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A deeper dive into the new Illinois Economic Policy Institute study

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Illinois

* 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.

—————————————————-

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.

posted by Rich Miller
Monday, Oct 16, 23 @ 9:35 am

Comments

“The short answer to your question is that the Illinois Policy Institute’s analysis is incomplete”

That statement is unnecessarily polite.

IPI is the master of the gish-gallop, but with numbers instead of words.

By the time someone points out the missing data which drastically changes the outcome of the analysis, they have already moved on to another group of deceptively selected numbers.

Comment by TheInvisibleMan Monday, Oct 16, 23 @ 9:49 am
— leading to a distorted picture—

Data distortion is what the Illinois ‘Policy Institute’ does.

Comment by King Louis XVI Monday, Oct 16, 23 @ 10:03 am
Very good information herein. It is a shame we “must remain wary” regarding population estimates going forward, but the explanation makes sense. If the estimated reported herein is possibly -18,000 across 10 years, then the reasonable conclusion is no meaningful growth or loss for a population of about 12.8 M citizens.

Comment by H-W Monday, Oct 16, 23 @ 10:08 am
Give Manzo points for diplomacy. That was way nicer than IPI propaganda deserves.

Comment by Rufus T. Firefly Monday, Oct 16, 23 @ 10:17 am
===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.===

Those regurgitating the line of negativity, do these folks purposely ignore the math, or are they so blind to truths that the want for negative must be fed, first and last?

Comment by Oswego Willy Monday, Oct 16, 23 @ 10:33 am
-the main reason most people stayed was to be near family.-

This here… if people could pack up and move families in all you’d see out migration like this place was a literal hell. Statistic gerry meandering aside. Those who complain most about the state are unwillingly to accept the reality of having to uproot and move elsewhere possibly away from family.

Comment by An Idea Monday, Oct 16, 23 @ 10:46 am
===This here… if…===

A textbook, perfect example on why the IPI grift works, and why IPI can find easy marks outside of the “whale” marks of Uihlein.

Here’s the sitch;

You can’t say people are leaving in droves… then say people wanna leave in droves but can’t.

It’s literally justifying an anger pushed to get IPI cash to pay salaries, rent, “expenses”, so the grift can continue another day.

One only needs to look at how IPI did when they governed Illinois… those whole weeks…

“If” is an excuse.

When I leave, I’ll be quite sad but it won’t be because anger or wanting to prove my anger true… and tethered folks can move, it’s a choice.

Comment by Oswego Willy Monday, Oct 16, 23 @ 11:01 am
IEPI gets a lot of funding from big labor so I’m skeptical either side truly presents all the facts.

Thinks tanks are born out of confirmation bias.

Comment by Facts Monday, Oct 16, 23 @ 11:06 am
===so I’m skeptical===

Which facts make you skeptical.

Let’s talk in agreed facts that you are having trouble seeing.

Thanks.

Comment by Oswego Willy Monday, Oct 16, 23 @ 11:13 am
IEPI was being polite. The accurate response is that IPI gets the result it wants to serve their negative narrative.

Comment by Norseman Monday, Oct 16, 23 @ 11:13 am
I’m skeptical of an institution that gets funding on one side or the other.

Ignored my second comment completely as you do you OW.

Comment by Idea Monday, Oct 16, 23 @ 11:15 am
===Ignored my second comment===

Nah.

I’m tired of “both sides” when a refusal to talk facts is the want.

Which facts confuse you?

Comment by Oswego Willy Monday, Oct 16, 23 @ 11:18 am
IEPI had an article about right to work laws being bad… they get heaving funding from AFL. It is in their interest to support a narrative that supports AFL goals… one being getting rid of right to work laws… for all we know IEPI is cherry picking just as much as IPI… everything should be viewed with skepticism as man is an inherently flawed creature, just sayin…

Comment by Facts Monday, Oct 16, 23 @ 11:22 am
===everything should be viewed with skepticism ===

It would help your case if you had any specific criticism of the data here.

Comment by Rich Miller Monday, Oct 16, 23 @ 11:26 am
===IEPI had an article about right to work laws being bad===

I dunno if that’s relevant here, which is your both sides.

Please, which facts are concerning

Comment by Oswego Willy Monday, Oct 16, 23 @ 11:31 am
Incomplete and distorted.

Or, as Greg Bishop calls it, bread and butter.

Comment by Flyin'Elvis'-Utah Chapter Monday, Oct 16, 23 @ 11:32 am
“… Greg Bishop … [.]” is no longer at WMAY. Friday was his last day, apparently spending more time at Center Square.

Comment by Anyone Remember Monday, Oct 16, 23 @ 12:14 pm
@ Facts

=== IEPI gets a lot of funding from big labor so I’m skeptical either side truly presents all the facts. Thinks tanks are born out of confirmation bias. ===

Either side? Neither side?

Why do you assume all organizations can be assigned to either, or? You apparently want to politicize, rather than criticize.

Comment by H-W Monday, Oct 16, 23 @ 2:08 pm
That third bullet point with the cook example is quite the stretch. Assuming someone unemployed who has never filed a tax return somehow lands a job making more than the person who just left that very position?

==But we also detail how those who are being left behind in under-resourced areas are disproportionately leaving the state.==

Black people. The study specifically states people who have moved out of Illinois are more likely to be Black. Strange they can’t seem to state that explicitly here.

Comment by City Zen Monday, Oct 16, 23 @ 2:33 pm
Need some time to digest the data to draw conclusions, but one thing is clear — information and debate like this is why I come to this site — thank you!

Comment by ARepublicIfUCanKeepIt Monday, Oct 16, 23 @ 4:29 pm
I really appreciate Manzo’s response to your inquiry. I think it goes far in explaining the complexity of what, at the surface, appears to be a simple thing to measure.

Comment by Blitz Monday, Oct 16, 23 @ 4:54 pm