What Are You Gonna Do?

My spouse and myself are blessed to have a large group of friends throughout the Chicago area. That group today sports an age range from their late 50's to early 60's. This year marks a period of time where a large majority of us will turn 60. Most that haven't already reached that plateau will do so within the next 2-3 years. We collectively marked our last important birthday cycle, when we turned 50, by throwing parties. My 50th was memorable because after the party {and after perhaps a few cocktails} I drove my youngest over to Loyola for an emergency appendectomy. Back then most of us were beginning in the early years of sending kids off to college. I had one there already and two still at home. At 60 my group is on the tail end of college. Kids are starting to get married and a few of us are now grandparents. The end game of our working years is starting to shape up. There will likely be no parties this year. COVID has seen to that.

 "What are you gonna do?" That's a question that started to circle among our Chicago friend group a few years back. The question was a nod to where we were in our careers but it was also an acknowledgement of the dire fiscal situation that Illinois, Cook County and the City of Chicago all find themselves to be in. Each of these organizations is fiscally insolvent. I wrote about this issue last winter here, here and here. I had more back then to say about this subject back then but frankly other things became more important to write about.  Never-the-less the events of the past six months have only made the finances of all three entities much more perilous.  Even acknowledging the fiscal problems, our friends talked about what they were going to do mostly in the abstract a few years ago.  Most of our friends either grew up in the Chicago area or have a spouse that did.  Many have deep family ties to the region.  These ties are being further cemented as they begin to become grandparents and if those grand kids are not too far away.   Truly leaving the Chicago region for good was not an option many seriously contemplated.  Not anymore.

"What are you gonna do?"  That question has been more seriously posed to me by more than a few people I know in the past few months.  It seems that last Sunday's riots in Chicago's "Gold Coast" region may have been the final catalyst.  There is a lot more chatter about leaving in text messages and emails from what I can tell.  I've also had three communications with friends/clients since then.  One of those is a friend of mine in Tampa who used to live here and is always telling me I'm crazy to stay where I live.  Another is from an early retiree who's decided to change their permanent residence to their vacation home in a nearby state and will be putting the family house on the North Shore on the market soon.  Another is from a Oak Park lifer who's decided to take a similar job in Florida, commuting  for the next year or so until they figure out what they want to do.  

What has been a trickle of most likely the very wealthy leaving for better climes is probably going to rapidly increase over the next few years, likely at a faster clip than many would have thought only a few months ago.  People that don't leave for warmer places are at least going to consider getting out of Chicago and Cook County at a minimum.  For the young and those perhaps looking to start families, COVID has shown those living in cramped apartments or condos that more space is better than less.  Many have discovered {as I did many years ago} that you can do your job from places other than your office in the Loop.  Others are coming to the sad conclusion that crime is out of control.  Even before the most recent outbursts crime from the city had spilled over in recent years into the suburbs.  My area of Oak Park and River Forest has seen an uptick in recent years of carjackings and burglaries.  Several of those carjackings have been in vehicles with children inside.  Shootings along the expressways have increased and are now not only limited to early morning hours.  There is a growing sense that the police as well as the political and judicial classes are either unwilling or unable to deal with the emboldened criminal element now.

Finally there is the growing fiscal toll that I've discussed before and is only likely to get worse.  Everybody knows the inevitable response to our problems at every level of government is going to mean tax increases for someone.  This may be mitigated to some extent in the future if Mr. Biden wins and the states get some sort of bailout.  However, it's unlikely that the Feds are going to ride in with an unlimited supply of cash.  That likely means higher state and local taxes, adding to what WalletHub already calculates as nearly a 15% tax burden or nearly $9,000 on a median family household in Illinois.  In my neck of the woods, where property taxes on a median sized family home are in the $9-12,000 range, that median tax burden can be likely doubled.  WalletHub also rates Illinois as dead last in terms of tax rates by state.  There are many places in more desirable climates where the tax burden is half of what it is in Illinois.

My guess is you won't see much written about this except on conservative or financially oriented websites.  At most, these growing issues don't merit much ink in mainstream Chicago press outlets. The silent epidemic of property taxes on the middle class isn't headline screaming news. But the person in a household that pays the bills and balances the checkbook knows about the costs of taxes even if they haven't thought through the overall burden to their net worth.  

"Money goes where it's treated best."  That's another of those old Wall Street sayings used to explain why money naturally gravitates towards stocks that are doing well.  To those that bear the tax burden that place is not the place they've called home for many years.  From a tax standpoint, somebody making over $150,000 and paying that median $9,000 a year in taxes is hard to replace.  The political class needs to wise up to this and fast before "what are you gonna do?" is answered by "leave".