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ILLINOIS
HAS WORST PERSONAL INCOME RECOVERY IN MIDWEST, 2ND-WORST IN U.S.
Illinois Policy Institute
A new study by The Pew Charitable Trusts
shows Illinois trails all states but Nevada in personal income growth
since the Great Recession, with a growth rate half that of Illinois’
neighbors.
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 A new report from The Pew Charitable Trusts shows Illinois’ personal income
recovery since the Great Recession is the worst in the Midwest and the
second-worst in the country. The report reveals Illinois’ dire need for economic
reforms to revitalize its moribund economy, which isn’t producing enough
well-paying jobs to keep hard-working Illinoisans in the Land of Lincoln.
According to the Pew study, personal income in Illinois has grown at an
annualized rate of only 0.7 percent since the recession began in the fourth
quarter of 2007. Only Nevada has fared worse: the Silver State experienced one
of the worst housing declines in the country, along with massive losses in
tourism, as a result of the Great Recession.
Most of Illinois’ border states have seen personal income grow at twice
Illinois’ annual 0.7 percent growth rate. Kentucky had 1.7 percent growth,
Indiana experienced 1.6 percent growth, Iowa saw 1.5 percent growth, and
Wisconsin had 1.4 percent growth. Michigan’s 1.3 percent growth rate and
Missouri’s 1.2 percent rate also bested Illinois’ anemic 0.7 percent rate.
Personal income is calculated before taxes are deducted. Since the recession
began, Illinois taxes have gone up across the board, with hikes in income taxes,
sales taxes and property taxes. Not only is personal income growing slower in
Illinois than in other states, but the taxes taken out of personal income have
also gone up faster in Illinois than in other states.
There are eight years of state personal income data since the Great Recession
began, running from 2008 to 2015. Indiana, which has enacted tax and regulatory
reforms, has seen better personal income growth than Illinois in all of those
eight years.
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 Illinois personal income growth has been so weak because the
state’s economic climate is so inhospitable to both workers and
businesses. As of May 2016, Illinois is the second-worst state in
the country for putting people back to work since the recession
ended. Illinois still has 110,000 fewer people working than before
the Great Recession began.
Faced with such a weak employment recovery, working-age Illinoisans
are increasingly leaving the state. Millennial taxpayers are leaving
Illinois most rapidly of all age groups. Weak income growth,
together with high out-migration, is a recipe for financial disaster
for a state with unsustainable debt at both the state and local
levels.
Illinois must control spending because the government-worker pension
debt that has accrued is already beyond what taxpayers can afford.
The state needs economic reforms to encourage jobs growth and
broaden the base of taxpayers. Only with more workers in jobs and
higher pay at those jobs will state income grow. Without a
competitive economic environment, Illinois workers will continue to
see their income growth weaken, and more and more residents will
have to leave the Land of Lincoln for better opportunities in other
states.
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