Texas has been enacting some of the most far-right social policies in the country. But the tech industry continues to move in.
When Republican Gov. Greg Abbott in February directed state agencies to investigate anyone who provides gender-affirming treatment to transgender children for alleged "child abuse," he drew a swift and vocal backlash from civil rights groups, medical organizations and the White House.
Tech companies also spoke up, signing pledges or reiterating offers to help employees affected by the order. South by Southwest, the world-renowned tech, music and film festival slated to start in Austin on Friday, condemned Abbott's order. "The governor's latest directive puts trans children in harm's way once again and we unequivocally condemn this action," SXSW told local newspaper The Austin American-Statesman.
But that's done nothing to budge Abbott or his supporters from accelerating the shift further to the right in Texas politics.
Indeed, the governor's directive about trans youth was just the latest in a series of laws and orders targeting social issues, including voting, reproductive and gun rights. But for a state that has seen such an influx of new voices -- Texas has the ninth-largest economy in the world, is the third-fastest growing state and has added more people than any other state in the past decade -- the overall public response to this slew of laws and orders affecting individual rights has not been as resounding as political observers expected. That's especially the case when it comes to the booming tech community, which has played a key role in the state's expansion in recent years.
That dynamic underscores the tradeoff that tech companies -- and the liberal employees who have moved to Texas -- must reconcile as their values collide with their wallets.
Tech and Texas have become intrinsically linked. It's no coincidence that the so-called Texas Miracle, which refers to a decade-long period of economic expansion after the Great Recession, has continued as technology companies relocate or expand in the Lone Star State. The companies include the likes of Tesla, Oracle, Hewlett Packard, Apple, Google and Amazon.
"Businesses are having a really difficult time deciding how to position themselves on these issues of social justice and public policy," Joshua Blank, research director of the Texas Politics Project at the University of Texas at Austin, said over Zoom.
The reason? Taking a stand on social issues is hard when you are benefiting from a fiscal and regulatory agenda that makes Texas a business haven, according to several experts. Compared with other states, especially California, doing business in Texas is much less expensive. Texas has no state income tax or capital-gains tax on individuals and has fewer business regulations. By moving to Texas, tech companies are "escaping high taxes and a regulatory environment," Bill Fulton, director of the Kinder Institute for Urban Research at Houston's Rice University, said over Zoom.
At the same time, over the past six months, Texas has also been busy issuing social policies that might make some think twice before deciding to relocate to the Lone Star State. In September, three new state laws took effect. A new voting law restricts how and when voters cast ballots, making it harder for some Texans to vote. A new abortion law bans abortions after about six weeks of pregnancy, amounting to a near-total ban and allowing private citizens to sue anyone who enables a prohibited abortion. Another new law allows anyone in the state to carry a handgun in public without a permit or training.
In addition to his most recent directive against gender-affirming care, Abbott signed in October a law that bars transgender girls from participating in female sports in schools. In February, Texas Lt. Gov. Dan Patrick proposed to end university tenure at public universities in an effort to silence support for the teaching of critical race theory, the study of how racism permeates policies, institutions and systems. Republicans in the state legislature have also repeatedly sought to require public schools to ban books with themes of race and sexuality.
As a result of such laws and policies, some hospitals have stopped offering gender-affirming care to transgender youth, Texan women have been forced to seek abortions out of the state, and thousands of vote-by-mail applications still face rejection from the March 1 Texas primary due to confusion over new ID requirements.
Regardless of how their employees feel about these issues, companies know that antagonizing the elected officials who continue to make possible the Texas Miracle can backfire.
"Political leaders of the state have learned that the consequences of drifting ever further to the right are modest to nonexistent," Cal Jillson, professor of political science at Southern Methodist University in Dallas, said over Zoom.
Indeed, the hard turn right in Texas politics hasn't taken a toll on the state's economic growth prospects or even on recruitment efforts of tech companies located in the state, especially those in the ever-expanding and liberal-leaning metropolitan areas of Austin, Dallas and Houston.
That doesn't mean, however, that the radicalization of Texas social policies won't have an impact on the state's economic or social future. Political experts, academics and business leaders interviewed by CNET expressed concern that the trend -- assuming it continues -- will eventually tarnish the Texas brand and make it increasingly difficult for companies to attract and retain top talent.
But also at stake is the role that corporate America can play in society at a time when consumers and employees expect business leaders to advocate for social responsibility.
"Texas will become a textbook example of what happens when social policy and marginalized, underserved, underrepresented communities become the collateral damage of corporate political giving," Jen Stark, senior director of corporate strategy at Tara Health Foundation, a nonprofit focused on engaging private companies to advance gender and racial equity, said over Zoom. "Companies have been complicit in setting up an extremist government in Texas and other states."
In September, Abbott told CNBC that the new state abortion law wouldn't hurt business in the state but would even accelerate the "process of businesses coming to Texas." Shortly after watching this, Curtis Sparrer, principal at the San Francisco-based PR firm Bospar, decided to take action.
