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PayPal Move Makes Economic Impact Of HB 2 Real

PayPal's corporate headquarters in California.
PayPal's corporate headquarters in California.

PayPal's corporate headquarters in California.
PayPal's corporate headquarters in California.

"The economic repercussions are threatened and real." That was the first line of a press release from the Charlotte Chamber of Commerce put out Tuesday after PayPal ended plans to bring 400 jobs to Charlotte.

The move was in response to House Bill 2, which the company sees as discriminatory. For Charlotte, the loss of PayPal is tangible. But for North Carolina’s Republican lawmakers, the move has barely registered. And they’re now portraying PayPal as the kind of company nobody should deal with.

Up to this point, calculating any potential long term economic impact of what’s now widely called HB 2 was a theoretical exercise.

Yes, more than 100 CEO’s and other corporate executives had signed a letter calling the law discriminatory and urging lawmakers to repeal the measure. But a letter doesn’t necessarily mean action.

Yes, the Charlotte Regional Visitors Authority said they’ve heard groups might pull their conventions from Charlotte. But so far, none have.

And yes, some television and movie studios have said they would not film in the state until HB 2 is repealed. But only one production was actually pulled, a pilot due to be filmed in Charlotte. But pilots for TV shows don’t always go into full production.

But with Monday's announcement that PayPal was scrapping its plans for a new facility in Charlotte, the economic impact of HB 2 has become real.

“This was going to be our Global Operations Center for North America,” explains Dan Schulman, the CEO of PayPal. The Charlotte center was to be home to 400 jobs. “And out Global Operations Center does all of our back office work. It does regulatory compliance types of works. Settling disputes.” It would have also housed IT workers, engineers and other staff.

Facebook post by Governor Pat McCrory on PayPal coming to Charlotte.
via Facebook
Facebook post by Governor Pat McCrory on PayPal coming to Charlotte.

For PayPal, it was a big deal. The Charlotte site was selected after a nationwide search. At the time it was also a big deal for Governor Pat McCrory, who estimated an economic impact for Mecklenburg and surround counties at more than $20 million annually. McCory stated the company was showing “North Carolina is on fire right now regarding job creation and Charlotte is leading the way.”

Five days later McCrory signed House Bill 2 into law.  According to Schulman of PayPal, “We were surprised that the governor would push a bill that basically discriminates against people for their sexual orientation or their gender identity.”

This isn’t just about who can use which bathroom. But neither is the law.

It does establish North Carolina’s first statewide non-discrimination ordinance which mirrors federal law, deeming race, religion, national origin, color, and other categories as protected classes. But it leaves sexual orientation, gender identity and gender expression off that list. And bars municipalities from granting those protections. And Schulman says it was time for PayPal to do something. “This is about discrimination in our country. I do not feel there is room for discrimination against any of our communities. It’s about just upholding our values.”

Now, PayPal’s action comes with a big slice of irony for Charlotte.

“It’s really odd.” Says State Representative Paul Stam, a Republican from Wake County. He co-sponsored HB 2. “Charlotte will presumably be hurt by this, not the rest of the state. Charlotte’s the one who did the policy that PayPal says they liked. So they’re punishing their friends.”

It’s a point not lost on Schulman. “I’ll tell you one of our biggest regrets is that we will not have the opportunity to be a part of the Charlotte community.” But that’s where the agreement ends. And the Republican backlash to PayPal begins.

On the company’s moral rational against doing business in North Carolina, Stam said this, “Maybe they’ll stop doing business in China, which is a brutal dictatorship.”

A press release from the North Carolina Republican Party also brought up allegations the company did business with Sudan, Cuba, Iran in violation of sanctions. PayPal settled the case with the U.S. government for $7.7 million but admitted no fault.  

Which raises the question: if PayPal is really such an evil company, why did the state offer up nearly $2.8 million in incentives to bring it to North Carolina in the first place?

Other reactions were far more visceral.

A joint statement by North Carolina House Speaker Tim Moore and Senate President Pro Tem Phil Berger included a direct attack on Charlotte’s mayor Jennifer Roberts. “She’s teamed up with Attorney General Roy Cooper, the Human Rights Campaign and the rest of the national Political Correctness Mob to trash the reputation of her own city and wage war on her own state.” They added that, “With the help of the Liberal Media, they have covered up the truth about the bathroom ordinance supporters. They have lied about and misrepresented what the bill does.”

Governor Pat McCrory has also said the controversy over HB 2 has been cooked up by the liberal media. But yesterday, he was more focused on PayPal, and a bit sarcastic. "I anticipate PayPal will still provide their services and accept our consumer money in the state of North Carolina." Which indeed, is the case.

PayPal CEO Dan Schulman
PayPal CEO Dan Schulman

And, PayPal’s Schulman says, their decision to scrap their new Charlotte operations center is not yet set in stone. "If HB 2 is repealed in the near future, before we settle on a new location, we would gladly go back into Charlotte." A process he expects to take a couple of months.

To be clear, PayPal’s decision will not send Charlotte spiraling into a recession. Nor will it make a visible dent in North Carolina’s overall economy. But perhaps the most telling press release yesterday was from the Charlotte Chamber of Commerce.

Yes, the economic repercussions of HB 2 are threatened and real. And they’re being felt in Charlotte.

Copyright 2016 WFAE

Tom Bullock decided to trade the khaki clad masses and traffic of Washington DC for Charlotte in 2014. Before joining WFAE, Tom spent 15 years working for NPR. Over that time he served as everything from an intern to senior producer of NPR’s Election Unit. Tom also spent five years as the senior producer of NPR’s Foreign Desk where he produced and reported from Iraq, Afghanistan, Yemen, Haiti, Egypt, Libya, Lebanon among others. Tom is looking forward to finally convincing his young daughter, Charlotte, that her new hometown was not, in fact, named after her.