Brain Drain in Downstate Illinois

April 25, 2014

When Archer Daniels Midland told Decatur city officials that it would be moving its global headquarters to Chicago, city councilman Pat McDaniel said the news hurt, but that it wasn’t surprising. “Young people don’t want to locate in Decatur anymore, at least we’re starting to see more and more people want to move to places like Chicago.”

And according to IRS and US Census data, McDaniel might be right. People are moving, around Illinois and out of the state all together. For at least the last fifteen years, more people have moved out of Illinois than have moved in. In order to keep businesses and communities thriving, Michael Lucci of the Illinois Policy Institute says that trend has to stop. It’s costing the state lots of money in tax revenue. In addition, Lucci says it’s a specific demographic that appears to be moving out.

“It’s earners that are making above the average household income who have college degrees that are leaving,” he says, “with an aging tax base and business climate where attracting big corporations to locate in a particular space is highly competitive, something has to be done.”

City leaders like Pat McDaniel agree. The question is – how? 

Kathy Lively has some suggestions. After the shutdown of the Maytag plant that employed nearly 1,000 people in Herrin, Illinois, city residents rallied together to ensure those workers found new jobs and stayed in town.

During this Focus interview, Scott Cameron talks with Pat McDaniel about what it means to Decatur that ADM is moving its global headquarters and some of its employees. Then we’ll hear from Michael Lucci and Kathy Lively from Mantracon, a company that helped the city of Herrin take care of its laid-off workers when Maytag left in 2006.

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Transcript for file: focus140425a_part1.mp3

Good morning I’m Scott Cameron welcome to focus from Illinois Public Media. Illinois has a people problem too many are leaving and they tend to be the people who are earning more money as brain drain has been going on for years especially challenging for many downstate communities who have over the years lost factories or other major employers to Chicago or nearby states in a few minutes to talk about one southern Illinois town that seems to have avoided this fate and later in the hour wrap up our series on mental health with an issue that came up during a recent Twitter chat the evolving language around mental illness. But first what to do about the downstate Illinois brain drain. If you’re considering a move out of downstate Illinois if you’re a company having trouble hiring here tell us your story eight hundred two two two nine four five five . Producer Lindsey Moon also is on Twitter that’s at Focus five eighty and you can e-mail us we’ll dash talk at Illinois dot edu Pat McDaniel is a city council member in Decatur. Nearby here we’re just a few months ago A.D.M. announced it was moving its corporate headquarters to Chicago after more than four decades in Decatur. Pat McDaniel joins us now by phone.

Welcome to focus. Well good morning Scott. So how did you find out that A.D.M. or at least its global headquarters was leaving

. Well we received an invitation from A.D.M. asking us to come to community leaders and council members to come to a luncheon and to hear about the future of the A.T.M. which is. There had been rumors around for several years with the new C.E.O. that was really the first outside C.E.O. to come into the caterer that you know the corporate headquarters may move up to Chicago and title out who took over bought out eighty eight Bally moved their headquarters about two years ago to Hoffman Estates up near Chicago. You know you kind of listen to him you hope oh I hope it’s not true and you kind of have an inkling right .

So we had our luncheon and they embargoed as we were leaving having lunch because they were going to make their announcement to their employees that one and we had to pledge that we would not leave the table and run to the phone and and tell everybody that that they were going to be moving their world corporate headquarters out of Decatur So who’s They say you can’t leave the table you change from who’s at this. Mabel Well we had various community leaders we did have one media person that was there and we had the mayor and several council members and economic development people. So there were just a variety a wide variety of community leaders.

It’s just it’s quite a juxtaposition of the leaders in the community being told when you stay at the table. Well I restrains moment.

Yeah I understand they wanted to tell their employees first before it got into the music and I can understand that.

True and you said that you said before that in that moment you you reach for a piece of cheesecake you call what you tell them.

Yeah I mean you knew something was up and when they made the announcement my head dropped down it and I haven’t finished my you know I had my dessert and little comfort food of the cheesecake.

I mean you didn’t know what else to do I mean there wasn’t anything you could say and I mean they even did mention after one of the community leaders that now you know there’s going to be community leader groups are going to try to see that that you don’t move and offer all kinds of incentives and they were point blank and said no you know we we’re going to keep our North American headquarters in Decatur. Forty four hundred employees that are employed in Decatur stadium but we are moving our our corporate headquarters World Headquarters elsewhere and at that time they did not say where they were looking at.

So and you’ve lived in Decatur a long time.

I’m born and raised in and been active in community events and organizations and also you know I was a reporter for the Decatur Tribune for eight and a half years.

So you see and you know this community you know this town the you you love this town of these you’ve been there a long time. This is you’ve seen other towns sort of run through this similar type situation. You know what this must a been hard for you to hear.

