On October 7th, during Tesla's annual shareholder meeting, company founder Elon Musk announced that he would be moving Tesla's headquarters from Palo Alto, California, to Austin, Texas. Reasons included a lack of space needed for the expansion of Tesla's Fremont factory and the high cost of living in the Bay area. Musk's decision makes his the latest in a line of companies leaving California for Texas, a list that includes Oracle Corp., Hewlett Packard Enterprise Co., and Charles Schwab. The Texas Economic Development and Tourism Office stated there has been a "tremendous increase" in interest. Since the pandemic began, the Office claims there are 37 relocation and expansion projects currently underway. Texas has made a significant effort to attract businesses from other states, using low taxes and minimal regulations as bait. Texas officials have promoted these “advantages” in ads highlighting their “free-market” environment and criticizing the "tax and spend policies of liberal leadership" in Democrat-run states. Their efforts have been largely successful: four million people migrated to the state over the past ten years, although other economic factors certainly played a role.
We believe this increased corporate presence in Texas is a problem for the nation as a whole, given extremist social policies. Beyond the most recent abortion bill, which allows people to sue those who "aid and abet" an abortion and receive at least $10,000 in successful cases, Texas Governor Abbott has also worked to restrict voter access, allow anyone 21 or older to carry handguns without training or licenses, and block public schools from requiring masks. These policies have been opposed, however, by some corporations: sixty businesses and groups, including Microsoft and American Airlines, signed a Fair Elections Texas letter, calling for more election access. More than 150 corporations, including Apple, Amazon, and Target, supported the John R. Lewis Voting Rights Advancement Act, which strengthened protections for minority voters. The abortion law drew similar, although less intense opposition, with companies like Yelp, Patagonia, and Lyft signing onto the Don't Ban Equality in Texas movement. Will corporate opposition have real impact on Texas politics and economics? Not all Texas companies are opposed to Abbott's social policies: AT&T, Comcast, and CVS all donated to sponsors of the controversial Texas abortion law. Still, the majority of companies oppose these conservative social policies.
In the face of opposition, Governor Abbott continues to claim that his policies draw companies to the state, citing Tesla as an example. (Musk responded to the Governor’s comment with a tweet stating, "government should rarely impose its will upon the people and when doing so, should aspire to maximize their cumulative happiness" but did not refute Abbott's claims.)
We note that an increasing number of Americans expect corporations to be more socially engaged. A Global Strategy Group survey found that 81% of Americans think corporations should take action to address societal issues. Another poll by PerryUndem found that two-thirds of college-educated workers would not work in a state with restrictions like the ones in Texas. M. Ray Perryman, an economist, found that the new Texas voter restrictions are likely to cost the state $31.4 billion and destroy 223,000 jobs. While it appears that Texas is unstoppable, consumer expectations may stunt the state's growth. Focusing on the “free market” may no longer be sufficient as businesses must now also answer to an increasingly aware consumer.
William Michael Cunningham
Research Assistant: Ethan Li, American University
Sources:
https://www.fairelectionstexas.org/fair-elections-texas-letter.pdf
https://www.vox.com/business-and-finance/2018/3/20/17107626/corporate-america-nra-guns-daca-trump