HB2 Could Cost North Carolina Almost $5 Billion a Year

For Immediate Distribution
May 11, 2016

The Williams Institute, williamsinstitute@law.ucla.edu, (310) 267-4382

Law Impacts Over 336,000 LGBT North Carolinians

LOS ANGELES – By adding to an already challenging legal environment in North Carolina, HB2 could cost the state almost $5 billion a year, according to a new report by the Williams Institute at UCLA School of Law.

“The repeal of HB2 would not only reverse the threat to over $5 billion in economic activity for the state, but would also begin to bring North Carolina some of the economic advantages that come when a state embraces diversity and its LGBT citizens,” said Christy Mallory, Senior Counsel at the Williams Institute and co-author of the new report.

While prior reports have focused on the potential loss in federal funding to the state, this report examines 9 other harmful economic impacts resulting from HB2.  The report also presents new data from North Carolina about the size of the LGBT population, public opinion on LGBT issues, bullying of LGBQ youth, and health disparities faced by LGBQ people in the state.  The report, entitled Discrimination, Diversity, and Development: The Legal and Economic Implications of North Carolina’s HB2, was produced as part of a collaboration between the Williams Institute and Out Leadership.

The report considers three different types of economic impacts:

Discrimination.  HB2 conflicts with federal laws, the laws of other states, and the policies of most large companies.  As a result, North Carolina risks the following economic impacts:

          1. Loss of Federal Funding – $4.8 billion in federal grants and contracts, primarily from the loss of $4.7 billion in funding for public schools, colleges, and universities.

          2. Loss of Business Investment – Over $40 million in business investment that has been withdrawn from the state, resulting in a loss of over 1,250 jobs, and the risk of losing over $20 million more in business investment and 550 more jobs.

          3. Reduced Travel and Tourism – The loss of travel, tourism, and event spending that would have supported jobs and state and local tax revenues.

          4. Costs of Litigation and Enforcement – Significant costs in pursuing and defending litigation and enforcement actions related to HB2.

Development.   HB2 adds to the challenging environment that LGBT people already face in North Carolina.  “By moving toward exclusion and away from inclusion, HB2 contributes to the discriminatory environment that LGBT people face at school, in the workplace, in housing, and in public life— creating health and economic disparities for LGBT people in the state and taking a significant toll on LGBT youth in particular,” said Mallory.  By moving toward exclusion and away from inclusion, HB2 exacerbates:

          5. Bullying in School – More than a third of LGBQ high school students in North Carolina report being bullied and over 41% report seriously considering suicide in the past year. When LGBTQ students miss or drop out of school, it impacts their education and future.

Bullying of high school students in NC during past 12 months, North Carolina YRBS, 2013Bully2

          6. Workplace Discrimination – Over three-fourths of transgender respondents in North Carolina report workplace harassment and 1 in 8 report losing a job.  Each year, the resulting poverty and unemployment costs the state approximately $227,000 in state Medicaid expenditures and $345,000 in housing program expenditures

Economic impacts of discrimination against LGB/T people in North Carolina, Gallup Daily Tracking Poll; National Transgender Discrimination SurveyEconImpact2

          7. Health Disparities – A lack of legal protections and poor social climate contribute to health disparities for LGBT people.  If North Carolina were to move towards inclusion of instead of exclusion of LGBT people, the report estimates that by reducing major depression for LGBT people, the state could benefit by $92 to $123 million each year.   This is just one of many health disparities that could be reduced.

Health care characteristics of adults in NC, 2014 BRFSSAdulthealth

Diversity. A growing body of research finds that supportive workplace policies and practices have a positive impact on employer outcomes— “the business case for diversity.”

“By adding to an already challenging environment for LGBT people, HB2 is undermining the advantages of diversity in the workplace, eroding worker productivity, and making talented LGBT and non-LGBT employees more difficult to recruit and retain,” says Todd Sears, Founder and Principal of Out Leadership.

HB2, by adding to an already challenging legal landscape and social climate for the over 168,900 LGBT workers in North Carolina, has the following harmful economic impacts:

          8. Productivity – Research shows that a poor legal and social climate can mean that LGBT workers are less likely to be out at work and more likely to be distracted, disengaged, and to be less productive.

          9. Retention – When LGBT workers are in less supportive workplaces, they feel less employer loyalty and are more likely to leave.  On average, each LGBT employee who leaves a job in North Carolina would cost $8,800 to replace.

          10. Recruitment – Many LGBT and non-LGBT workers, in particular millennials, prefer to work for LGBT-inclusive companies.  Over 60% of North Carolina voters already feel that HB2 has hurt the state’s image with the rest of the U.S., making it harder to attract the best and brightest.

Click here for the full report.

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