By Paul Kersey -
There is a virtual caravan of businesses leaving Illinois.
Office Depot, which announced that it would be setting up its headquarters in Boca Raton, Fla., rather than Naperville, Ill., is only the latest. A string of smaller companies, mainly manufacturers such as Modern Drop Forge or Food Warning Equipment Company have been relocating – sometimes to the south, sometimes to neighboring states. But bigger companies have an eye on the exit too. State Farm Insurance of Bloomington, Ill., has many concerned after it announced plans to expand regional offices in Atlanta, Dallas and Phoenix.
The exodus has gotten to the point where the governors of Texas and Florida have taken to targeting Illinois businesses, openly inviting them to leave the Land of Lincoln for more inviting – and profitable – climates elsewhere. This is something that Illinoisans cannot allow to go any further. Illinois needs to take decisive action to ensure that it will be competitive and attractive to employers. Passing a Right-to-Work law would be one step that could arrest the flow of businesses out of Illinois, and that needs to be part of the political debate going forward.
Illinois used to have a reasonably modest tax burden, and that, plus its central location and the attraction of Chicago, was enough to make the state competitive. But Illinois has become a high-tax state. According to the Tax Foundation, Illinois’ corporate taxes are among the worst in the nation, ranking 47th out of the 50 states. Overall Illinois ranks a mediocre 31st, but since 2011, when Illinois enacted a record income tax hike, Illinois dropped 15 spots. And businesses have to look to the future. Illinois government pensions are dangerously underfunded. If the state responds by passing a progressive income tax, as some union-supported groups are calling for, Illinois’ tax burden could become one of the heaviest in the nation.
Passing a Right-to-Work law would make Illinois much more attractive to employers than it would otherwise be, especially as it sorts out its tax and pension problems. A Right-to-Work law would simply say that workers cannot be forced to join or financially support a union as a condition of holding on to a job. The law makes unions more accountable to workers, and at the same time makes the state that passes it more attractive to employers. Nearby states such as Indiana and Michigan have already turned to Right to Work to overcome their own economic struggles, and there is good reason to believe they will succeed over the long run. At least one Chicago-based expert approves of Michigan’s move:
Tracy Bosman, a Chicago-based site selection consultant with Biggins Lacy Shapiro & Co, says Michigan’s law has generated interest in the state.
Up to 50 percent of manufacturers automatically screen out any non-right-to-work state, Bosman said, so Michigan was out of the picture for many companies looking to add production capacity.
“While it does not guarantee success for Michigan, it does at least mean the state will get a second look from firms that automatically excluded it in the past,” she said.
Illinois has long struggled with high unemployment and stagnant wages. The recent decision by Office Depot to locate its headquarters in Right-to-Work Florida instead of Naperville illustrates the difficulty that Illinois has in retaining companies and jobs. Illinois would benefit from getting a fresh look from employers. If Illinoisans are serious about turning around the state’s economy, Right to Work ought to be a regular part of the political discussion.
Paul Kersey is Director of Labor at the Illinois Policy Institute