The news didn't spread far amidst the hustle and bustle of the holidays, but a potentially momentous event occurred in Lincolnshire, IL (a northern suburb of Chicago) on December 14th. The Village Board elected to become a right-to-work zone, the first in Illinois.
Illinois Governor Rauner (R) supports establishment of Right-to-work zones at a local level, but the move is unlikely to avoid a legal battle. State Attorney General Lisa Madigan (D) is opposed to the action, insisting that local governments don't have authority to declare themselves right-to-work zones. The Illinois Chapter of the AFL-CIO is reportedly considered mounting a challenge, while the Liberty Justice Center, a Chicago-based conservative think tank that engages in public-interest litigation, is intent on defending Lincolnshire's action.
In a right-to-work location, employees of a unionized facility can choose whether or not to pay membership dues. In a non-right-to-work location contracts between unions and companies can include union security agreements requiring employees to pay dues or fees as a condition of employment.
Companies, particularly manufacturers, frequently use right-to-work status as a filter when looking for new business locations. While a strong argument can be made that right-to-work legislation has no bearing whatsoever on the likelihood that a facility will become unionized, companies are using it as a "proxy" for measuring how pro-business a location is. The surprising conversions to right-to-work in recent years by Illinois' neighbors -- Wisconsin, Michigan, and, going a little further back in time, Indiana -- have put pressure on Illinois to address the issue. This puts non-right-to-work states like Illinois at a competitive disadvantage, particularly in border economies such as the Chicago region, where companies can be part of the metropolitan labor market while locating in a neighboring, right-to-work state.
Right-to-work has historically been a state government issue, making the move by a Village especially interesting. But some counties in Kentucky -- a non-right-to-work state -- have also chosen to establish themselves as right-to-work zones. Warren County was the first, but 12 others followed suit. One of those counties, Harden County is now part of a legal battle in the U.S. District Court which, regardless of outcome, appears likely to be appealed to the Supreme Court.
Lincolnshire Mayor Liz Brandt was cited in the Chicago Tribune as being worried about losing business to nearby Wisconsin. While I am not aware of any company that has "jumped the border" for the sole purpose of moving to a right-to-work state, I can confirm that companies are aware of the opportunity and cite it as one of the reasons to consider a move.
Tracey Hyatt Bosman is a Managing Director at Biggins Lacy Shapiro & Co., one of the largest, most highly regarded site selection and incentives advisory firms in North America. BLS & Co. helps manage the complexities associated with finding optimal location and securing incentives to support new ventures.