The Fleeing Young of Illinois

Fiscal trouble looms for the state as its young adults flee

WSJ editorial.

"Illinois lost one House seat in this year’s reapportionment, and Democrats blame snowbirds migrating south. But a new analysis by the University of Illinois Extension finds that those fleeing for better tax and economic climes include swarms of young people.

The Land of Lincoln is one of only three states, including West Virginia and Mississippi, to have lost population since 2010. But its population over age 55 has grown as Baby Boomers have aged. Over the last decade, Illinois’s median age has increased to 38.8 from 36.6, which puts it among the fastest aging states. Florida’s median age ticked up two years to 42.7.

Illinois is losing young people while Florida is gaining them. State development specialist Zach Kennedy notes that “the U.S. population actually grew in the prime working age, young adult age cohorts, 25 to 29, 30 to 34 and 35 to 39 year olds.” Illinois was among the few states to see a decline in these age cohorts.  

One reason is that many students who leave the state for college don’t return. The analysts call this “brain drain.” “Only New Jersey lost more college-aged individuals out of state who never returned,” Mr. Kennedy says. Hmmm. What do the two have in common?

High taxes, for one. Illinois’s effective residential property tax rate (1.97%) in 2019 was second only to New Jersey’s (2.13%). Illinois’s flat 4.95% income tax is relatively low, though its 9.5% corporate rate is among the highest in the country. Hefty business taxes have suppressed job growth, and young people are following employers out of the state.

The state is also losing children. Its under-18 population has declined by 350,000 over the last decade. Lousy schools may be driving away young families. Out-migration of young people is triggering a demographic and fiscal time bomb like the one that eventually bankrupted Puerto Rico.

Illinois doesn’t tax retirement income such as 401(k)s or public pensions. This tax perk may help keep some seniors from leaving. But a shrinking population of prime-age working people and children means a smaller tax base will have to support growing retirement liabilities. Folks who stick around will have to pay higher and higher taxes.

A study last month by the research outfit Wirepoints estimated that each Illinois household on average is on the hook for $110,000 in government-worker retirement debt, up from $90,000 in 2019. The burden of the state’s pension debt alone is $64,200 per household—four times more than the national average and the second highest after Connecticut ($65,400), which has a wealthier population. The per-household pension burdens in Iowa and Wisconsin were $3,500 and $3,200, respectively. Both states have gained young people.

State and local government in Illinois is run by public-worker unions, and people are fleeing the economic and fiscal consequences."