Recent Migration Trends in Wisconsin and Other States

Recently attention in Wisconsin has turned to the labor force as a key factor affecting the state economy, highlighted by a new state initiative to recruit workers to the state. The labor force in Wisconsin declined in the recession and was flat long after, only surpassing its 2009 level in 2016. One key component in labor force dynamics is migration, which we focus on here.

Wisconsin has experienced a net out-migration recently: the number of individuals moving out of the state (out-migrants) exceeded the number of individuals moving into the state (in-migrants) in each year since 2010. The table above reports recent data from the Census Bureau and the IRS. Up until 2016, the net number of out-migrants (out-migrants minus in-migrants) ranged between 3,459 and 15,130 according to the Census. The number for 2017 is 2,086, the lowest in last eight years and a sharp decline from 11,439 in 2016, and it accounts for about 0.04% of the state population.

Besides the Census, the IRS also measures interstate migration based on year-to-year address changes reported on individual income tax returns filed with the IRS. According to the IRS data, Wisconsin lost about 5,000-10,000 individuals in each year from 2010 to 2016. Due to different data sources and methodologies, the numbers from IRS and Census are not exactly equal to each other, but they are roughly comparable, and both indicate that Wisconsin has experienced persistent net out-migration recently.

The above table breaks down the 2017 domestic migration data from the Census to compare the differences in gains and losses across states and put the changes in Wisconsin in context.  In 2017, Wisconsin stood at 25 when states are ranked by the net number of out-migrants. New York, California and Illinois are the three states with the largest out-migration in 2017, all losing more than 100,000 residents. When states are ranked according to the percentage of the population lost through net out-migration, Wisconsin stands at 26. Wyoming and Alaska are the top two states in this rank, with each of them losing over 1% of the population to other states.  Even in previous years when Wisconsin had higher out-migration of 10,000 or more it was only about 0.2% of the population, and thus a significantly smaller loss than many other states have experienced recently.

On the other end of the spectrum, the top three states with the largest in-migration, Florida, Texas and North Carolina, are all in the South. In percentage terms, the largest gainers are Idaho and Nevada, both of which are mountain states and both gained over 1% of the population from other states. Overall, the data reflects a persistent trend over recent years where the population has generally moved from the Northeast and Midwest to the South and West.

One advantage of the IRS data is it breaks out interstate migration by demographics like income and age. From the most recent data, we can see that Wisconsin lost 7,078 individuals, or 0.15% of its population, between 2015 and 2016. Looking across age groups, most of the loss comes from individuals under age 26. This group lost 2,289 individuals, which accounts for about one third of the total loss and 0.57% of the group’s population. This should be a concern as the out-migration of young people reduces the state’s labor force in the future. Actually, consistent with this out-migration of individuals under age 26, Wisconsin’s labor force has been growing at a slower pace than the national labor force recently. Consistent with the observation that individuals tend to move to warmer areas after retirement, another group of individuals with a high out-migration rate are those between ages 55 and 65. This group lost 0.17% of its population between 2015 and 2016.

Looking across income categories, the group which lost the most in numbers was those individuals reporting an annual income of $10,000-$25,000. Part of this is due to the high out-migration rate of young individuals, who tend to have a lower income. In fact, the loss was concentrated in the under 26 and 26-35 age groups.

In percentage terms, the income group with the highest out-migration rate are those with an annual income of $200,000 or more. This group lost 0.42% of its population between 2015 and 2016. Some of this is also correlated with age, as with the high out-migration rate of older individuals who tend to have a higher income.  However across all age groups except age 26-35, the highest out-migration rate occurred for the highest income group.  Some of this may be due to the increased ability to be mobile which comes with income, but it may also reflect state policy, such as the relatively high income tax in Wisconsin.

It is interesting to compare the migration patterns in Wisconsin with those in Illinois, which has also experienced net-outmigration recently, but on a much larger scale. According to the Census, Illinois lost 114,779 individuals, or 0.9% of its population in 2017. Similarly, the IRS data shows that Illinois lost 86,858 individuals, or 0.8% of its population between 2015 and 2016. Unlike Wisconsin which has experienced a sharp decline in out-migration in 2017, there is no sign that out-migration declined in Illinois.

Looking across age and income groups, one significant difference from Wisconsin is that individuals under age 26 accounts for a relatively smaller fraction of the total loss in Illinois, where most of the loss comes from individuals between 25-45. Additionally, the out-migration rate seems to be more uniformly distributed across age and income in Illinois: it ranges between 0.58% and 1.1% across age groups and between 0.53% and 1.42% across income groups. With the total out-migration rate at 0.8%, these ranges seems relatively tight.  There is a slight increase in out-migration rates at high incomes, which again may partially reflect the recent policy changes in Illinois, as well as expected future taxes due to unfunded pension liabilities.

In summary, while both Wisconsin and Illinois have experienced net out-migration recently, there are some significant differences between the two states. The scale of out-migration is much larger in Illinois, and there is no sign that it will slow down. Also, the rates of out-migration were roughly similar for all age and income groups, with some increase at the top end of the income scale. For Wisconsin, the size of out-migration is much smaller in both absolute and relative (to the population) terms, and there is some sign that it may be slowing down. Also, the out-migration is more concentrated among those under age 26 and those nearing retirement.  Clearly more work must be done to sort out the causes underlying these migration patterns, and the extent to which they may be influenced by policy.

Media Coverage: Wall Street Journal