Do “Religious Freedom” Laws Hurt Business and Cost Jobs?

There’s an interesting fight happening in Missouri. Usual allies are at odds over SJR 39, a proposed constitutional amendment that, according to proponents, protects those who oppose same-sex marriage from being forced to take part in any aspect of the celebration.

You would expect the religious right to be on one side and LGBT rights proponents to be on the other side. The surprise is that business groups are siding with the LGBT rights people against SJR 39.

If you’ve been paying attention to recent disputes about similar legislation in North Carolina, Georgia, Mississippi, and Arizona, the reason is obvious. Major companies have become very vocal in their opposition to laws viewed as discriminatory toward the LGBT community and are threatening to pull business from states in which the laws are enacted.

North Carolina has experienced quite a backlash to the law signed by Governor Pat McCrory late last month. Within a week PayPal announced that they would no longer build a global operations center in Charlotte which would have employed 400. Sharon Stone has cancelled plans to film a movie in the state and Deutsche Bank put their plans to hire an additional 250 in Cary on hold.

According to Greater Raleigh Convention Center president and CEO, Denny Edwards, they have lost six bookings worth $2.4 million and another sixteen bookings worth $44 million are in jeopardy. Greensboro Coliseum lost a concert by Bruce Springsteen and the E Street Band on April 10 because of the performers’ opposition to the law, and the 15,000 ticket holders will receive refunds.

There is plenty of anecdotal evidence that religious freedom laws negatively impact certain parts of a state’s economy, but is there any firm data that shows long term effects? To find out, I took a look at Indiana which passed such a law about a year ago.

According to Mark Fisher with the Indianapolis Chamber of Commerce, the city lost at least $60 million in convention business following the passage of the Religious Freedom Restoration Act. Governor Mike Pence issued a statement shortly after signing the bill into law which read, “If I thought it legalized discrimination in any way in Indiana, I would have vetoed it.” Within a week, Pence took steps to dramatically scale back the effect of the law, but the backlash was immediate and powerful. The #boycottindiana hashtag launched quickly on Twitter and helped channel worldwide condemnation.

So, has the Indiana law, even in it’s stripped down version, harmed the state’s economy? Probably.

I compared Indiana job growth as a percentage of employed persons versus that for the four states it borders. For private sector employment, the numbers show that Indiana has grown the slowest of the five states for the period from March 2015 – March 2016.

Illinois: +1.5%
Indiana: +1.3%
Kentucky: +2.0%
Michigan: +2.3%
Ohio: +1.8%

Business changes have occurred quickly in response to North Carolina’s law, but the decisions may have taken a little longer to work through corporate structures with respect to Indiana’s earlier law. Now that it’s been a year, we may be seeing the effect of business decisions made many months ago.

For the one month period from February – March 2016, Indiana is the only state in the country to experience a statistically significant loss of seasonally adjusted non-farm jobs. Indiana lost 9,000 job during that month while its neighbors Illinois and Ohio gained 14,700 and 18,300 jobs, respectively.

In addition to lost business spending, there’s a real risk of lost recreational dollars as well. Once a state is identified as discriminatory, some of the people who may have been considering a visit will change their plans to vacation elsewhere. The media have been eager to highlight the conflict, but some governments are joining in the controversy. The governors of Washington, New York, and Vermont have issued non-essential business travel bans to Mississippi and/or North Carolina following the enactments of their religious freedom laws, and yesterday, the United Kingdom issued a travel warning about anti-LGBT laws in U.S. states.

There seems to be a clear consensus from centrist and liberal governments and business leaders that religious freedom laws in conservative states are either discriminatory against the LGBT community or may be perceived to be so. Either way, it’s bad for business, and may have long lasting effects on the economies of the states which enact such laws.

It’s only been a year since Indiana’s religious freedom law went into effect – and one week less than a year since it was significantly weakened – so the data aren’t extensive. Still, Indiana has the slowest job growth rate in the region over the past year and it is the only state to lose non-farm jobs last month.

I think Indiana played with fire and got a little burnt, and it looks like several other states have decided to walk across the hot coals to join them. That sort of thing is a matter of faith after all, and should be protected under “Religion Freedom” laws.

About tonyj126

I'm a 50+ married man who always seems to have a large backlog of work to do, but also a lot of flexibility in my schedule. Much of the work I do is volunteer or taking care of extended family members. I suffer from, as my priest calls it, "the sin of self-sufficiency," which means I can figure out how to do most things myself, and consequently, reduce the need for community to solve problems. As a logical extention (at least to me), I find myself called to comtemplate the country's and the world's woes and offer my observations. I hope someone out there will find them useful.
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