The new Kentucky leadership has acted quickly since the November election, passing a right-to-work bill that will significantly change the business climate in the Bluegrass State. So, what does this mean and how will it affect your business or site location decision? Find out these answers and more by reading our exploration of Kentucky’s legislative update.
Currently, about 11 percent of the Kentucky workforce is part of a union. However, that number may go down soon. Governor Matt Bevin signed a right-to-work bill on Jan. 7 that quickly passed the state Senate by a 25-12 vote, two days after the statehouse passed the bill in a 58-39 vote. This makes the Bluegrass state the 27th state to pass such legislation.
In short, right-to-work legislation gives employees of unionized workplaces the right to choose whether or not to join a union. Whereas previously, union membership could be a mandatory condition of employment. The move is expected to help Kentucky better compete for new jobs and investment. Terry Gill, secretary of the Kentucky Cabinet for Economic Development, said too often Kentucky was passed over during the site selection process for states that already had a right-to-work law. Specifically, surrounding states like Indiana, Tennessee, and South Carolina all have right-to-work legislation and have been mentioned as states that beat out Kentucky for development projects. Meaning, economic leaders saw this as a necessary step to help boost job growth in Kentucky.
Moreover, this was a logical decision for the new leadership, which is a Republican-controlled legislature for the first time since 1921, because they had a point of reference in their own state. Since Warren County passed the nation’s first local right-to-work ordinance in 2014, the county has landed more than $1 billion in new capital investment. Within six months of passing the local right-to-work law, Warren county announced at least 4,785 new jobs according to the Bowling Green Area Chamber of Commerce. Meanwhile, the rest of Kentucky had announcements totaling only 2,212 new jobs. This disparity caused the 2015 Kentucky Senate to approve a statewide right-to-work ordinance, but it was blocked in the House.
Now, with the votes on their side, the Kentucky leadership is aiming to capitalize on the state’s other economic advantages with the newly passed right-to-work law. The plan, according to economic leadership, is to combine the following factors to maximize economic growth:
- low housing costs,
- an innovative workforce,
- industrial electric prices nearly 20 percent lower than the national average, and
- an ideal location within 600 miles of two-thirds the U.S. population
With such a business-friendly combination, site selectors should be more willing to keep Kentucky on the map when considering new business locations and expansions.
Could the new right-to-work law influence your site location decision?
It is evident that Kentucky wants to be more competitive. The state has recognized an area in which they want to improve and is certainly moving in the right economic development direction to bridge a site selection gap. Now signed by the Governor, the right-to-work bill will allow Kentucky workers to choose if they want to participate in a union rather than being forced to. Economic leaders are expecting this new law to inject hundreds of millions of dollars into the state’s economic development decisions, resulting in expanded options for businesses when considering Kentucky for site location choices.
For companies considering any type of Midwest expansion or investment, Kentucky has just changed its landscape immensely. Nevertheless, knowing how the Bluegrass state stacks up to other state tax schemes is critical to the site selection process.
Article written by Steve Brunson from McGuire Sponsel, an affiliate of Blue & Co.
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