On the State of Illinois

Although there is a perception by some that the state of Illinois is in decline, the reality might not be quite so bad, at least at the moment. Estimates indicate that the population of Illinois has declined by about 1% since 2013. However, the population of the state is still larger than it was in 2000.

Much of this ascribed to the woeful conditions in the city of Chicago and the Chicago metropolitan area but the losses there have been comparatively modest compared to the rest of the state. The Chicago metropolitan area lost more people (about 22 thousand out of about 9.5 million) between 2017 and 2018 than any other metropolitan area in the United States. But the big losses have been more substantial outside of metropolitan Chicago. Since 2010, downstate Illinois has lost 3.1% of its population.

Since 2010, growth in Gross Domestic Product (GDP) has been 0.2 percentage points below the national average, but the state still ranks 11th in per capita GDP. Further, median household income in 5% above the national average and ranks 16th among states. Illinois ranks 18th in the degree of income inequality in the state putting it close to the national average.

Further, the state has had a declining poverty rate that was slightly below the national average in 2017. Although the poverty rate is still above the national average in the city of Chicago, it has improved by about five percentage points (from 23.9% in 2012 to 18.6% in 2017) since 2012. At the same time, the poverty rate in many suburban communities has increased although it is not clear whether this is a product of poor households migrating from the city to suburban communities.

Regarding population growth, it is important to point out that there has actually been negative domestic migration (more people leaving than entering) for most of the past century. At the same time, the state’s population doubled in size and the economy continued to grow.

The population increased due to natural increase (more births than deaths) and international migration. More recently, the rate of natural increase in the population has declined markedly. There are substantially fewer births and more deaths. This is a consequence of changes in the population mix—fewer women of childbearing age and more seniors. As recently as 2010, the rate of natural increase in the population completely offset the negative effect of domestic migration. This is no longer the case. This past year, the rate of natural increase only offset one-third of the negative effect of domestic migration.

Recent population decline reflects the acceleration in the rate of outmigration over the past 5 years while the rate of in-migration to Illinois has not changed much. While the highest rate of outmigration is to Indiana, the growth in outmigration over the past decade has been concentrated in states that are warmer and sunnier, especially California, Florida, Georgia, Tennessee, and Texas. In 2017, the key destinations of migrants from Illinois were Indiana followed by Florida and California. If it were not for international migration to Illinois, the population of the state would have been declining over a much longer period. The foreign-born population has increased from less than a million in 1990 to over 1.8 million in 2017. Hispanics were the largest contributor to this change. They now makeup over 2 million of the state’s population.

While the number of international migrants to Illinois increased markedly (61%) during the 1990s, the rate of international migration has declined since 2000. The last decade only saw a 14% increase in the number of foreign-born in that state. For the 2010 to 2017 period, international migration to Illinois has declined even more with no growth since 2015.

Although Illinois has gained a large number of international migrants since 1990, it has lost a small percentage of African-Americans many of whom are descendants of the great migration from the rural south this past century. Since 2000, the African-American population of the state has declined by 3%. However, in the city of Chicago the black population has declined by 24%. This decline is partially offset by increases in the African-American population in the suburbs of Chicago and in downstate communities.

The population of the state will continue to age and probably decline going forward. For the 2007 to 2017 period, the population of all age cohorts declined except for seniors 65 and older and 25 to 34 year olds.

The 25 to 34 year old cohort has maintained its size because of in-migration of college graduates, especially to the city of Chicago. Between 2007 and 2017, there was a 70% increase in the number of college graduates 25 to 34 in the city of Chicago. The corresponding increases in the Illinois part of the Chicago metropolitan area and downstate Illinois (outside of the Chicago metropolitan area) was 10% and 1%, respectively.

The growth of young college graduates living in the city of Chicago, who are mostly not married or married without school-age children, has resulted in substantial population growth in the downtown area and adjacent community areas surrounding the downtown. This, in turn, has resulted in substantial growth in jobs and wages in the core. One reason for this is that jobs increasingly follow residential preferences. At the same time, most community areas in the city have lost population and jobs, some considerably.

