Lyons businessman says workers' comp costs weighing down state's businesses
Workers' compensation costs in Illinois are one of three burdens manufacturers must endure to remain in the state, a Cook County businessman and officer in a large industry political action committee said during a recent conservative radio show interview.
"It's one of the No. 1 issues facing Illinois manufacturers," Zach Mottl, chief alignment officer at Atlas Tool & Die Works in Lyons and Tooling & Manufacturing Association PAC chairman, said during a recent edition of "Illinois Rising."
"My company is one of 1,000 members of that manufacturing association, the TMA (Technology and Manufacturing Association)," Mottl said. "We represent 30,000 employees in Illinois working in manufacturing, and if you talk to every one of those 1,000 companies, they will say the same thing that I say: This is one of the biggest costs and one of the fastest-rising costs that we face in Illinois."
Mottl represents the fourth generation of his family to own and operate the metal services and manufacturing company, founded in 1918, in the Cook County township west of Chicago. The manufacturing climate in Chicago is so bad that it isn't clear the company will see a fifth generation in Lyons, Mottl said.
"I'm currently expanding my facility in Cook County, and I wonder if I'm doing the wrong thing here," Mottl said. "When you look at other states and then you look at Illinois, where we're talking about raising electricity costs on small manufacturers, we look at the workers' compensation costs, look at the property tax costs. Those three burdens are huge for manufacturers, three of the biggest burdens they face.”
Those burdens become all the more significant when compared with other states or even worldwide, Mottl said. “Illinois is just absolutely out of whack with all of the surrounding states. Most of the other states in the nation and certainly when manufacturers have to compete on a global scale. When you look at other countries, nobody is burdened with these kinds of costs."
Illinois is tied for eighth place with Oklahoma in workers' compensation premium rates for this year, according to figures released in October by the Oregon Department of Consumer and Business Services. That is an improvement over 2014, when Illinois ranked seventh, behind Oklahoma.
The news about workers' compensation in Illinois has not been universally bad. In April, a report issued by the Cambridge, Massachusetts-based nonprofit Workers Compensation Research Institute found that Illinois has substantially improved its position compared with other states since reforms were enacted under former Democratic Gov. Pat Quinn in 2011. In particular, the report found that the total medical and indemnity costs per claim dropped in 2015.
By May of 2015, workers' compensation reform bills intended to advance Republican Gov. Bruce Rauner's Turnaround Illinois agenda were filed in the state House and Senate. HB 4223, filed by Republican state Rep. Jim Durkin (R-Western Springs), would have required that an injured worker prove, when filing a workers' comp claim, that the condition or injury is mostly the result of on-the-job activity.
House Speaker Michael Madigan (D-Chicago) also introduced workers' compensation reform legislation as amendments to HB 1287.
In the state Senate, workers' compensation reform was introduced by Republican state Sen. Christine Radogno (R-Lemont) as an amendment to SB 994.
None of that proposed legislation got very far, as Rauner encountered push-back from Democrats, and workers' compensation reform soon was mired in budget talks. Workers' compensation reform was not addressed at all in the temporary stopgap budget, and it wasn't taken up again during the recent veto session.
For now, the benefits of keeping his business in Illinois outweigh any benefits from relocating to another state, Mottl said.
"It would cost me a significant amount of money to move all of my plants and equipment," Mottl said. "I also am trying to stay where my workers are located. The skilled workforce is a real issue in manufacturing right now. We're busy; many of my fellow manufacturers are busy. We're expanding, we're growing, we're hiring, and finding skilled workers is a big challenge. But I worry that if I move to Indiana, I'm going to lose some of my best people."
However, Mottl said he might one day reach a point when those benefits in Illinois aren't good enough.
"The cost of moving my equipment might be $1 million," he said. "What I'm talking about is certainly $200,000 a year. I'll recoup the money back, so it gets to be a tougher and tougher decision to stay every year."