The Economic Impact of Ending Roe v. Wade — Will Large Companies Reconsider Leaving California?

Here at Wells $treet, every headline has a money angle, including the possible end of Roe v. Wade.

This story isn’t about whether abortion should be legal. It’s about how Corporate America may react to its restricted access. The idea of fleeing high-tax states for business-friendly environs just got more complicated.

California, where I live, is the biggest and bluest state in the nation. Abortion here is legal until a fetus is considered viable, usually between 24 and 26 weeks. A pregnancy can even be terminated after viability if a mother's life is at risk.

But liberal California is losing residents. Its population dropped for the second year in a row in 2021, reversing more than a century of growth. According to the state’s Department of Finance, 275,000 people left California last year, and not enough people moved in or had babies (or survived Covid) to make up for it. The net loss in population was 117,000.

Who can afford to live here? I mean, when a house in Berkeley goes on the market for $1.8 million and sells for $4 million in CASH, well… geez.

Companies have been leaving, too. Stanford’s Hoover Institution reports 265 businesses relocated their headquarters outside California from 2018 through the first half of last year, including Oracle, Schwab, and CBRE.

Most of those companies moved to Texas, where abortion is currently banned after about six weeks of pregnancy. Elon Musk moved Tesla’s headquarters to Texas, along with one of his other ventures, The Boring Company. Could SpaceX follow? One can only imagine what Twitter employees in San Francisco are thinking. “I’m not moving to Texas, especially not now.”

“The Roe decision will probably have more impact on highly educated white women than minorities,” says Joel Kotkin. “They [are] more likely to be able to afford living in some of the more expensive blue states.”

Joel writes about Americans on the move in his capacity as the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange, California, as well as Executive Director of the Houston-based Urban Reform Institute.

The Public Policy Institute of California says the people who move to California “tend to have higher education levels than those who move out,” and these are the kinds of workers that Silicon Valley needs, along with the state’s thriving biotech industry.

Polls indicate a majority of Americans do not want Roe overturned, at least not in the first trimester, and if those polls are to be believed, will an end to Roe impact the decisions of more companies considering a move outside "Taxifornia"? Might some that already took off decide to move back to attract talent?

We’re already seeing other corporate decisions around abortion. Several companies from Amazon to Apple are covering travel expenses for their employees in Texas to leave the state for an abortion after the six-week cutoff. Bloomberg reports that women are traveling as far as 1,000 miles for the procedure. These corporate travel benefits are expected to expand as more states restrict or completely cut off access to abortion services.

Companies that are making these decisions could face potential backlash from anti-abortion advocates, much like Disney is over its opposition to the so-called “Don’t Say Gay” law in Florida. But it appears that right now, employees — or at least vocal ones — hold more sway than customers. “A hundred very militant people at Google have more voice than 10,000 people who don’t say anything,” Joel tells me.

There are other economic impacts in overturning Roe. Fortune reports that current abortion restrictions are costing the U.S. economy over $100 billion “due to reduced earning levels, increased job turnover, and time off for women between 15 and 44 years old.” That whopping dollar figure comes from the Institute for Women’s Policy Research.

I don’t know where they arrived at a number like that, so I did a little math of my own. The CDC reports there were almost 630,000 legally induced abortions in the U.S. in 2019. The USDA says it costs about $233,000 to raise a baby from birth to adulthood. Multiply those two numbers and you get $147 billion for one year’s class of unwanted births. And much of that cost would most likely require government (taxpayer) aid.

I know you can’t put a price on human life — though insurance companies do, and I just did. Again, I’m not making a moral judgment here, I’m just doing some objective math.

Joel is amazed that huge decisions like abortion continue to fall into the lap of the judicial branch. “One of the biggest problems we have as a country is that we now adjudicate almost everything,” he says. Laws seem to increasingly come through “a presidential decree” that has to be deemed legal or illegal by the high court, bypassing an often-gridlocked legislative branch. “The participation of people has almost disappeared,” he says.

So now what? In a more expensive world, Corporate America has to consider more than its balance sheet in making decisions about relocating or expanding, and state governments also have a lot at stake. “The great problem [that] the Southeast, Southwest are going to have is their economic policies are clearly working,” says Joel, “but if they adopt very, very conservative social policies, they may actually slow their own progress.”

That may be just fine with locals, he adds, who may not want fast growth if it means more Californians moving in and driving up home prices. “Do they really want this big, cosmopolitan company with their genuflection to progressive values?”

Bottom line — literally and figuratively — overturning Roe v. Wade will ripple all the way to the boardroom. “Many of the people who run these large companies are probably culturally Democrats, and they’re economically Republicans,” Joel says. Right now, “They’re completely confused.”

Watch this space, folks.

Do you think large businesses will take abortion rights into consideration as they make plans to move or expand? Join the conversation below, or 📫 jane@janewells.com.

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Cover image: Protest in Boston over the Supreme Court draft overturning Roe v. Wade/Boston Globe