×

Culture wars draw new battle lines on state competitiveness

Corporate outcry over Religious Freedom Restoration laws puts discrimination issues in the spotlight.

If there is one thing Louisiana governor and potential 2016 presidential candidate Bobby Jindal is proudest of, it is his efforts to improve the state's business climate.

"Since 2008, the Jindal administration has secured projects that are resulting in more than 91,000 new direct and indirect jobs and $62 billion in new capital investment across Louisiana," the governor's official website recently noted.

But the Republican governor's warm relationship with business apparently has its limits.

More than 2,000 demonstrators gather at Monument Circle in Indianapolis on March 28, 2015, to protest a controversial religious freedom bill recently signed by Gov. Mike Pence.
Nate Chute | Reuters
More than 2,000 demonstrators gather at Monument Circle in Indianapolis on March 28, 2015, to protest a controversial religious freedom bill recently signed by Gov. Mike Pence.

"I have a clear message for any corporation that contemplates bullying our state: Save your breath," Jindal wrote in a New York Times op-ed article on April 23.

He was referring to the outcry from several major corporations over so-called Religious Freedom Restoration laws in Indiana and Arkansas, as well as his efforts to strengthen a similar law passed in Louisiana five years ago.

The laws ostensibly protect business owners from actions that "substantially burden" their rights to exercise their religion. But opponents say the measures can give businesses a license to discriminate, such as refusing service to same-sex couples.

Read MoreAmerica's Top States for Business is coming soon!

After dozens of major companies vocally opposed the Indiana and Arkansas laws—from Apple and Angie's List to Wal-Mart and Yelp—legislators approved amendments to clarify that the laws do not authorize discrimination.

The changes did not go far enough for some, since Indiana and Arkansas—along with 27 other states—still have no outright statewide bans on LGBT discrimination. But the amendments alone were enough to fracture the long-standing alliance between conservatives and business, and to prompt Gov. Jindal's op-ed.

"Liberals have decided that if they can't win at the ballot box, they will win in the boardroom. It's a deliberate strategy. And it's time for corporate America to make a decision," he wrote.

Read MoreA US workplace civil war that's at a tipping point

"Liberals have decided that if they can't win at the ballot box, they will win in the boardroom." -Bobby Jindal, governor of Louisiana

For now, corporate America seems to be deciding on inclusiveness. That is especially clear from reactions to a bill in Texas that would have blocked local officials from issuing same-sex marriage licenses regardless of a U.S. Supreme Court ruling on the issue.

Read MoreIndiana gov: Need 'clarifying' legislation this week

The bill ultimately died without coming to a vote, but not before dozens of companies came out against it, including Texas corporate mainstays Dell and American Airlines, which said in a statement, "American has long been a pioneer in its fair-minded policies and practices for its LGBT customers and employees. We oppose any legislation that directly or indirectly discriminates against individuals based on their gender identity or sexual orientation."

But the effort goes beyond just one bill.

More than 200 companies and organizations signed onto a group called Texas Competes, formed ahead of this year's legislative session to push what the group calls "the business case for equality."

Read MoreGood news for America's workers: You matter again

"Fair treatment for gay and transgender people isn't just the right thing to do," the group says, "it's good for businesses too."

Spokeswoman Jessica Shortall acknowledges the state has had no trouble competing in the past, despite having a same-sex marriage ban and no statewide protections against LGBT discrimination. But she says businesses know that attitudes are shifting fast, and "we don't want to have to fix something once it's broken."

Citing surveys showing nearly 80 percent of millennials—regardless of their orientation—consider workplace antidiscrimination measures important, Shortall said Texas businesses increasingly see a risk of losing talent if the state is seen as intolerant.

"I don't know that we could have made such a data-driven case 10 years ago," she said.

It was an easy case to make to Sabre, the travel technology company based in the Dallas–Fort Worth area. General Counsel Rachel Gonzalez acknowledges, "Texas has had a little bit of brand damage."

"Hiring and retaining the very best talent we can, including technical talent, really is a top priority for Sabre," she said. Part of that effort means ensuring that Texas "is a strong brand" as a welcoming place.

"We love the blues and the reds," Gonzalez said. But she added that the company often finds itself competing to lure skilled employees from places like the West Coast, and "some people just have preconceived notions about what Texas is like."

Gonzalez said she is not surprised that so many businesses are becoming vocal about the need for inclusiveness.

"Really well-run businesses are going to want to attract that top talent," she said.

Our 2015 CNBC America's Top States for Business study takes the widespread corporate calls for equality into account. This year, we are considering LGBT antidiscrimination provisions among the more than 60 metrics we use to score the states. The metric is part of our Quality of Life category.

Read MoreThe truth about the GOP candidates

While some business owners consider such laws examples of government overreach (something we also cover in our Business Friendliness category), the overwhelming sentiment of business seems to be clear.

The historic bond between businesses and conservatives, however, may be anything but.