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ILLINOIS’
INCOME GROWTH SECOND-WORST IN THE NATION
Illinois Policy Institute/
Vincent Caruso
Amid two record-breaking income tax hikes,
growing property tax bills and population decline, the Land of Lincoln’s
income growth is trailing the rest of the nation.
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 The end of 2007 brought economic distress nationwide with the
painful arrival of the Great Recession. And more than a decade later, a recent
study has found, personal income growth in Illinois continues to trail nearly
every other state in the nation.
The study, released Sept. 10 by Pew Charitable Trusts, shows Illinois’ average
annual income growth since late 2007 has been a meager 0.7 percent after
adjusting for inflation – tied for second-slowest in the nation alongside
Mississippi.
To put Illinois’ laggard income growth in perspective, the
study recorded an average personal income growth rate of 1.6 percent for the
nation as a whole – almost double Illinois’ personal income growth rate.
Connecticut, with a 0.6 percent personal income growth rate over that period, is
the only state that performed worse.
Illinoisans should wonder why their personal wealth has fallen behind that of
their national peers. The answer can be attributed to a series of major policy
failures at the state level.
Even compared with the nation’s tepid post-recession recovery, Illinois’ uphill
economic climb had begun near the back of the pack. The state’s
worst-in-the-nation pension debt coupled with its failure to control wasteful
spending had fostered uncertainty, leading many to fear tax increases were on
the horizon.
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Those fears were vindicated when a pair of record
income tax hikes – one in 2011 and another in 2017 – punished the
state’s economy. An Illinois Policy Institute study found the 2011
income tax hike severely hampered job creation and wage growth in
Illinois, ultimately costing the state economy $55.8 billion in real
GDP. The subsequent income tax hike is expected to inflict similar
harm.
Credit rating agencies have also taken note of Illinois’ policy
failures. An Aug. 27 report by Moody’s Investors Service revealed
that the state’s staggering 601 percent pension debt-to-revenue
ratio is the highest on record for any U.S. state. Illinois’ credit
rating remains the lowest in the nation.
Illinoisans must pressure their lawmakers to enact the reforms
needed to reverse the state’s fiscal trajectory. When Springfield
reconvenes next session, serious reforms such as a smart cap on
state spending and changes to the Illinois Constitution’s pension
clause need to be on the table.
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