From 2007 to 2017, some of the 25 to 34 year olds in Chicago moved to the suburbs reducing the number of 35 to 44 year olds in Chicago by 8% and increasing the number in the suburbs by 25%. In a previous post (William Testa and I have shown that as college graduates age in the city of Chicago they tend to move to the suburbs, especially if they have school-age children.) For this reason, growth in educational attainment for 45 to 64 years olds in Chicago has been very modest. For downstate Illinois, the percentage of college graduates for the 25 to 34 year old cohort in 2007 actually decreased by about 1% by 2017. Overall, the state of Illinois lost more working-age residents than it gained for the 2007 to 2017 period. Residents with less than a college degree were slightly more likely to leave the state than college graduates. This would be consistent with research by the Chicago Metropolitan Agency for Planning (CMAP) that finds that the Chicago area is losing low- and moderate-income workers while it is gaining high-wage workers.

One of the positive consequences of demographic changes in Illinois and the Chicago metropolitan area is that education levels have increased. I discussed some of these changes in a previous post (Newgeography, January 18, 2018). This is important because industry is attracted to high human capital locations. For the state of Illinois, the percentage of adults 25 and older with at least a bachelor’s degree has increased from about 1 in 4 in 2000 to more than 1 in 3 in 2017. For the city of Chicago and the Chicago metropolitan area, almost 2 in 5 adults 25 and older had a college degree in 2017. However, for downstate Illinois about 1 in 4 adults have at least a bachelor’s degree.

Further, Illinois has a higher percentage of adults with a college degree than the states that are adjacent to it. This is also the case for younger adults 25 to 34. For example, 30% of residents of Indiana 25 to 34 have a college degree while 41% are college graduates in Illinois.

Overall, Illinois ranks 13th in the percentage of adults 25 and older with at least a bachelor’s degree. This is up from 14th in 2000 and 20th in 1990. Among the ten largest cities in the United States, the city of Chicago ranks 3rd in the highest percentage of adults with a college degree following San Jose and San Diego. Of the 100 largest metropolitan areas in the United States, Chicago ranks 16th in the highest percentage of millennials with a college degree while the state of Illinois ranks 10th. Overall, the Chicago metropolitan area ranks 49th out of 388 metropolitan areas in the percentage of adults with a college degree. Of the ten largest metropolitan areas, Chicago ranks 5th in the percentage of college graduates. Thus, there is an ample supply of college graduates to attract high-skilled industry, especially in the Chicago metropolitan area.

It has been argued that the Chicago area and downstate Illinois are losing millennial college students to other states. Although this is true for college freshmen, it is not true overall. Illinois has about the same percentage of its population enrolled in college as are enrolled in college in neighboring states and in the country overall.

While there has, in fact, been a net loss of college freshmen from Illinois to other states, there has not been a net loss of college students overall. One reason for this is that Illinois has a higher percentage of students in graduate and professional schools.

This is not to say that it’s not in Illinois’ interest to attract more freshmen from within the state to colleges and universities. It’s important because many metropolitan areas keep a large share of their college graduates regardless of their state or country of origin. In the case of Chicago, a study by Martha Gimbel, research director for the Hiring Lab, indicated that 63 percent of graduates stay in the area, making Chicago one of the top metropolitan areas for keeping their graduates.

According to a Wall Street Journal study, about seven out of ten DePaul University and University of Illinois at Chicago graduates stay in the Chicago area after graduation. A large number of Northwestern University and University of Chicago graduates do so as well.

Chicago not only keeps most of its college graduates, at least while they are relatively young, it is one of the leading destinations in the country for new college graduates, according to a study by Nalini Robbins of Handshake, the college career networking service. In a study of 14 million job applications by new college graduates, Robbins found that Chicago ranked second after New York City in where new graduates wanted to work.

Although there are many positive features to the state’s economy and human capital infrastructure, there are many challenges as well. Many of these are well known. Perhaps most importantly, Illinois is now a top ten state for state and local taxes, mostly because of very high property taxes. Illinois is also among the leaders for underfunded pensions. The inability to solve the pension liability problem is putting a damper on the state’s future. A declining number of households and workers going forward will make this problem even more challenging.

William Sander is Professor Emeritus of Economics at DePaul University in Chicago. He has also taught at the University of Illinois at Urbana-Champaign and the University of the Philippines. He has a master’s degree in regional planning from Cornell University and a Ph.D. in natural resource economics.

Photo credit: Piotrus via Wikimedia under CC 3.0 License