Media Document The Economic Cost Of North Carolina’s Anti-LGBTQ Law
Republican North Carolina Officials Defend Discriminatory Law Despite Increasing Economic Consequences
Research ››› ››› ERIN FITZGERALD
North Carolina’s Republican administration is still defending its anti-LGBTQ law House Bill 2 (HB 2), even as media outlets continue to document the economic harm the law has done to the state, including via backlash from the business community and potential loss of federal funds.
North Carolina Passed Anti-LGBTQ Law Limiting Transgender Bathroom Access And Blocking Local Bans On Discrimination
North Carolina Passed A Law Rescinding LGBTQ Nondiscrimination Protections. On March 23, the North Carolina state legislature passed HB 2, a "sweeping" law that invalidated local governments' ability to provide legal protections for LGBTQ people and limited transgender people's bathroom access in certain public bathrooms. The law came in response to a local ordinance passed in Charlotte that provided nondiscrimination protections for LGBTQ people, including allowing transgender individuals to use the bathroom that aligns with their gender identity. [The Charlotte Observer, 3/23/16]
The Atlantic: After Weeks of Criticism, North Carolina Gov. McCrory Is Attempting To “Blunt The Backlash” To Anti-LGBTQ Law. On April 12, faced with a pending ACLU lawsuit and in response to weeks of national backlash, North Carolina Gov. Pat McCrory issued a "nearly meaningless” executive order clarifying HB 2. As The Atlantic noted, “there is no change to the transgender-bathroom conditions,” and it “does not restore cities’ right to establish local non-discrimination ordinances that apply to the private sector.” [The Atlantic, 4/12/16]
North Carolina’s Commerce Secretary “Doesn’t Expect The Legislation To Negatively Impact The State’s Economy.” In an interview with the Triangle Business Journal, North Carolina Department of Commerce Secretary John Skvarla said he doesn’t expect the legislation to negatively impact the state's economy:
In an interview, he said he has heard from companies “considering their options” but none that expressly decided to leave North Carolina because of the bill, which the LGBT community has decried as discriminatory to transgender people. “I have not had anyone ask any penetrating questions,” Skvarla said.
On Thursday, Skvarla said he has “not seen a diminution in the pipeline” of companies interested in an investment in North Carolina. “As far as I’m concerned, it’s business as usual,” he said. [Triangle Business Journal, 4/5/16]
CAP: HB 2 Threatens More Than A Half Billion Dollars In Economic Activity. According to a report from the Center for American Progress based on publicly available estimates of the economic impact of lost or at-risk business activity or events, the North Carolina economy could potentially lose out on more than $568 million in private-sector economic activity through 2018. According to the report, the state has already lost out on $86 million and stands to lose upwards of an additional $481 million due to canceled events, businesses leaving the area, and tourism declines if HB 2 is not repealed. [The Center for American Progress, 4/13/2016]
News Outlets Report North Carolina’s Tourism Industry Could Lose Out On Millions Due To Canceled Events
WSOC TV: Charlotte's Economy Suffers Due To Four Confirmed And Nine Potential Event Cancellations. On April 11, local news outlet WSOC TV reported on the economic impact of HB 2 in Charlotte:
Charlotte tourism sources told anchor Scott Wickersham on Friday that four groups canceled conventions because of HB 2.
Nine were in talks but sources said they decided not to come to Charlotte.
Almost 30 more are on the fence because of HB 2.
For those four confirmed events, there would’ve been more than 1,100 nights booked at hotels.
For the groups considering, that would have been more than 1,200 rooms booked and for the hesitant groups that's nearly 90,000 rooms now hanging in the balance. [WSOCTV.com, 4/11/16]
Wash. Post: Raleigh Stands To Lose Contracts For Multiple Events That Would Bring The Local Economy Millions of Dollars. An April 12 Washington Post article reported on more economic impacts to the state from HB 2:
Officials in the state are already reporting tourism losses and event cancellations due to the law. As of this week, five groups canceled events planned in the Wake County region, which would have brought the local economy more than $732,000, according to the Greater Raleigh Convention and Visitors Bureau.
Another 16 groups were about to sign contracts to hold events and are considering canceling or changing their minds, according to a spokesman for the visitors bureau. These groups could bring a combined 73,000 people and $24 million to the region.
The visitors bureau did not identify these 16 other groups in a report released by Denny Edwards, president and chief executive of the visitors bureau. But the report did say that one of the biggest hits would come if Raleigh lost its chance to host an unspecified sports tournament, one that the bureau said could bring in $4.5 million to the local economy. [The Washington Post, 4/12/16]
The Atlantic: Bruce Springsteen Cancels His North Carolina To Boycott Anti-LGBTQ Law. Bruce Springsteen and the E Street Band announced that they were canceling their April 10 show in Greensboro, NC. Over 15,000 tickets had been sold for the show and officials estimated the cancellation resulted in a $100,000 loss at the venue alone:
City officials did not have a dollar estimate for the lost revenue from foot traffic in restaurants, shops and hotels. Mayor Nancy Vaughan said it would be difficult to quantify as some concertgoers could have become repeat visitors to Greensboro.
