Top States for Business

LGBT groups and tech companies warn that a Texas bill could cost the state billions

Key Points
  • Backers of Texas State Senate Bill 17 say it grants religious freedom to licensed professionals.
  • Critics say it is a license to discriminate against the LGBTQ community.
  • Legislation perceived as being anti-LGBTQ, like North Carolina's bathroom bill and various Religious Freedom Restoration Acts introduced across the U.S., can take an economic toll.
  • The North Carolina issue was estimated to cost its economy $3.76 billion.
Roy Hsu | Getty Images

The Supreme Court has become the latest flash point for LGBTQ politics, agreeing to hear a case about Title VII of the Civil Rights Act of 1964 and workplace discrimination. But at the local level, Texas is the current showdown state for LGBTQ rights.

Bill 17, recently passed by the Texas State Senate, sounds innocuous, but citing religious freedom as a reason for licensed professionals — doctors, lawyers and accountants — to turn away business (except in cases of severe injury or risk of death), the bill has become part of a nationwide battle between conservative politics and the business community.

Even before the Texas Senate passed the bill earlier this month — which now heads to the Texas House for a full vote — major technology companies and employers in the state, including Amazon, Dell, Apple and Facebook, sent a warning letter to legislators.

"We will continue to oppose any unnecessary, discriminatory, and divisive measures that would damage Texas' reputation and create problems for our employees and their families," said representatives in a joint letter, also signed by a dozen local Chambers of Commerce. "These include policies that explicitly or implicitly allow for the exclusion of LGBTQ people."

Republican State Senator Charles Perry, a sponsor of Senate Bill 17, said his concern is not companies that provide Texas with the "almighty dollar."

"When we see what we may perceive as immoralities, those people who hold those beliefs should be able to defend their faith ... without fear of losing their livelihood and their license," Perry, a certified public accountant, said during a Senate hearing on March 25.

Many LGBTQ community stakeholders say the bill is a "license to discriminate," depriving members of their human rights. Similar political battles in recent years have shown that the employers Perry dismissed as the "almighty dollar" have proved to be an important and powerful political voice in these debates.

Similar bills have been bad for business

Bills introduced in states across the country similar to SB 17, such as North Carolina's Public Facilities Privacy & Security Act, otherwise known as the bathroom bill, can be detrimental to a state's economy.

Back in 2017 that bill, which only permitted people to use bathrooms based upon the sex on their birth certificates, was estimated to cost North Carolina $3.76 billion. PayPal was one of the many businesses to change its plans within North Carolina, opting not to build a facility that would have generated an estimated $2.66 billion for North Carolina's economy. In March of 2017, the bill was repealed.

Members of the black community join a diverse crowd of protesters opposing North Carolina's HB2 "bathroom law" that restricts members of the LGBT community from using the bathroom of their choice, during a demonstration outside the state legislature in Raleigh, North Carolina on May 16, 2016.
Jonathan Drake | Reuters

Texas attempted to implement several different versions of a bathroom bill a few years ago but ultimately failed.

"I'm disgusted by all this. Tell the lieutenant governor I don't want the suicide of a single Texan on my hands," said Texas speaker of the house (2009–2019) Joe Straus, in regards to the bills that were brought forward in legislative session back in 2017, which cost Texas $66 million in revenue from travel and tourism.

Indiana's Religious Freedom Restoration Act was part of a wave of legislative efforts brought by conservative politicians and deemed anti-LGBTQ by businesses and critics. The text of that bill stated the government cannot "substantially burden a person's exercise of religion" unless it is furthering a "compelling government interest" and acting in the least restrictive way possible. Nineteen states had similar laws at the time of the Indiana battle under then-Gov. Mike Pence in 2015. They are modeled after a federal law, the Religious Freedom Restoration Act, signed by President Bill Clinton in 1993.

How the business world reacts to anti-LGBTQ legislation

Apple CEO Tim Cook, the most prominent openly gay corporate official in America, described laws like Indiana's as "very dangerous" in a 2015 Washington Post op-ed piece.