Well it was matter of fact that was a pretty bad week for Decatur. You know that the announcement was that A.D.M. was at the beginning of the week and then on the Friday of that same week which was even to a certain extent a little worse is that Caterpillar announced they were laying off a number of their white collar workers at the local chapter. Caterpillar plant here Rich. Although they’ve never said how many I’ve heard kind of out of one hundred fifty people white collar so that kind of almost hurt is more because most of those people live in Decatur where you know A.D.M. was only going to move about fifty of their key people up to their new corporate headquarters in and not all of those people lived indicator that was a double whammy week on on Decatur. But we’re a very resilient community we’ve had our ups and downs like many other communities and we just say OK this is the issue now we move on and see where we can progress from there to progress well again one of the key factors that A.D.M. has been building if you’ve been hearing about the inland port is utilizing the three world class or country class railroads that come into Decatur and utilize them and they build an inland port not only for their own shipping needs but now it’s open for any variety of shippers and companies throughout the Midwest. You know we’re looking at where within. In a one hundred million people within you know about ten hours of Decatur which is great. So again this is a real game changer for Decatur. The opportunity to be utilized by many companies. We’re hoping some distribution companies will be set up here in to take advantage of that to facilitate and bring some new jobs. So we’re doing that so that’s a key element.

We’re also making sure that our infrastructure our basic infrastructure is being improved and built because if you’re going to keep your present industry in the city you have to make sure your basic infrastructure is in in good shape and other companies looking at your community have to make sure that you’re going to have the infrastructure to meet their needs and try to attract new talent companies things like that in the town right.

Michael Lucci is director of jobs and growth for the Illinois Policy Institute a research group that focuses on free market ideas. He’s been analyzing a lot of the data on people and companies leaving Illinois in downstate Illinois in particular. Michael joins us now on the phone Michael nice to talk.

It’s nice to talk to you too.

So you’ve heard McDaniel are talking about the situation in Decatur we’ve seen similar stories play out across Illinois. How common is dictators experience there in terms of a decline in business and population and as he was talking about before high earners specifically the cator situation is actually quite normal in Illinois.

Most of the industrial counties of Illinois have lost population and lost income to other parts of Illinois and more importantly to other states in the country so they cater and had a net loss of people on income . Both the Cook County but also to the rest of America. What’s important to us in this discussion is that Illinois it still is losing a lot of people to other states in the country. We lose people to almost every state on net. And what I mean by that is when you take the number of people who move from say Illinois to Indiana and you find a difference with people move from Indiana Illinois Illinois is losing that net exchange every year for the past twenty years. So what we want to look at is ways to make the state of Illinois more competitive more attractive to businesses such as A.D.M. which is been Illinois for a long time but also small businesses large businesses that want to grow here. We want them to feel that this is a place that will foster their growth.

Looking at the towns as people do start to sail away from some of these places. How does that kind of loss of people and then that that income affects the town.

It it’s devastating for those kind of towns and I have to say I can sympathize specifically with the Cater I’m originally from a place called Youngstown Ohio which is known as America’s fastest shrinking city. We peaked out in the sixty’s and seventy’s and have been declining since it was at the Firestone plant that Youngstown was a steel city.

OK are still with us.

But these cities are faced with a number of problems one of the problems that popping up in the last ten years is their pension problems. These municipalities have promises to pay pensions to city workers and teachers and they’re losing population they’re losing tax payers to fund those things. So the problem is building upon itself as more financial obligations are coming due.

The people we need to pay those obligations are leaving they’re leaving for other parts of Illinois and they’re leaving for other states in the country and that’s another point here that the Midwest in general Illinois in particular has trouble holding onto college graduates and some of these you know high paying skilled fields technology comes to mind health care things like that. How does that play into this.

Sure. We we lose a lot of highly skilled workers and that’s referenced in the income of those workers every single year. We’ve lost more people than we’ve gained in every single year. The average income of someone who leaves has been higher than the average income of the people who come in . The average This difference is nearly ten thousand dollars a year. So these net losses really compound the state has lost a total of forty billion dollars of annual income and that that is income that would be taxed at the state local level which for Illinois on the whole is about ten percent. So that’s about four billion dollars of state revenue that we lose every week every single year.

And if you’re losing some of the younger more skilled higher paid and some case workers do we see then of the people who are staying maybe older may use more health type resources may rely more on the pension benefits and things like that so you have this if you’re not able. So some of those needs later on.

Yes we see a lot of tech workers moving to California which on the whole is not the most business friendly environment but they still have a lot of good things happening in pillock on value that it attracts a lot of tech workers. University of Illinois is one of them has a great tech and engineering program graduate programs and they lose about eighty percent of their graduates to other state a lot of that goes to Silicon Valley. But we’re also seeing the state that’s really attracting a lot of our talent right now is Texas in the most recent year virus data. Texas put more people than any other state in the country and Florida and Indiana were other states that really poured a lot of Illinois talent. Why why those states Texas specifically and Florida also are zero income tax which really promotes jobs growth and if we look at somewhere like the Cater if we look at if we look at other cities like Peoria that have very high jobless rates Rochefort these cities all have double digit jobless rate. So people have to go where there is opportunity and there is tremendous opportunity in Texas. They’ve been growing up . They’ve been growing jobs every month. The great recession which hit Illinois very hard with almost little more than a blip in Texas. They they continue growing jobs as soon as the recession ended they started growing more and more jobs. And I hear every week from people who used to live in Illinois and have since moved their business to Texas or just move their family to Texas because it’s easier to do business there. They’re taxed much more lightly and they’re regulated much more lightly there.