“We had so many people that would have been able to see Greensboro, many for the first time, and now we won’t have that hotel and restaurant revenue,” she said. “My other concern is that acts we are currently in negotiations with could look at other venues. People we don’t have contracts with can just automatically take us off the list.”
The cancellation also means lost wages for some workers. At the coliseum, several hundred employees were scheduled to work the concert, according to Brown. [The Atlantic, 4/12/16]
ESPN: “NBA Moves 2017 All-Star Game From Charlotte Over HB 2 Bill,” An Estimated “‘$100 Million Hit.’” On July 21, ESPN reported that the 2017 NBA All-Star Game was being moved from Charlotte due to league objections to HB 2. The NBA, along with the Charlotte Hornets, had been “working diligently to foster constructive dialogue and try to effect positive change" since the bill passed back in March, according to a July 21 statement from the league. As repeal efforts failed, the NBA stated that “we do not believe we can successfully host our All-Star festivities in Charlotte in the climate created by HB2.” According to ESPN, Democratic state Sen. Jeff Jackson estimated that the decision is a “$100 million hit to the city of Charlotte and the state. A lot of that money would go to schools, health care and roads.” [NBA.com, 7/21/16; ESPN.com, 7/22/16]
NY Times: NCAA Announced It’s Moving All Championship Tournament Games Out Of North Carolina In Response To HB 2. In a September 12 statement, the NCAA announced it was moving seven championship events out of North Carolina for the 2016-2017 year due to the state’s anti-LGBT bathroom bill. From The New York Times:
The N.C.A.A., responding to a contentious North Carolina law that curbed anti-discrimination protections for lesbian, gay, bisexual and transgender people, will relocate all championship tournament games scheduled to take place in the state over the coming academic year, the organization announced Monday night.
Among the events affected is the Division I men’s basketball tournament, the N.C.A.A.’s most prominent annual event, which had six first- and second-round games scheduled to be played in Greensboro in March.
The announcement followed the N.B.A.’s decision in July to move its 2017 All-Star Game out of Charlotte but was seen as a particularly substantial blow to officials in North Carolina, where college basketball is central to the state’s culture and pride. North Carolina has hosted more men’s basketball tournament games than any other state, an N.C.A.A. spokesman said.
In a statement explaining the decision by its Board of Governors, which is largely made up of institutional presidents and chancellors, the N.C.A.A. said: “N.C.A.A. championships and events must promote an inclusive atmosphere for all college athletes, coaches, administrators and fans. Current North Carolina state laws make it challenging to guarantee that host communities can help deliver on that commitment.” [The New York Times, 9/12/16]
CNBC: Following NBA And NCAA, ACC Decided To Move League Championships Out Of North Carolina, Causing Estimated Spending Loss Of Up To “$175 Million.” On September 14, the Atlantic Coast Conference (ACC) announced it would also move its eight championships out of North Carolina because of HB 2. CNBC interviewed sports business professor Patrick Rishe, who estimated the total economic costs of the related tourism losses in 2017 from the three league pullouts as between $125 million and $175 million. [CNBC, 9/16/16]
The Charlotte Observer: “Influential Fine Dining Panel Cancels Visit To Raleigh, Citing HB 2.” The Charlotte Observer reported that the James Beard Foundation released a statement on October 4 canceling its chef award committee’s upcoming visit to Raleigh in January, citing HB 2 as the reason. Each year, the James Beard Foundation bestows prestigious culinary industry awards that are “considered among the highest honors for an American chef.” The foundation’s 17-person chef awards committee is a group of elite food writers and restaurant critics that travels to different cities throughout the year and nominates exemplary chefs and restaurants for award consideration. To date, only four chefs have won the award while working in North Carolina. [The Charlotte Observer, 10/4/16]
Several Companies Have Canceled Multimillion-Dollar Expansion Projects Due To Anti-LGBTQ Law
WRAL.com: Citing HB 2, PayPal Cancels Planned Expansion In Charlotte. PayPal announced on March 18 that it would open a $3.5 million complex in Charlotte, employing 400 people, and having an annual payroll of about $20.7 million. On April 5, the company retracted its decision, citing the governor signing HB 2 into law, stating the new law "perpetuates discrimination and it violates the values and principles that are at the core of PayPal's mission and culture.” [WRAL.com, 4/5/16]
AP: Drug Company Reconsiders Building $20 Million Factory In North Carolina Because Of Anti-LGBT Law. The Associated Press reported on April 10 that “New Jersey-based Braeburn Pharmaceuticals said it is ‘reevaluating our options based on the recent, unjust legislation’ whether to build a $20 million manufacturing and research facility in Durham County.” AP further reported that the facility would create 50 new jobs, paying an average salary of nearly $76,000. [The Associated Press, 4/10/16]
