Illinois: Skilled Moving In, Unskilled Moving Out - At A Net Loss
Source: zaralawgroup.com
Too often, people interpret population numbers at face value and make a determination of a place’s success or failure based on absolute numbers. Population went up? Place is doing great. Population went down? Place is not doing well. Truth is, there is a lot going on with population change that offer few clues as to why growth or decline occurs. Digging a little deeper into data can tell how places are changing.
Last week the U.S. Census released its 2023 state population estimates. Nationwide, the Census reports that the nation added 1.6 million people in the last year, growing by 0.5% to nearly 335 million people. Generally, the high number of deaths seen during the pandemic has fallen, while migration is returning to pre-pandemic levels.
Of course, population change is distributed equally across the nation. Southern U.S. states grew the most, at 1.1% between 2022-23. The nation’s Midwest and Western states eked by with a scant growth of 0.2% over the period, while Northeastern states actually lost population (-1.0%). As for individual states, South Carolina led the way with a 1.7% growth rate between 2022-23, followed by Florida and Texas at 1.6%. New York had the greatest loss of population at -0.5%, followed by Louisiana, Hawaii and Illinois, all at -0.3%.
I can’t speak for New York, Louisiana or Hawaii as it relates to their population losses, but as a resident of Illinois who’s been studying Midwest demographics for some time, I can point to resources that give a clue as to what’s happening here. Yes, Illinois ranked 47th out of 50 states in population growth between 2022-23. However, what’s happening in Illinois may not be nearly as dire as the figures imply.
A report by the Illinois Economic Policy Institute last October found that while the state’s population has been trending downward since 2010, those moving into Illinois as well as those electing to stay in-state are having better economic outcomes than those who leave. The report’s authors found that the exodus out of Illinois is led by younger residents (an average age of 32) who were more likely to be Black, less likely to have college degrees, and more likely to have lower incomes than those moving into the state. Illinois in-migrants were more likely to have a college degree (64 percent domestically, 70 percent internationally) compared to out-migrants (59 percent).
The findings in the report suggest that Illinois, led by the two-thirds of Illinoisans who live in the Chicago metropolitan area, is undergoing a restructuring of its demographics. The state has become more urban and more educated, with more foreign-born, female and Hispanic residents, and increased in income – despite losing residents.
Illinois’ demographic restructuring even calls into question to two often cited reasons for leaving the state – Illinois’ high tax rates and Chicago’s violent crime rate. These points certainly factored into to the highly-publicized move of the hedge fund Citadel and its CEO, Ken Griffin, from Chicago to Miami in 2022. Perhaps that’s true for super-rich people like Griffin, with an estimated net worth of $36.5 billion, according to the Bloomberg Billionaire Index. However, the IEPI report suggests that taxes and crime are having little impact on the affluent residents who are choosing to come here. Data from the Illinois Department of Revenue found that between 2010 and 2020, the number of tax filers reporting an adjusted gross annual income of $500,001 or more rose by 80 percent, and the number of tax filers with an adjusted gross annual income of $100,001-$500,000 rose by 52 percent (true, more context is probably needed to test the veracity of this fact, but I’ll go with it anyway).
A Crain's Chicago Business article I contributed to in 2022 covers much of the same ground as the IEPI report, but with a specific focus on Chicago. The article is paywalled, so I’ll pull out a few of its salient points:
“Change your metric (from population) to households, and Chicago grew at the fastest rate in modern times. The extent to which Chicago boomed during the 2010s isn't widely recognized, since public attention focuses on population change, and the city added just 51,000 people. In fact, however, Chicago grew at a rate probably not seen since the 1920s. Households increased by 97,000—the largest 10-year gain in modern recordkeeping—and will soon surpass the 1960 peak. Population hasn't risen at the same rate due to declining household size, a trend throughout the developed world. However, households acquire housing, accumulate wealth and purchase goods and services, and so are an equally if not more important measure of economic potential than population.
According to the Brookings Institution, the residential population of downtown Chicago exceeds 110,000 and since 1980 has grown at the fastest rate of any U.S. city by a wide margin.
Downtown Chicago jobs rose by 153,000 between 2010 and 2020, the largest increase for any 10-year period in the modern record, reaching 632,000 before the pandemic. The total has since dropped, but still.
The number of college graduates in Chicago increased by 203,000 between 2010 and 2020, more than any other U.S. city except New York and Los Angeles, and higher than both on a percentage basis.
College grads are the chief source of immigration to Chicago and the main driver of population growth. Chicago's college grads aren't usually thought of as immigrants, but, like traditional immigrants, they're primarily newcomers. According to the census, 55% weren't born in Illinois, and based on reasonable assumptions, the share of city-living graduates who are Chicago natives may be just 10%.
The point is worth stressing: Most of Chicago's college graduates came from elsewhere. They made a conscious choice to live here, presumably knew what they were getting into, and so are less likely to bolt at the first sign of trouble. That, plus their education and higher lifetime earnings potential, make them a formidable asset.”
So how is one to describe Illinois’ – and Chicago’s – unique demographic profile? I view it as a restructuring borne of the state’s manufacturing legacy. For decades Illinois relied heavily on manufacturers and the well-paying yet low-skilled jobs they provided, protected by unions working on behalf of their membership. For at least 50 years now, Illinois’ economy has been moving away from leaning on its manufacturing roots, and has been pretty successful at doing so. Being the home of the nation’s third largest metropolitan area during a period that favored such places and the assets they offer – excellent educational institutions and rising opportunities for knowledge-based jobs – plays a considerable role. However, Illinois’ economic restructuring is perhaps moving faster than its demographic one. More working-class Illinoisans are leaving the state because low-skilled, good paying jobs are harder to come by, and many are leaving to test the waters elsewhere.
In the end I think Illinois’ experience leads to two overarching conclusions. One is that Illinois’ economy, with the Chicago metro area leading the way, is being remade without the benefit of a warm climate or hot economic sector to lure newcomers. Illinois is moving more quickly into the knowledge economy domain than its Midwestern cohorts, probably nearly as fast as the nation’s best state economies. That’s great. The other is that there’s still a significant number of workers who are seeking and not finding low-skilled, good paying jobs, and leave as a result.