Officials from, which was at the time building a huge presence in Indianapolis, spoke out at the time in letters, saying its "success is fundamentally based on our ability to attract and retain the best and most diverse pool of highly skilled employees, regardless of gender, religious affiliation, ethnicity or sexual orientation." CEO Marc Benioff warned the company would be forced to dramatically reduce its spending in the state and would have employees boycott the state when it came to travel.

Angie's List co-founder and former CEO Bill Oesterle blamed his cancellation of a planned $40 million headquarters expansion of his Indianapolis-based online ratings company on RFRA.

It is bad for business, bad for the brand and bad for the people of Texas, their workers and their families.
Samantha Smoot
interim executive director of Equality Texas

After signing the bill, Gov. Pence had the legislation rewritten to make clear in the language that business owners will not be allowed to discriminate when providing services. In a post-mortem analysis of the battle, published in 2018, the Indianapolis Star noted that RFRA caused the city to lose up to 12 conventions and $60 million in business. The Indianapolis Star also uncovered that a year after the passage of RFRA, Pence had spent $365,000 of taxpayers' money on PR firm services to repair the damage to the state's reputation from the religious freedom law.

Republican Governor Greg Abbott noted in a commentary written for CNBC last year when Texas was named the Top State for Business in 2018 that it is the top tech exporting state in the country, the top state for jobs created by foreign and domestic investment, and with an annual GDP of $1.7 trillion, the state is the 10th-largest economy in the world.

"If Texas truly wants its economy to grow, its legislators must concern themselves with the health of our businesses, not our bedrooms and bathrooms," said Jonathan D. Lovitz, senior vice president, National LGBT Chamber of Commerce, discussing the current bill that is running through Texas. "The LGBT community is a vital part of the Texas economy and deserves equal treatment under the law."

"The business community across Texas has made it clear that they oppose this legislation," said Samantha Smoot, interim executive director of Equality Texas. "It is bad for business, bad for the brand and bad for the people of Texas, their workers and their families."

Smoot said efforts continue around the U.S. to craft laws that are presented as protecting religious freedom but in fact are designed to discriminate against the LGBTQ community. Many are modeled on the legislative playbook of Project Blitz, a program of the Congressional Prayer Caucus Foundation.

Future repercussions in Texas

If the bill passes the Texas House, Lovitz is confident that major corporations will continue to step up to the plate.

A spokesman for Dell Technologies, a company founded in Texas and based in the Round Rock community outside of Austin, told CNBC in response to the Texas bill passing the Senate that "promoting an environment that values individual differences is a pillar of our success."

"Dell Technologies prides itself as a welcoming workplace for all. ... We look forward to working with officials at both the state and local level on policies that encourage fairness, economic growth and business development."

"It's fortuitous that we are watching SB 17, and bills like it, in the same [time period] the NGLCC and the National Business Inclusion Consortium are meeting with the Nation's top 50 corporations for inclusion," Lovitz said. "Many of the corporations who made this list have publicly come out against discriminatory bills like this in the past, and we will likely see them do the same in the future."

Some of the more notable companies on the top 50 list are AT&T, IBM and Walt Disney.

"Our economy is directly tied to our nation's rich diversity. LGBT people are women; we are people of color; we are veterans and so much more," Lovitz added. "Texas is a place that is known for so many leading industries nationally, such as energy, tourism and transportation. So they know fighting a bill like this is not only the right thing to do by their people but in the best interest of our economy."

There is no date yet in the Texas House for a vote on SB 17, which currently sits with the Texas House State Affairs Committee.

The Texas Tribune noted in a recent analysis that the conservative movement's goal may stop short of complete legislative victory. The bathroom bill considered during the 2017 legislative session was approved by the Senate, but the House never voted. "Nevertheless, Lt. Gov. Dan Patrick declared victory," the Tribune wrote.

Correction: This story has been updated to reflect the current title for Angie's List co-founder and former CEO Bill Oesterle.

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