labor force that will deliver strong profits for businesses and a high quality of life for future generations.

• Frank Manzo IV, MPP is an economist at the nonpartisan Illinois Economic Policy Institute.