Illinois by the Numbers: Five Alarming Trends to Watch by Doug Whitley, President/CEO Illinois Chamber of Commerce

Doug Whitley is the highly respected president of the Illinois Chamber of Commerce. The is the first two parts of 5 parts on the challenges facing Illinois right now.

March 11, 2013   Illinois by the Numbers: Five Alarming Trends to Watch     Understanding Illinois' demographics and population trends is fundamental to understanding the mounting economic pressures on state government finances. Illinois has changed a great deal in the last several decades. Our population has become older, more diverse and, unfortunately, increasingly dependent on government. Recent statistics show steep job and population losses in Illinois and increases in average age, poverty level and individual tax burden. Together, these trends paint a revealing and sobering picture of the state. The Illinois Chamber's evaluation of this data suggests the state's elected leaders must make aggressive moves to promote job growth and improve the business climate in Illinois. Without intervention, our economy will neither satisfy employment needs nor generate the revenues needed to remedy the government's budget problems. In order to reverse these trends we must address the root causes of increased government spending, as well as the factors that influence the private sector's decisions on whether to invest or disinvest in our state. For example, to curb costs associated with public safety and corrections, we must focus on improving positive educational outcomes, combating the drug culture, reviewing sentencing laws and providing legitimate employment opportunities. Likewise, to stop the exodus of private sector jobs that are vital to economic growth, we need to address not only the costs of doing business but to make our government an enabler of private sector initiative rather than a barrier to commerce. After looking through various demographic data from myriad sources, the Chamber has identified five distinct trends that merit attention. The first two, which are featured in this message, are Illinois' drastic population and job losses. Tomorrow, we will examine three additional trends, along with their effect on the economic health of the state and what, if anything, Illinois' elected officials can do to address them. Trend 1: Illinois is Losing Residents Each year, moving company United Van Lines conducts a study that tracks inbound and outbound migration trends throughout the country. In 2012, the study showed Illinois ranked second in the outbound category. The previous year, our state topped the list. In all, Illinois lost more than a half-million residents between 2000 and 2009. Data from the 2011 U.S. Census puts the state's net migration at 79,459 people - the second biggest population loss in the country. Between 1995 and 2009, one taxpayer moved out of Illinois every 10 minutes.Why are population numbers so important? Population is central to commerce, employment and revenue generation for both the private sector and governments. People are leaving Illinois because there are fewer jobs. And, as they leave, it adversely affects local economies and government revenues. Lower population growth increases the burden on residents and corporations that remain behind. That, in turn, makes it much less attractive for others to remain here. Whether it is individuals making plans to move or employers choosing to invest elsewhere, the effect is a downward spiral of economic loss. This is dramatically illustrated by a report from the Illinois Policy Institute showing that in2009 alone, Illinois lost a net of $1.5 billion in taxable income through out-migration. Between 1995 and 2009, the report said Illinois netted a loss of 366,616 tax-paying households, resulting in a loss of $26 billion in taxable revenue. This trend has been somewhat masked by the number of foreign immigrants Illinois continues to attract. Immigrants accounted for 43 percent of Illinois' new residents from 2000 to 2009. But that doesn't change the fact that, by and large, residents and businesses are voting with their feet and choosing to move to other states where economic conditions and opportunity are superior, or at least perceived to be superior, to Illinois. So, where is everyone headed? According to the U.S. Census Bureau, the states that experienced the greatest population growth over the last two years were North Dakota, Texas, Utah, Colorado, Alaska and Florida. By no coincidence, several of those same states appeared on a recent list of top states for job growth by volume. The report, by Staffing Industry Analysts, ranked North Carolina first, followed by Florida, Texas, Georgia and Tennessee. Trend 2: Illinois is Hemorrhaging Jobs The state's population has declined dramatically, but the decline in jobs has been even worse. As the State of Illinois Economic Forecast points out, Illinois' recession was more severe than the nation's, and its recovery has been slower. Illinois has recorded a net loss of 270,000 jobs since the beginning of the recession in December 2007. According to a November 2012 Brookings Institute study, Illinois must add 500,978 new jobs to fill its "jobs gap" - the number of jobs Illinois needs to create to return to pre-recession employment levels. Other experts say the job gap is actually 641,000, which would be the number of jobs the state needs to recover to its peak employment level reached in November 2000, according to the Illinois Economic Review report published by the University of Illinois in January 2013. Some industries have been especially hard hit. Illinois lost 34 percent of its manufacturing jobs from 1997 to 2012. Construction jobs - which pay almost 24 percent more than the national average - decreased 29.6 percent from 2000-2012. Adding to the problem is the fact that Illinois' civilian labor force - the number of people over 16 who are working or eligible to work - has been growing faster than the employment rate for more than 20 years. For example: From 1990-2011, the civilian labor force increased by 633,900 but those employed increased by just 364,650. From 2002-2011, the civilian labor force increased by 178,400 but the number of employed decreased by 44,200. Unless we make serious improvements to Illinois' business climate and economy, we have no hope of closing our state's jobs gap anytime in the near future. Illinois' job growth has trailed the national pace for the last 10 years and, as the State of Illinois Economic Forecast points out, our state ranked 48th in the country in private sector job growth in June 2011. While the University of Illinois study estimates the state needs to add 641,100 jobs to reach peak employment, it shows we have added only 136,300 over the last three years combined. At that rate of growth, it would take Illinois more than 10 years - adding about 45,000 jobs per year - to reach its peak target. We can't wait that long. The threat to job loss is further compounded by forthcoming changes enacted by federal law, like that of the Affordable Care Act, which beginning in 2014 will impose a new health insurance tax on fully-insured plans that amounts to an indirect tax on small employers. According to a study released by the National Federation of Independent Business Research Foundation, the result will be a loss of 1,500 jobs and a decrease of nearly $3 billion in sales by 2021. Unfortunately Illinois' problems don't end with population and job loss. Tomorrow, we will examine three additional trends that are contributing to our state's ailing economy: the aging of our population, rising poverty levels and the state's growing tax burden.

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