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Banana Republic, Yet? – Scoring Best Places for Business – BIPA

There can be no joy in living without joy in work.” – Thomas Aquinas


Everybody knows work is important. It gives people a sense of dignity and value whether that work is paid or unpaid. That’s why having a thriving business community is or should be the goal of every elected leader at every level of government.


State and local communities pride themselves on business rankings and use them as marketing tools to attract more business. So when I saw the Crains’ Chicago Business article by Greg Hinz about CNBC ranking Illinois 17th as the Best State for Business, I was eager to read it and curious about how the survey was conducted. Illinois improved two places from last year and ranked ahead of our neighbors, Kentucky, Wisconsin, Missouri, and Iowa. The entire list is available here at this LINK.


Gov. Pritzker has been touting the survey saying we are “outpacing” other states and noting our number 2 ranks in the categories of infrastructure and education. But other indicators seem to point out that we are treading water and have big problems financially on the horizon.


Quite frankly, that ranking didn’t make sense to me. Last year Tyson Foods, Citadel, Boeing, and Caterpillar all moved their headquarters out of Illinois. We lost a congressional district and have tried 18 times in a row to attract an electric vehicle battery factory and failed, despite Pritzker bending over backward to get them to come to Illinois. Additionally, in the last 10 years of tracking Chief Executive Magazine’s ranking of best places to locate a business, Illinois has been 48th every year.


Something did not add up about the CNBC survey. So what’s going on?


Mr. Hinz did a fair job in his article, linking readers to the actual survey and alerting them that the survey “includes figures on “health and inclusion,” such as how much a state spends on social services and whether it protects abortion rights. Most business-condition surveys ignore or downplay such matters.” He’s right. The survey should be taken with a full box of Morton’s salt.

At this LINK you can read the survey methodology. The weighted categories include:


  • Workforce – 16%, includes number of degree and certificate holders, right-to-work (not sure if that’s positive or negative), looks at net migration of educated workers.

  • Infrastructure – 15%, looks at the value and volume of goods shipped by air, waterways, roads, and rail, reliability and condition of electrical grid, water systems, broadband, availability of renewable energy, and susceptibility to extreme weather events like wildfires and flooding.

  • Economy – 14.4%, looks at stable finances, real estate market, GDP and job growth, diverse economy and major HQs located there.

  • Life, Health and Inclusion – 14%, worker protections, voting rights, abortion rights, healthcare and childcare availability.

  • Cost of Doing Business – 11.6%

  • Technology and Innovation – 10.8%

  • Business Friendliness – 8.6%

  • Education – 5% - test scores, class size or spending, support for higher ed (SHEEO ranks IL 3rd in US )

  • Access to Capital – 2%

  • Cost of Living – 2%

So liberal laws on voting and abortion are weighted higher than the costs of doing business, technology and innovation and business friendliness and about the same as economy.


Does that make sense?


Not to mention in the category of infrastructure – naturally, size and location matter. Illinois has a long-standing advantage in the movement of goods due to its location and permanent assets like rail, barge, air, and inland ports, which is why we rank #2 in that category. If you are producing physical goods, our infrastructure is a big advantage, if you are pushing money around on paper or creating software, it doesn’t matter as much.


Many of these categories can be misleading. Education includes spending and support for higher education, test scores, and class size, plus community college programs. Understandable - but if spending counts for much of the weighted vote, then that doesn’t mean much after all, as Illinois spends a lot on education for average results. According to SHEEO, we rank 3rd in terms of state-level support for higher education. They include our pension payments to staff and faculty, which accounts for about 40% of the state support. That spending doesn’t translate into better outcomes.


Any business study, however, that ranks abortion rights and liberal election laws ahead of business friendliness should be completely disregarded or explained in much greater detail!


It is telling that despite Life, Health, and Inclusion having a significant weight, Texas ranked 6th and Florida ranked 8th – way ahead of Illinois. And those states are both prone to weather-related problems and hold conservative positions on abortion and election law. Illinois just can’t overcome the great economies of Texas and Florida, even in a survey that ranks abortion law as a big benefit.

