A new study by United Van Lines, the largest moving company in the country, has found that for every customer who moved into Illinois in 2018, two moved out. According to the company’s 2018 National Movers Study, Illinois saw more than 7,600 total state-to-state moves, with 66 percent moving out and only 34 percent moving in.
The study, which tracks customers’ migration patterns, ranked Illinois’ percentage of outbound moves second-highest in the nation, just below New Jersey.
United Van Lines found that the bulk of those leaving Illinois – nearly 46 percent – cited job opportunities as the reason for their move. Over 67 percent of outbound Illinoisans reported incomes of at least $100,000, according to the report.
Other moving companies have also ranked Illinois ranked high as a place to leave. Atlas Van Lines, for example, ranked Illinois as having the third-highest rate of outbound moves among its customers, in a 2018 study. Over 60 percent of Illinois’ state-to-state moves were outbound in 2018, that study found. Atlas’ data shows Illinois has seen net outbound moves since 2001.
Land of leaving
A 2018 poll conducted by the University of Illinois, Springfield and NPR Illinois found 53 percent of Illinois registered voters have considered moving out of the state in the past year. For 39 percent of those respondents, comparatively lower taxes elsewhere was the No. 1 reason. Another 15 percent cited job opportunities as their primary reason.
These observations closely relate to the most recent U.S. Census Bureau population data, which showed Illinois’ population decline – driven by outmigration – had entered its fifth straight year. According to Census data, Illinoisans fled to other states at the third-fastest rate in the nation, with the state losing 114,000 residents – or 313 per day – over the year. From July 2017 to July 2018, Illinois’ population declined by 45,000 on net, continuing a trend that has been accelerating since 2014.
Illinois’ outmigration crisis is mainly driven by prime working-age residents – between ages 25 and 54 – leaving for better opportunities. College-educated migrants leaving Illinois make 14 percent more in wages and salaries than non-migrants, and 18 percent more than those moving into Illinois.
High taxes hamper opportunity
An Illinois Policy Institute analysis of IRS data revealed that Illinois’ lagging labor market accounts for a majority of state-to-state migration losses. In other words, the state’s lackluster economy is directly responsible for persistent decreases in population.
What’s hampering the state economy? Illinoisans are still feeling the effects of the 2011 income tax hike, which decreased employment by 9,300 jobs between 2012 and 2016. But that didn’t stop state lawmakers from enacting the largest permanent income tax hike in state history in 2017. Jobs data suggests the historic tax hike further weakenedIllinois’ job market.
Unfortunately, Gov.-elect J.B. Pritzker made a progressive income tax a key pillar of his campaign, which would pave the way for further tax hikes. One progressive tax proposal in 2018 would have raised taxes on individuals earning as little as $17,300.
Illinois’ flat income tax structure is one of the state’s few competitive advantages. Progressive income tax states are hemorrhaging residents to more competitive tax environments, losing nearly 300,000 residents to other states over the past year as a group. Meanwhile, states with no income tax gained nearly 340,000 residents. And taken together, flat income tax states excluding Illinois also gained residents from other states.
Reversing the trend
Springfield should reject a progressive income tax, which would likely raise taxes on Illinois’ middle class, worsen the outmigration crisis and further harm the state economy.
The 101st Illinois General Assembly must rein in unnecessary spending with a spending cap. Lawmakers must also reform pensions with a constitutional amendment that protects already-earned pension benefits while allowing changes to unearned, future benefits. This would prevent growing pension obligations from driving further tax increases.
When the next General Assembly is sworn in Jan. 9, they should seize the opportunity to pursue reforms that address the state’s outmigration crisis.