Jim Dey | Funny talk on outmigration

Jim Dey | Funny talk on outmigration

A funny — meaning peculiar — discussion took place earlier this week after a ratings agency analysis of Illinois' finances suggested to some that the state's "outmigration" doesn't pose an economic problem.

"Growth defies out-migration," one newspaper headlined declared.

It ran above a story that reported outmigration here is part of a "century-long trend that has not hurt the state's economic growth."

"Fitch downplays outmigration ..." read a subsequent headline on CapitalFax that concerned news reports about the Fitch Ratings analysis of Illinois' current financial embarrassment.

Prominent Illinoisans have been wringing their hands for several years now over Illinois' population loss, roughly 640,000 residents leaving from 2010 to 2017. Births and in-migration made up for all but roughly 40,000 of those who left.

With roughly 12.8 million people, Illinois has fallen to the sixth largest state, recently losing the fifth spot to Pennsylvania.

Population issues in recent decades have cost the state representation in the U.S. House of Representatives. The Land of Lincoln is expected to lose at least one House member — perhaps two — after the upcoming 2020 census.

Even though Fitch was referencing economics exclusively, the Chicago Tribune's interpretation came across as shocking.

After all, how can population declines not hurt from an economic standpoint?

States and their economies need to grow, and loss is the opposite of growth.

Like many economic matters, this issue requires further explanation.

"Fitch notes that out-migration from Illinois, despite its recent acceleration, is a long established phenomenon that has not prevented the state's economy from continuing a long pattern of overall growth," the company analysis states.

The trend, which dates back to 1900, has been "virtually uninterrupted" since the "mid-1920s."

"Yet Illinois' economic growth has continued since at least the late 1970s when the federal government began reporting state-level GDP," the report states.

Don't confuse outmigration with population loss. Obviously, people moving in can exceed those moving out. After all, Illinois didn't have a population of 12.8 million in 1900.

Outmigration becomes a bigger issue when those leaving equal or outnumber those moving in.

Further, the economy still can grow in the face of outmigration.

Illinois Policy Institute chief economist Orphe Divounguy writes that "up until now labor productivity growth (growth in the skills or quality of workers) was very fast, even outpacing skills accumulation in the rest of the country."

But he said Illinois could have grown "even faster during that same time period" if there was less outmigration.

Starting about four years ago, Divounguy reports, Illinois started losing population, and that's where the state's economy takes a real hit. The decline represents a reduction in the available labor force.

Divounguy said the specifics of Illinois' decline — losing higher-income families and gaining lower-income families — "is telling us we're losing some of our most productive people."

IPI reports that, since 2011, the state has lost $14.1 billion in taxable income from residents leaving Illinois. Plus, those who left earned on average $19,600 more than those who moved in.

Regardless of earnings, the smaller the population the "less private consumption and less private investment" in the state economy.

"For example, if there are less people in the state, fewer people buy homes. As a society then, we invest less and build less housing. This hurts output and employment," Divounguy said.

Fewer people working, spending and paying taxes also means that government at all levels collects less revenue and has a more difficult time providing public services.

In fact, as Fitch reports, that's the phenomena under which Illinois currently operates.

It said the state's economy has grown "only tepidly" since the end of the Great Recession and "future growth may also remain subdued" as a consequence of demographic trends.

Jim Dey, a member of The News-Gazette staff, can be reached by email at jdey@news-gazette.com or by phone at 217-351-5369.

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