Analyst: Key to stopping loss of residents, jobs may lie in workers' comp reform
A U.S. Census Bureau report released this week reveals that between July 2015 and July 2016, Illinois lost 114,144 residents -- a net loss of 37,508 when arrivals are factored in -- a record high for the state.
Over the last three years, the exodus has increased from one resident every 7.8 minutes in 2013 to the current rate of one every 4.6 minutes. Over the last 16 years, the outflow has resulted in a net loss of 1.22 million residents. At the current rate, Illinois' population will drop below Pennsylvania's next year, dropping it to the sixth most populous state in the nation.
"Imagine the entire population of Peoria, Illinois’ seventh-largest city, all picking up and moving across state lines in one year, never to work, pay taxes or create jobs in Illinois again," Illinois Policy Institute Vice President of Policy Michael Lucci said in an article on the group's website. "That’s equivalent to what happened to Illinois over the past year: New migration data from the U.S. Census Bureau shows that from July 2015 to July 2016, Illinois lost 114,000 people, on net, to other states, a record high for the Land of Lincoln."
Illinois continues to lose residents while lawmakers argue over reforms and the budget. The top reasons cited for leaving the Land of Lincoln include high taxes, the government and job or educational opportunities.
Illinois has among the highest property taxes in the nation, second only to New Jersey. Combined with the 3.75 percent income tax on net income and other local taxes, the state's taxpayers carry a heavy burden.
The IRS migration data shows that the workers who left the state the fastest between 2011 and 2014 were under age 35. The next fastest group was between the ages of 35 and 44, then 45 to 54.
Businesses also pay high income taxes, at a rate of 5.25 percent of net income. In addition to the business income tax, businesses are hit with heavy regulations and fees compared with other states in the nation. Illinois ranked 48th out of 50 states in Chief Executive magazine in 2015. Only New York and California were ranked lower. Factors cited in the rating included taxation and regulations, workforce quality and living environment.
The cost of workers' compensation insurance is one factor in businesses moving across state lines to more business-friendly states. Manufacturing and other "high risk" businesses pay double and triple the premiums for workers' compensation insurance due to Illinois' current regulations. If a business is found to be at fault in a worker's injury, or having aggravated an existing injury, its insurance pays out for the injured worker.
"Illinois’ out-of-balance workers’ compensation laws contribute to the Land of Lincoln’s loss of industrial investment and blue-collar job opportunities," Lucci wrote in an article published on the website Reboot Illinois in November."Illinois manufacturing firms often cite workers’ compensation as a primary reason for the loss of rewarding industrial job opportunities in Illinois."
The Illinois Department of Employment Security (IDES) said the state lost 2,800 trade, transportation and utilities jobs; 2,300 construction jobs; and 700 manufacturing jobs in November. The modest gain in jobs was due to increases in white-collar occupations. The loss of blue-collar jobs is driving workers from the state.
The resistance to any reforms in the General Assembly has hampered the state's ability to slow job losses, keep existing businesses and attract new businesses. The budget stalemate, caused by a power struggle between Gov. Bruce Rauner and House Speaker Mike Madigan (D-Chicago) over reforms and a balanced budget, has kept the state in a downward spiral of increasing costs, unpaid bills and rising taxes.
The economic uncertainty is expected to continue pushing businesses and families out of Illinois, as legislators continue to clash over whether to implement reasonable reforms to encourage job growth and a balanced budget.
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