NY Times: Deutsche Bank Freezes Expansion In North Carolina, Citing HB 2 As The Reason For Halting Growth. The German “financial giant” withdrew plans to expand its technology development center in Cary, NC, which already boasts 900 employees, citing HB 2 as the reason for halting its growth. The company planned on spending $9 million on the expansion, creating an additional 250 jobs that were expected to have a total salary package upwards of $21 million annually. [The New York Times, 4/12/16]
Charlotte Business Journal: “Charlotte Loses Out On 730-Job Headquarters” And An Estimated Long-Term Influx Of A Quarter Billion Dollars “Because of HB 2.” Though real estate research firm CoStar Group Inc. had originally included Charlotte in its short list of potential locations for expansion, the company instead chose Richmond, VA, according to the Charlotte Business Journal. The Journal reported that “sources say North Carolina's controversial House Bill 2 ultimately cost the Queen City” the expected 730 jobs, $8.2 million initial investment, and “long-term, quarter-billion-dollar economic impact” overall. The October 25 article also rebuffed recent claims that minimized the expected economic impact of HB 2 backlash:
Maxwell Hanks, managing director of brokerage services at Spectrum who is part of the project’s leasing team, indicated to CBJ that CoStar could have been a contender for [an under-construction] office building [in Charlotte] which he earlier touted as a good option for out-of-state company headquarters or relocations.
"For those who say HB2 isn't moving the needle, they simply aren't paying attention," he said late Tuesday, referencing a comment N.C. Department of Commerce Sec. John Skvarla made yesterday to The Charlotte Observer about HB2. "CoStar, as a data, media, and research company, would have been a major job generator and invested ... millions in Charlotte.” [Charlotte Business Journal, 10/25/16]
North Carolina Could Face Potential Loss Of Federal Funding And Other State Governments’ Spending
Wash. Post: At Least Five Federal Agencies To Review Funding To North Carolina In Wake Of Anti-LGBTQ Law. The Washington Post reported on April 4 that at least five federal agencies are in the process of reviewing whether to withhold funds from NC in response to HB 2:
The ongoing reviews at the Education, Transportation, Labor, Housing and Urban Development, and Health and Human Services departments are not yet complete, and it is unclear how much federal money might be involved. But the Obama administration’s decision to scrutinize what White House press secretary Josh Earnest described as “both policy and legal questions that are raised by the passage of this law” suggests that the measure signed by Gov. Pat McCrory (R) last month could have major implications for his state.
Earnest said that “individual agencies are undertaking” the review, and the White House had not issued specific guidance on how to proceed. But he emphasized that President Obama said that “ensuring that individual Americans are not discriminated against because of who they love is something that the president feels strongly about,” and he was not surprised that North Carolina officials “are feeling some pressure” on the issue.
“I can just say that, more generally, this administration is committed to defending and even promoting the equal rights of all Americans, including LGBT Americans,” he added. [The Washington Post, 4/4/16]
The List Of Corporations, Small Business Owners, And Entrepreneurs Calling For Repeal Of HB 2 Continues To Grow
The News & Observer: Hundreds Of Corporations, Small Business Owners, And Entrepreneurs Call For Repeal Of HB 2. The News & Observer reported April 16 that 160 corporations including Red Hat, Bank of America, PNC, Wells Fargo, LabCorp, American Airlines, Time Warner Cable, Campbell Soup, and United Airlines have signed on to a letter in protest of the law. A coalition of 32 independent North Carolina bookstore owners has called for the repeal of the law. Also calling for repeal is a group called “Scholars for North Carolina’s Future,” comprised of 500 faculty members, staff, and graduate students from public and private universities across North Carolina. [The News & Observer, 4/16/16]
WRAL.com: Coalition Of 58 Investors Worth $2.1 Trillion Call For Immediate Repeal Of HB 2. A coalition representing a wide swath of investors published a letter on September 26 calling for a full repeal of HB 2, stating that equality is fundamental to a “successful workplace and community.” The statement, organized by Trillium Asset Management, Croatan Institute, and the New York City comptroller, has 58 signatories representing collective assets of $2.1 trillion. WRAL.com describes the letter as stressing the importance of “safe, open, and inclusive environments,” and in it the authors assert that nondiscrimination policies help businesses “attract, retain, and promote the best and the brightest.” The statement also warns against delaying repeal, before the damage is irreversible:
