One of the strongest cogs in Illinois’ economic engine is an industry that isn’t necessarily a household name. Data centers.
They pretty much do what their name suggests. They’re climate-controlled buildings that warehouse massive tranches of gigabits inside clusters of servers and data storage systems. Data centers play a role in everything from email and e-commerce to gaming and data backup and management. In an increasingly online world, data centers are far from bit players.
In 2019, the Chicago area ranked third in the country for data center capacity, behind northern Virginia and the Dallas-Fort Worth region. The data center industry generated for Illinois $7.1 billion in economic output in 2017, $877 million in tax revenue, and 31,500 jobs, according to a report commissioned by the Illinois Chamber of Commerce Foundation.
So what’s got us worked up about data centers? Legislation with an amendment sponsored in the House by state Rep. Mark Walker, an Arlington Heights Democrat, that would require new and prospective data centers to sign so-called peace labor agreements with unions representing workers who maintain typical data center infrastructure, such as cooling and fire safety equipment, backup generators and water treatment systems. The measure is part of an amendment to the state’s 2-year-old tax credit program for data centers, which Republicans pushed, that so far has brought in $5 billion in private investment to Illinois’ data center industry.
Companies that want to set up data centers in this state now would have to hire union labor, if the amendment filed by Walker stays. It’s easy to see what the fallout would be. The people behind data centers would shrug and say, Illinois is too expensive. Too many hoops to jump through. Let’s take our business to Indiana, Iowa or a host of other states that offer tax incentives for data centers without any onerous union hiring mandates.
“It’s all but certain we would see less projects and less investment in Illinois simply because of this provision,” Brad Tietz, vice president of government relations for the Chicagoland Chamber of Commerce, recently testified to the Illinois House Revenue Committee, as reported by Crain’s Chicago Business. “In the immediate term, this is likely $1 billion in additional investment that we are putting at risk.”
The solution is straightforward. This measure should never see the light of day. Lawmakers should kill it, and if it somehow makes it to Gov. J.B. Pritzker’s desk, he should veto it. Data centers represent a rare bright spot in Illinois’ otherwise sluggish economy. In a state struggling to stem the exodus of businesses, jobs and people, the last thing needed is yet another legislative burden that turns away investment Illinois so desperately needs.
What was Walker thinking? No clue.