Here's a different study to consider - the CATO Survey on Freedom in the 50 States – they rank freedom in various categories from economic, regulatory, lawsuit, personal, and more. Read here: print-edition-2021.pdf (freedominthe50states.org)


In the category of Lawsuit Freedom Illinois ranks last. Overall, we rank 37th. Look at how we compare at this link: Freedom in the 50 States 2021 | Cato Institute



BIPA Law - Here’s a good reason why we rank last in lawsuit freedom and civil liability.


In 2007, Illinois passed aggressive legislation to protect personal data. Called the Biometric Information Privacy Act (BIPA), it now “threatens business operations and jobs throughout the state” according to a TMA press release this week. We are the ONLY state in the nation with such an aggressive law that has resulted in multi-million-dollar payouts for the voluntary and knowing collection of biometric information despite there being no harm or compromise of that individual information.


The law hinges on companies obtaining written consent prior to collecting biometric information, if that is not done, then every instance of collection can result in a $1,000-$5,000 payout.


The law was not a hot topic while I was in Springfield, but ever since Six Flags had to payout $36 million for collecting a thumbprint to secure seasonal passes so that they were not transferrable, that law has been used by trial lawyers looking to get a quick settlement using the law.


This NPR article from 2021 explains the Six Flags lawsuit. Then in 2022, BNSF got hit with a $228 million verdict for using fingerprints of truck drivers as a secure way to give them entry to the rail yard. Read that whole story in the Cook County Record. Here is an important excerpt:


"The lawsuit accused BNSF of violating the BIPA law by requiring truck drivers to scan their fingerprints when entering BNSF rail yards. The lawsuit asserted the company was required to first secure written permission from the drivers to scan their prints, and to provide the drivers with notices concerning why the fingerprint scans were required, what the company would do with the scanned prints, and how the scanned prints would ultimately be destroyed.


The plaintiffs sought to expand the lawsuit to include tens of thousands of other truck drivers who also had scanned their fingerprints at BNSF facilities in recent years.


The lawsuit’s claims were similar to those leveled against other hundreds of other companies in thousands of other BIPA-related class action lawsuits filed in Illinois courts since 2015.


While the BIPA law was enacted in 2008, the law sat largely unnoticed for years before a group of privacy class action lawyers, including the McGuire firm, began filing class actions by the scores against employers they claimed violated the rights of customers, employees and contractors.


Some of the lawsuits have taken aim at big tech companies, like Facebook and Google, resulting in headline-grabbing settlements worth hundreds of millions of dollars over claims those companies improperly scanned the faces of people who were pictured in images uploaded to social media and photo sharing platforms, like Facebook and Google Photos.


But the overwhelming bulk of the class actions have been leveled against Illinois employers of all types and sizes, claiming they improperly required workers and contractors to scan fingerprints or other biometric identifiers to verify their identity when punching the clock at the beginning and end of work shifts, or when accessing secure workspaces, like medicine lockers in hospitals, cash rooms at retail stores, or rail yards, as in the Rogers case against BNSF."


Google and Facebook settled for $100 million and $650 million respectively.


The granddaddy of all BIPA lawsuits is the $17 BILLION judgment against White Castle for using biometrics to have employees sign in and out of work. The Illinois Supreme Court wrote an opinion that the law applied for every instance that a biometric print was used and not based on a per-person use. That’s why the judgment is so large.


While White Castle just announced that they sold 29 Billion Sliders since opening in 1921, their annual revenue was only around $720 million. So, this judgment could bankrupt them.


Here’s the rub. Thousands of Illinois companies are at risk of massive payouts for a poorly written law. While most agree that personal data including biometric data should be protected, there is no indication that any biometric data has been compromised or any person has been harmed. In 2023, years after the 2007 law was passed, biometric data is now used frequently for security. Hospitals use it for knowing who dispensed drugs. Others use it for entry to secure areas. An industry insider said that the biometric data is converted to a digital combination and anonymized.


Also concerning is that nothing has been done to correct the flawed legislation. Trial lawyers are salivating for big class action lawsuits and advertising for clients. An amendment that would have alleviated business concerns over BIPA was pulled out of an end-of-session bill at the request of - you guessed it – the trial lawyers association, so I am told.


This is the height of business unfriendliness. I wonder why the CNBC survey didn’t heavily weigh these criteria. One more kicker – the politicians exempted the government from the BIPA law.

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