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Area Development

Taking Up the Right-to-Work Debate

Right-to-work and unionization issues are heating up Missouri's labor environment, and could affect site selection decisions.

March 2011
Right-to-work laws allow an individual to work at any place of employment without being forced to pay union dues as a condition of that employment, either before or after being hired. Twenty-two states - mostly in the South and West - have such statutes on the books.

Missouri is not one of these states and, in early February 2011, the Missouri State Senate held hearings to determine whether the state should become right-to-work. Opponents of right-to-work laws say unions provide a steady supply of trained workers; proponents say making union membership a condition of employment infringes on an individual's liberties.

The debate was brought before the Missouri Senate by its President Pro Tem Rob Mayer. He claimed that communities in Southeast Missouri had lost business to its right-to-work neighbors - Arkansas and Tennessee. Missouri also shares borders with four other right-to-work states - Iowa, Kansas, Nebraska, and Oklahoma - and with two non-right-to-work states - Illinois and Kentucky.

During, the debate, a well-know site selection consultant, Mark Sweeney, Principal of McCallum Sweeney Consulting based in Greenville, South Carolina, provided some insight into the role of a state's right-to-work status in the site selection process. According to Sweeney, nearly all of his firm's manufacturing clients have expressed a preference for operating a nonunion facility.

"Companies believe this gives them greater work force flexibility, thereby allowing them to compete more effectively and in a more timely manner," Sweeney explained.

In addition, wages and benefits in unionized plants are generally higher than in those that are not unionized, and work rules in those union shops generally result in larger staffs. Sweeney cited these conditions as another reason his firm's clients prefer to keep the unions out of their facilities. "Those manufacturing clients express an interest in considering [locations] only in right-to-work states," Sweeney said, although his firm recommends that right-to-work be just "another scoring criteria" and not a "pass-fail" decision. Unfortunately, states that are eliminated because of this scoring criteria, never even know they were left out of consideration, Sweeney further noted.

What Do Our Readers Have to Say?
What did Area Development's corporate readers tell us about the right-to-work factor in our 2010 Corporate Survey? Among the 26 site selection factors ranked by the survey respondents, right-to-work placed 16th, with slightly more than two-thirds (67.9 percent) considering this factor "very important" or "important." However, this was down from 14th position in 2009, when 74 percent of our Corporate Survey respondents rated this factor as "very important" or "important." Among the consultants responding to our 2010 Consultants Survey, 71.3 percent rated the right-to-work factor as "very important" or "important," down from 81.2 percent in 2009.

The drop in importance of right-to-work in our surveys may coincide with the drop in union membership nationwide: unionized workers fell to 11.9 percent of the work force in 2010, from 12.3 percent in 2009. And, for the first time, government employees accounted for more than half of the nation's union membership. However, in Missouri, union membership rose from 9.4 percent in 2009 to 9.9 percent in 2010, defying the national trend.

In 1978, Missourians overwhelmingly defeated a right-to-work law. How this issue plays out in Missouri in 2011 might affect whether challenges arise in other non-right-to-work states and ultimately where you might want to place your next facility. You can let me know your thoughts about the issue by contacting gerri@areadevelopment.com.

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