We are going to be seeing a lot of stories like this in the not very distant future. From Ted Dabrowski and John Klingner at wirepoints.com:
Don’t expect Illinois millennials to ignore the state’s collapsing finances for long. They’ll soon be asked to bear more and more of the financial and economic costs, from higher taxes to diminishing job prospects to cuts in funding for their kids’ schools. That’s when Illinois’ millennials will either fight back, as they’ve done on many national issues, or they’ll simply leave the state. It’s that simple.
A first sign of that fight came in a recent Crain’s opinion piece – A millennial’s call for fiscal sanity in Illinois. The author Thomas Dowling says “Our generation’s economic future will largely depend on Gov.-elect Pritzker’s ability to balance the state budget, which means solving the state’s pension crisis.”
Dowling seems to get how bad things are. He realizes that even the best-case pension scenario will still be painful for everyone. “Even with reform, residents under the age of 30 – my peers and the children of many of Pritzker’s transition team members – will pay for their parent’s unfunded liabilities for the rest of their lives. We will face the consequences of higher taxes and reduced government services. We are the ones that will shoulder the $129 billion for the foreseeable future.”
Dowling calls for Illinois millennials to get engaged. Kudos to him for the wake up call.
But the question of what exactly Dowling wants millennials to fight for remains. He doesn’t make clear whether he favors passing the tough reforms like a constitutional amendment so the state can restructure not-yet-earned pension benefits, or just more tax schemes and the pension “fixes” Pritzker is considering. (More on Pritzker’s progressive tax scheme and his potential pension fixes here, here and here.)
If Dowling favors more taxes and “fixes”, he’ll need to revisit his opinion piece – especially the line where he says, “We are the ones that will shoulder the $129 billion for the foreseeable future.” Dowling wrongly assumes Illinois millennials will stick around to pay the higher tax bills and face the cuts in services. But millennials are highly educated and an extremely tech-savvy generation. They don’t have to stay in Illinois to find their future.
The data already tells us they aren’t.
Illinois has lost a net of 107,000 millennials and their dependents to other states across the nation since 2012, according to the Internal Revenue Service.
It’s a stunning number.
Illinois can’t have a prosperous future without the next generation of emerging professionals, digital natives and echo boomers, as millennials are also known.
There’s no good analysis on why millennials leaving, other than anecdotes. But it’s safe to say that they’re finding better opportunities elsewhere.
Illinois finances and economy are lagging the nation, a consequence of too much debt, spending and corruption.
There will be fewer and fewer opportunities to succeed as the state’s negative trends accelerate.
And as millennials come to appreciate the debt load they’re expected to burden over the next two to three decades – the average Chicago household is on the hook for at least $125,000 in state and local pension debt – expect more of them to head for the border.
The millennial voice
The millennial voice could make the difference between whether Illinois fixes its pension mess or not. But what they demand from Pritzker, House Speaker Mike Madigan and the legislature will make the difference between whether the mess is fixed or just kicked down the road.
The worst thing millennials could do is push for more taxes – especially a progressive tax – and yet another set of can kicks. When that doesn’t work, highly-mobile millennials will flee in even greater numbers, leaving whoever is left to pay for the mess.
Which brings us back to Dowling and his call to action. He and other engaged members of this cohort are going to have to convince millennials to stick around for the fight.
At Wirepoints, we think Illinois is worth fighting for. But just like Dowling, we have to make the case for what Illinois need to do. We’re fighting for tough spending and pension reforms, including a constitutional amendment on pension benefits, not more can kicks. We hope Dowling and his peers will join us.
What millennials need to know about the pension mess, tax hikes and Pritzker’s plans:
On Pritzker’s’ proposals and progressive taxes:
- What Pritzker’s progressive tax rates will probably look like
- Yes, middle-income Illinoisans would get “socked” under Minnesota’s tax scheme
- Pritzker “Seriously Considering” Two Very Bad Ideas
On the pension crisis:
- $125,000: The pension debt each Chicago household is really on the hook for
- It’s the pension promises, stupid!
- Understanding the numbers behind Illinois’ dramatic pension shortfall
- Illinois pensions sink during record bull market run
On tax hikes:
- Progressives Zero In On Exit Tax On Illinois Wealth
- Chicago Fed’s answer to Illinois pension crisis is a statewide property tax