By Thomas Cunningham, MAC Chief Economist
Attachment: Potential Economic Consequences of RFRA-Like Legislation
As the Georgia General Assembly considers the Religious Freedom Restoration Act next year, legislators enter this debate with their eyes wide open. Based on the experience in Indiana – which passed a nearly identical bill earlier this year – we can safely predict that Georgia would suffer a significant economic backlash if it passed such a bill into law. The impact could include major sporting events like the Super Bowl, conventions, business and workforce attraction, and other negative economic consequences.
The negative reaction to Indiana’s law, which many believed would allow business owners to deny service to certain customers based on the owners’ religious beliefs, instantly exploded across the nation.
Upon signing by the Indiana governor, the state suffered negative stories in the national media, while #BoycottIndiana went viral through social media. More than 1 billion negative social media impressions were counted in the days following the bill’s enactment, which translates into millions of dollars of negative earned media coverage.
Major conventions and entertainment events previously scheduled in Indianapolis were canceled. Indiana’s WNDU-TV reported that Indianapolis lost $1.5 billion in meetings and conventions in the week that followed the bill signing. The intense national backlash even jeopardized the city’s hosting of the Final Four, which was scheduled for the next weekend.
Indiana’s leaders tried to stop the bleeding. Within a week, the Indiana bill was “fixed” to include language to clarify that the new law could not be used to discriminate against certain classes of people. The media turmoil died down and public backlash subsided, but the damage was already done. Hoosiers continue to suffer blowback, and the estimates of losses could be greater because analysts cannot know all the instances where Indiana was removed from consideration for major conventions and events, new business investment and large purchasing decisions from corporate customers and suppliers who took their dollars elsewhere.
Indiana will further consider this issue in its upcoming legislative session, which coincides with Georgia’s legislative session.
While determining a definitive dollar figure for total losses is difficult, it is clear that the economic consequences of a RFRA-styled bill are very real. Even conservative estimates of losses offer up eye-popping numbers.
In my analysis, enacting a RFRA law in Georgia without any added nondiscrimination language would produce two major monetary risks.
First, Georgia would lose at least $600 million in convention business. This is based on an outcome scaled to that which occurred in Indiana, assuming a minimum of one week’s time following a passage of a RFRA-style bill. Given the most recent data coming from Indiana, this estimate seems extremely conservative. Convention and meeting planners will ask “why take the risk?” if they have a choice between multiple states to host a major conference or event. Georgia’s tourism industry is responsible for around $50 billion in direct, indirect and induced spending and more than 400,000 jobs. Both of these figures represent slightly more than 10 percent of our state’s total economy.
Second, the state would forfeit $400 million from major sporting events – chief among them is the Super Bowl. Atlanta is bidding to host the 2019 or 2020 Super Bowl, and the selection process coincides with the 2016 Georgia legislative session. Other major sporting events at risk include sponsor-driven events such as NASCAR races and college football and basketball events.
It’s important to note that both of these numbers are intentionally conservative estimates.
Georgia is a large state. The metro Atlanta area economy alone is actually slightly larger than that of the entire state of Indiana.
With a potential economic loss of more than $1 billion in a scenario where the disruption is as short-lived as that in Indiana, the risks are substantial. Understanding real potential risks is a critical part of the decision-making process, and no one can plausibly claim they didn’t know what would happen.
Preserving Georgia’s reputation as a welcoming state promotes economic development and new jobs. Losing that reputation does just the opposite.
Thomas J. Cunningham is Chief Economist at the Metro Atlanta Chamber after a 30-year career at the Atlanta Federal Reserve Bank.