The Policy Shop: The shrinking city

This episode of The Policy Shop is by Bryce Hill, director of fiscal and economic research.

When Democrats come to Chicago Aug. 19-22, they will find plenty of elbow room: people are leaving, and not because of the potential for protests to turn ugly near the United Center.

Chicago has lost nearly 130,000 residents since 2014, marking nine straight years of population decline. The city’s population was last this low a century ago.

While Chicago’s population increased rapidly in the first half of the 20th century, the population peaked in 1950 at just over 3.62 million residents. Since then, the city population has declined: steadily from 1950-1990, then a fluctuating drop since 1990.

From July 2022-July 2023, Chicago lost more than 8,000 residents, the third-largest decline of any city in the nation. If post-pandemic population trends hold, Chicago will soon be overtaken by Houston for the title of America’s third-largest city.

It’s not just Chicago that is losing. All of Illinois is shrinking, with a total population drop of 548,916 in the past decade.

Population loss in Chicago – and Illinois in general – can be attributed to one cause: people moving out. More people are moving out of the city than are moving in. International migration continues to be a boon to population counts and births still outpace deaths, but Chicago’s population decline is because Chicagoans are leaving.

The latest data from the Census Bureau confirms Illinois’ outmigration and population crises are ongoing and continue to plague the state and Chicago. While politicians have disputed the numbers, Illinois’ population loss and outmigration crises have been repeatedly confirmed by data from the U.S. Census Bureau, IRS, as well as U-Haul, United Van Lines and Allied Van Lines moving companies.

The new city-level data does not break down population change by components such as domestic and international migration, births and deaths. Illinois’ population declines during the past decade have been solely attributable to people leaving for other states. The same is very likely true for Chicago – the city’s population is declining because residents are fleeing.

When taxes were not a response option, surveys of those who have left the state showed the major reasons were for better housing and employment opportunities. The Chicago metro area’s unemployment rate is the highest in the nation among large metropolitan areas and Illinois unemployment remains well above the U.S. average.

Both housing and employment opportunities have been damaged by poor public policy in Illinois. Democrats hold supermajorities in the Illinois General Assembly, occupy the governor’s office and Chicago City Hall. So, who is responsible for the public policies that drive up taxes and damage housing and job markets? Who is to blame for Chicagoans and Illinoisans leaving?

Good questions to ponder as the nation’s Democrats consider what they will tell voters about how they would govern.

Last year, polling conducted for the Illinois Policy Institute showed 34% of Chicagoans would leave the city if given the opportunity, with 39% of those who said they would move citing taxes and affordability as a reason.

Polling from NPR Illinois and the University of Illinois found 61% of Illinoisans thought about moving out of state in 2019, and the No. 1 reason was taxes.

Despite repeated evidence of population decline being driven by a hostile tax environment that does little to foster job and housing opportunities for residents, Mayor Brandon Johnson is boosting his calls to raise taxes on Chicagoans.

Voters rejected Johnson’s signature real estate transfer tax hike at the polls in March, but the mayor has said he hasn’t given up on raising $800 million in new taxes. Johnson on May 8 was in Springfield seeking $1 billion in additional funding from the state for Chicago Public Schools, $900 million in bond funding for a new Bears stadium, increased funds to remove lead service lines and additional tax revenue to be shared with the city.

Gov. J.B. Pritzker just signed the state’s largest budget ever at $53.1 billion, which required taxing Illinoisans an extra $1.1 billion. The state budget is now $15 billion bigger than when Pritzker took office.

Here’s something for Democratic delegates to ponder: Maybe more government and more taxes is not the answer. Maybe a better business climate that fosters better jobs and housing will stop Illinoisans from seeking those things in other states.

Then maybe their next Chicago convention will find cheering crowds instead of chanting protesters, or even worse: silence.