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A New Report from KDM Consulting

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Key Findings:
  • llinois’ out-migration is nothing new.  The state has seen net out-migration every year but one since 1925.
  • Illinois’ out-migration is overstated if international migration is ignored.  Otherwise migrants from other countries are not counted when they move to Illinois, but are counted when they move out of Illinois to other parts of the country.  Including international migration reduces net migration out of Illinois by one-third.  
  • Both in-migration and out-migration are tied to the economic cycle.  People move when times are good and sit tight when they are bad.  The 2011 income tax rate increases came as Illinois was moving out of recession, and migration could have been expected to increase.
  • Illinois’ migration pattern is similar to those of its neighboring states.  Illinoisans tend to move to the same states as do residents of Indiana and Wisconsin.
  • Many migrants don’t move far.  Illinois’ largest out-migration is to Indiana.  Indiana’s and Wisconsin’s largest out-migration is to Illinois.
  • Illinois is a large state so out-migration in absolute numbers is large.  However, a larger percentage of both Indiana’s and Wisconsin’s population moves to Illinois than vice versa.
  • Out-migration from Illinois to Indiana and Wisconsin has declined.
  • Illinois net out-migration rates fell in 2011, the first year of the income tax rate increase, but increased significantly in 2014.
Executive Summary:

Currently the widely held and oft repeated claim that the 2011 "temporary" tax rate increases prompted Illinoisans to leave the state permeates Illinois public policy discourse.  This report probes beyond this assertion examining data from multiple federal sources - the Population Estimates Program (PEP), Internal Revenue Service (IRS) and the American Community Survey (ACS) - in an attempt to understand Illinois’ migration patterns and trends.
Data show that net out-migration in Illinois is not a new phenomenon – it has been occurring since at least the 1920s as part of a national trend that has seen a movement of population from the Northeast and the Midwest to the West and South.

The data also indicate that while Illinois has experienced net out-migration for over 90 years, its magnitude is overstated if data reflecting international migration patterns are not included.  This is because Illinois not only attracts more international in-migrants than the average state but the number of individuals moving into Illinois from other countries is significantly larger than international out-migration from Illinois.  When international migration is included in net migration figures, Illinois had overall net out-migration of 67,635 in 2015 compared with 105,217 for domestic net out-migration only: a reduction in net outflows of one-third.

One factor we can identify from the data is that migration patterns follow the economic cycle - overall gross migration slows down during recessions and picks up once the economy starts to recover.  Illinois had begun to pull out of the 2008-2009 great recession by 2011, the same time that it enacted income tax rate increases.  That has led some to conclude that the increase in the income tax rates was the reason net out-migration increased.  This conclusion is not supported by the data; in fact we find that the out-migration rate actually fell in 2011.

A review of IRS data shows that the 10 states with which Illinois has had the largest gross migration flow were the same in 2012/2013 (most recent available data) as they were in 1994/1995 (a comparable year in terms of the economic  cycle).    Neighboring states, Indiana and Wisconsin, rank highly in terms of net out-migration from Illinois.  In what may come as a surprise to many  who follow media coverage of this issue – including us – we found that net out-migration to Indiana and Wisconsin was less in 2012/2013 compared to 1994/1995.   We also found that net out-migration to Florida remained relatively unchanged when 2012/2013 is compared with 1994/1995. This had not been our perception before conducting this research.   

We discovered that Illinois’ migration pattern were relatively similar to those in Indiana and Wisconsin in terms of destination states.  Texas is the second most popular destination for Illinois’ out-migrants, fourth for Wisconsin, and sixth for Indiana.  Florida is the third most popular destination for Illinois and Indiana out-migrants and second most popular for Wisconsin.  California is the fourth most popular destination for Illinois out-migrants, the fifth highest for Wisconsin and the seventh highest for Indiana. 

We note that many migrants do not move very far.  Illinois’ largest out-migration is to Indiana;   Indiana’s largest out-migration is to Illinois. Illinois fifth largest out-migration is to Wisconsin; Wisconsin’s largest out-migration is to Illinois.  

There are many ways to look at migration data.  When we look at raw numbers, Illinois is a big state with a large population and as such has a larger absolute level of out-migration to smaller states than smaller states to Illinois.  However, when these numbers are examined as a percentage of population, for example, Illinois draws a larger percentage of both Indiana’s and Wisconsin’s population than either state draws from Illinois.

Up to this point in the research we had looked at the number of people moving from one state to another.  But we didn’t know much about who these people were.  The ACS allowed us to review that very issue, going back to 2007 (the earliest date ACS information is available).  We used ACS data to examine Illinois migration by income, age, and education. We found that the rate of net domestic out-migration from Illinois was relatively stable between 2007 and 2013.  However, it appears to have increased in 2014 across most age, income, and education cohorts. 

While our research has helped us understand the context of migration trends in Illinois, it leaves us with many, as yet unanswered questions, such as:
  • Is the increase in the 2014 net out-migration rate a state-wide phenomenon or is it concentrated in a few pockets? 
  • Why is the out-migration rate of the $65k-$75k income group slowing down?
  • Where are young college-age Illinoisans moving to and for what reasons?
  • Why has the rate of out-migration for 60-64 year old cohort slowed down? 
  • Why has the rate of out-migration in the age 70 or older increased?  Where are they going?
  • Why has there been an increase in the rate of out-migration of holders of graduate or professional degrees?  Where are they going?
  • Are mid-career professionals with young children who make an above average income more likely to leave Illinois now than was true in the past?  
We will keep looking for answers and encourage our colleagues who are interested in the development of fact-based, data-driven research to join us in this quest.

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