“North Carolina has written discrimination into state law,” stated Trillium CEO Matthew Patsky. “The unintended consequence has been a backlash that is having material, negative impact on the economy of the state. HB2 must be repealed immediately before this damage becomes irreversible[,]” He continued: “There’s no question whatsoever that corporate and public policies that celebrate and strengthen diversity and inclusivity of all people are good for society and good for business.” [WRAL.com, 9/26/16]
Economic Losses Continue To Increase As Backlash Against Anti-LGBTQ HB 2 Mounts
The Guardian: North Carolina’s Tourism Officials Say The Economic Losses Due To HB 2 Have Quadrupled In The Past Week. The Greater Raleigh Convention and Visitors Bureau earlier reported just over $700,000 in economic losses, but is now reporting losses upwards of $3.1 million. According to the bureau, another 16 bookings worth $44 million are currently in jeopardy due to the state’s recently enacted anti-LGBTQ law. Wake County, home of the PNC Arena, will be especially impacted by the growing number of boycotts by musicians and other performers. [The Guardian, 4/19/16]
Meet the Press: North Carolina Has Lost Up To $186 Million In Revenue Due To Boycotts Over HB 2. On the April 17 edition of NBC’s Meet the Press, host Chuck Todd said to McCrory that NBC had calculated that the state had lost between $39.7 million and $186 million in revenue due to boycotts of the state since he signed the anti-LGBTQ law, and that “some have suggested billions in lost revenue.” [NBC, Meet the Press, 4/17/16]
Wired: “It’s North Carolinians ... Who Get Stuck With The Bill.” Wired published an article on September 18 that attempts to quantify the ongoing overall economic impact of the backlash against HB 2. It notes that costs include thousands in legal fees, which are paid with tax dollars:
Especially now that the NCAA and ACC joined in the boycott the loss of business represents a significant economic penalty for North Carolina. And it’s North Carolinians, most of whom don’t even support the legislation, who get stuck with the bill. So we decided to figure out how big a bill it is.
First, people are suing the crap out of these guys. North Carolina’s Republican leadership racked up at least $176,000 in legal fees so far, $47,000 of which is just lawyers for the beleaguered Governor Pat McCrory. Why do those numbers matter? They are paid with tax dollars, and they’re rising. In June, the North Carolina legislature approved diverting $500,000 from the disaster relief fund to Governor McCrory’s offices for HB2 litigation. Sure, this HB2 situation’s a disaster. But in a state that sees two, three hurricanes per year … they might have done other things with that money—especially as hurricane season gets underway.
Adding all that up, the total cost to North Carolinians so far from HB2 protests is slightly more than $395 million. That’s more than the GDP of Micronesia. And the bulk of it is from sporting organizations, who even five years ago would likely not have waded into political territory like this. But experts aren’t that surprised that the NBA, NCAA, and ACC have taken this step now. The near unanimous outcry against HB2 and in support of the NCAA and ACC confirms that. Legislating discrimination has become an expensive bad habit. [Wired, 9/18/16]
PolitiFact: HB 2 Backlash Hurts Local Economies Most From Declines In Direct Tourism Spending And Hundreds Of Lost Jobs, Totaling $42 Million In Lost Wages. In response to Commerce Secretary John Skvarla, a top official in McCrory’s administration, claiming that there has been minimal economic impact as a result of fallout from HB 2, PolitiFact analyzed the numbers and rated his claim “mostly false.” The fact-checking website concluded that “North Carolina has undeniably lost money and jobs due to HB 2.” It said the loss won’t “dent the state’s GDP very much,” but that “many local economies … have felt the sting”:
Beyond the job losses are the state’s lost tourism dollars. We can’t account for individuals moving their vacations due to HB2, but we do know about major events that were cancelled.
Four of the state’s seven largest cities’ chambers of commerce – Charlotte, Raleigh, Durham and Cary – have come out against the the law. Lost conferences and concerts harmed all of them, as did sporting events.
North Carolina has undeniably lost money and jobs due to HB2, so [Commerce Sec. John] Skvarla’s claim that the law "hasn’t moved the needle one iota" on the economy seems incorrect at first glance.
On a macro scale, however, Skvarla has a point. Even hundreds of millions of dollars in losses won’t dent the state’s GDP very much. And the now-canceled jobs would not have had much of an impact on the overall unemployment rate.
Yet many local economies – particularly in Wake and Mecklenburg counties, the state’s two largest – have felt the sting of hundreds of jobs, providing tens of millions of dollars in annual wages. That would have helped the economy. So would the tens of thousands of sports fans who will now spend their money in other states. [PolitiFact, 10/28/16]
** This item was updated on November 2 with additional information as the economic impact continues to increase.