What politicians should do about Illinois' declining population

  • Austin Berg

    Austin Berg

 
By Austin Berg
Posted12/27/2018 1:00 AM

It's the same grim story to which Illinoisans have grown accustomed: We're shrinking. And it's getting worse.

New numbers released Dec. 19 from the U.S. Census Bureau paint a stark picture.

                                                                                                                                                                                                                       
 

The chaser is that there are policy solutions on the table to bring back some hope to Illinois. But before you can fix the problem, you need to understand it. Here's the rundown of what the new data tell us. And what direction they should point state lawmakers.

The headline number comes first: 45,116.

That's how much Illinois' population shrank from July 2017 to July 2018.

It's the fifth year in a row the state has lost people. And the fifth year in a row that the loss has gotten worse. No other state finds itself adrift in five consecutive years of worsening population decline.

Since Illinois' population growth dipped into the red five years ago, Illinois has shrunk by more than 157,000 residents. It's as if Joliet, Naperville or Rockford were wiped off the map. Those are the state's third-, fourth- and fifth-largest cities.

What's driving the population decline? Far more Americans are leaving Illinois for other states than coming in. Illinois lost more than 114,000 people on net to other states over the year -- an exodus almost unchanged from the previous year.

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One person every 4.6 minutes. Or 313 each day.

That's a daily passenger plane full of Illinoisans moving to greener pastures, for two years straight. Most will never return.

But who are these people? And why are they leaving?

Government data show that those leading the march out of Illinois are between the ages of 25 and 54. In other words, they're in their prime working years. This poses another problem: When Illinoisans able to bear children leave, fewer children are born Illinoisans.

The state is having a baby bust.

Since 2011, Illinois has seen an 8.8 percent decline in births. That's the fourth-worst slide in the nation and more than twice as severe a decline as the average state. Births still outpace deaths. But the margin is getting smaller every year.

That makes Illinois' loss of people to other states -- and figuring out why those losses are happening -- all the more important. Natural growth in the population won't be able to mask them.

                                                                                                                                                                                                                       
 

Using a methodology developed by Federal Reserve economist Joshua Gallin and data from the IRS, Illinois Policy Institute research shows the primary driver of Illinois' out-migration over the past decade is a weak labor market, which includes factors such as tax policy, the unemployment rate and wage growth.

Taxes appear to be a particular pain point. Half of Illinoisans told pollsters they wanted to leave the state in 2018, and the No. 1 reason was high taxes.

Clearly, the permanent income tax hike state lawmakers passed in July 2017 hasn't helped fix the state's people problem. Families are rejecting Illinois soil as a place to plant roots. And that poses a major challenge in fixing the state's fiscal problems.

With fewer young people left to pick up the tab for Illinois' hulking pension debt, for example, the math only becomes more impossible.

This news, year after year, is enough to make the most optimistic Illinoisan a hardened cynic. But since we know a poor labor market is the primary driver of this problem, lawmakers should be looking at proven pro-growth policies to reverse the trend.

The first is a spending cap tied to economic growth, which will prevent the need for future tax hikes and provide certainty to residents and businesses.

But then there's pension problem. Without reform, fewer Illinoisans will be left to shovel an ever-larger pile of debt. Moody's Investors Service earlier this year pegged Illinois as having the highest pension-debt-to-revenue ratio ever recorded for a state. But a speech last week from Chicago Mayor Rahm Emanuel pointed a light toward some relief: a constitutional amendment.

Specifically, the amendment would protect all pension benefits that public employees have already earned, but allow for reasonable changes to future benefit accruals. That means the state couldn't slash a penny from current retirees' checks. But lawmakers could finally make reforms, like ending automatic, compounding 3 percent benefit increases throughout retirement.

Gov.-elect J.B. Pritzker and the new General Assembly will have a lot on their plates next year as they try to paper over yet another big budget deficit.

But Illinois' biggest budget problem is its shrinking population. And if lawmakers don't take steps toward spending reform, they shouldn't expect their constituents to hang around.

Austin Berg, aberg@illinoispolicy.org, is a writer for the Illinois Policy Institute.

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