* We talked about the new Illinois Economic Policy Institute study the other day. From the Tribune’s coverage…

From 2013 to 2022, Illinois saw significant growth in its number of higher-paid taxpayers, including a 52% increase in those earning $100,000 to $500,000 per year, and an 80% surge in taxpayers earning more than $500,000 per year.

Inflation may have helped drive some of that increase. Raises in the minimum wage also may have helped reduce the number of people claiming the earned income tax credit by 11%.

People who moved into Illinois were better educated and more likely to come to attend college than those who moved out. In census surveys, the most common reasons people cited for leaving were work, such as a new job or transfer, along with shorter commutes, better schools, housing and family ties. The main reason most stayed was to be near family.

Those who left Illinois earned 16% lower incomes, were less than half as likely to be homeowners, and less likely to be married than those who stayed. Pandemic-related business closures may have driven some lower-income workers to leave, creating further inequalities between high- and low-income residents.

* I reached out to IEPI economist Frank Manzo to ask him about an Illinois Policy Institute examination of IRS data this past June…

Data from the Internal Revenue Service shows Illinois in 2021 lost residents of every age and income level, with the majority of them prime working-age adults and earning more than $100,000.

Of the residents who left, 51% made more than $100,000 per year, 25% made less than $50,000 and 24% made $50,000 to $100,000.

The IPI ran a similar analysis in 2022.

* What explains the discrepancy between the two looks at tax and other data? Here is Manzo’s response…

The short answer to your question is that the Illinois Policy Institute’s analysis is incomplete, leading to a distorted picture of migration changes in Illinois.

Professor Robert Bruno from the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign and I examined a decade of Illinois Department of Revenue tax statistics and a decade of household survey data from the Current Population Survey to assess broad migration patterns (1). With this data, we are able to assess who is moving out of and into Illinois. Importantly, we also look at who chooses to stay. To ensure robustness, our report looks at multiple sources, looks over a long period of time, and includes more observations rather than fewer. I’ve bulleted a few methodological distinctions below.

• First, by focusing exclusively on “net domestic migration,” or people moving within the U.S., the IPI omits people from abroad—which includes active-duty military, students, and expatriates as well as highly-skilled immigrants, asylum-seekers, refugees, and the undocumented. Illinois is an importer of people from abroad, 62% of whom are foreign-born.

• Second, a missing group in IRS tax data is those who do not file taxes. People who don’t earn incomes are not included (but are in surveys). If those individuals are more likely to move out, then the average household income of leavers is lower than a reliance on IRS data would indicate.

• Third, tax return data can be somewhat misleading without understanding what happened to people who stay. As a simple example, let’s say a cook quits an Illinois restaurant and moves to Florida. Illinois loses that tax return. However, if a formerly unemployed resident is hired to fill that position, then there is no net loss in tax returns to the state. The restaurant may even increase the wage to attract a new cook, producing a higher income and more tax revenue. But in the net migration data from the IRS, all that shows up is the lost resident and lost taxes. It is worth noting that the total number of Illinois-resident tax returns grew by 200,000 between 2010 and 2020 and increased in 8 out of the 10 years.

• Similarly, the survey data—considered with economic data—dispels the mythology around why people stay or leave Illinois. The data show increases in taxpayers, lower incomes and disproportionate reliance on government assistance among those who leave, and that migrants tend to be younger (others find that “young people move more” as well) and move for job-related reasons—not because of estate taxes or state and local taxes.

• Finally, in reporting income changes, a focus on 2020 and 2021 is a potentially selective use of data during a once-in-a-century pandemic. We note in our study that post-pandemic dynamics may have resulted in new migration patterns that diverge from earlier trends, but recent data appears to show migration returning to pre-pandemic trends and levels.

Overall, complete datasets and additional context are required for a sound understanding of Illinois’ economy, migration patterns, and the likely impact of public policies.

People should remain wary about Census population estimates going forward. Unfortunately, the Census projections continue to rely on a mix of the official 2020 Census count (which likely undercounted Illinois by 2%), the “Vintage 2020 Population Estimates” (which only thought we were going to have 12.59 million residents, itself a 2% undercount from the official count), and net domestic migration data that led to the “wildly erroneous” projections last decade (2).

To be sure, our report supports a finding that the economy is in transition. As Illinois became a $1 trillion economy, its migration patterns made the state more urban and suburban, more educated, and higher paid. But we also detail how those who are being left behind in under-resourced areas are disproportionately leaving the state. It is for this reason that Professor Bruno and I include potential policy options to suggest how Illinois could better attract and retain people, based on a review of the data on who leaves, who arrives, and who stays—instead of relying on an incomplete picture with key pieces of the puzzle missing.

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1) The Illinois Economic Policy Institute (ILEPI) often partners with academic institutions to ensure that our approaches are methodologically sound and that we are calling balls and strikes in our analyses.

2) The Census’ net domestic migration numbers suggested Illinois lost 966,000 residents from 2011-2020. This means Illinois added at least 948,000 more people from births minus deaths and from net immigration in order to get to a minimum of -18,000 between the two Census counts. Where did these extra 948,000 people come from? Those who assume 100% accuracy of the net domestic migration data should be asked to answer that.