Growing up in Texas as a gay man, "I would frequently hear how gay people needed to be legislated," Sparrer said over Zoom. He remembered how important it was for him to see allies speak up when the state tried "to control another person's body." He decided that Bospar would offer staff members based in Texas a relocation package if they wanted to leave the state. Hours later, Salesforce, one of the largest customer relationship management software companies in the world, with headquarters in San Francisco and offices across the country, including Dallas, announced a similar relocation offer to its Texas-based employees.
Bospar's announcement made headlines and the company was praised by employees and business partners alike for taking a stand. Six months later, however, none of Bospar's employees based in Texas has taken the offer or relocated.
One of his employees told Sparrer that the relocation offer was "kind of a break-glass solution" for her and that she was not ready to leave Texas just yet. Another one said that she was in a lease, but once the lease was up, she'd think about it. These employees' positions exemplify a conundrum that explains why tech companies and the professionals who work for them in Texas might oppose the state's social policies but might not be willing to do much about it.
"One of the things about living in Texas is that being a liberal is relatively costless," said Texas Politics Project's Blank. Many of the businesses coming to Texas are moving from places "that are a lot further along in realizing a liberal public policy," which includes larger investments in education, health care and infrastructure, and from places where workers are allowed to unionize. "Those things are expensive," Blank said. Texas, by contrast, is a right-to-work state.
One of the reasons why so many people have moved from California to Texas in recent years -- more than 80,000 per year, according to the US Census -- is the cost of living and housing. While the median house price in Austin has risen by more than 20% in the past year alone to around $580,000, creating a looming housing crisis, it's still less than half of San Francisco's average price of $1.2 million. And houses in Dallas, Houston and San Antonio are significantly more affordable too. According to calculations by the Massachusetts Institute of Technology cited by Investopedia, living in California is nearly 30% more expensive than in Texas.
When families discuss where they will do better, particularly those with good incomes who don't need government support, the "calculation is more on the financial pluses and minuses and less on social policy," said SMU's Jillson. Although it's true that people worry about social policies, Jillson said, "they might talk about it among themselves, but they don't talk about it to Greg Abbott." And if you are a tech worker living in Texas, Blank said, "you're not normal -- you're making significantly above the median family income."
It also helps that the major metropolitan cities in Texas, including Dallas, Houston, San Antonio and especially Austin, are controlled by Democratic governments that have been promoting progressive social policies for years. Despite the recent increase in the cost of living, Austin remains one of the best cities to live in the US. It has a rich culture and food scene, great weather, a liberal vibe -- and it's still affordable, especially if you're in tech. Austin's allure is hard to resist when you compare it, for example, to the Bay Area. I know because I've lived in both places.
The reason liberal professionals aren't more uncomfortable with Texas' social policies is that Austin can give them shelter, said SMU's Jillson. "They can tell themselves, 'We're not moving to Texas, we're moving to Austin,'" he said.
Those same liberal metropolitan areas have been responsible for the rapid growth of Texas in the last decade. Six of the counties with the largest population gains between 2010 and 2019 in the country were in Texas, according to the US Census Bureau, all of them located in or around Houston, Fort Worth, San Antonio, Dallas and Austin. In the same time period, three of the top 10 metro areas with the largest population growth were Texan: Dallas-Fort Worth-Arlington, Houston-The Woodlands-Sugar Land and Austin-Round Rock-Georgetown.
The exponential growth of the major Texas cities also helps explain the state's stark urban-rural divide. In 2020, 44% of all votes cast in the state in the presidential election came from one of the so-called Big Six metropolitan counties in Texas, but 57% of all Democratic votes were cast in the same counties, according to an analysis by UT Austin's Texas Politics Project. Those metro areas lean Democratic, while the rest of voters scattered across the state lean solidly Republican and largely identify themselves as conservative, pro-gun, anti-immigration and anti-abortion, according to Texas Politics Projects' surveys.
Most people out of the state don't realize the dimension of the Texas rural electorate, said Jeff Blaylock, publisher of Texas Election Source, a nonpartisan publication that tracks election results, campaign contributions, expenditures and public opinion polls across the Lone Star State. Over 3 million people live in rural areas in Texas, equal to the population of Arkansas.
"Republicans have built an advantage of between a million and a million and a quarter net votes in counties with a population fewer than 30,000 people," Blaylock said.
Those rural voters have largely helped the Republican Party retain control of the executive and legislative branches in Texas for decades. And since elections in Texas are mostly decided at the primary level, those same rural and conservative voters shape any discussions and bills around social policies.
As elections have become increasingly competitive and contested, Republicans have spent the past two decades in power passing all kinds of right-leaning legislation, UT Austin's Blank said, and they ran out of low-hanging fruit issues. That's why, in order to keep their base happy and activated, GOP leaders made a big push to the right in the past legislative session around voting rights, abortion, guns and transgender health care.
The policy trend in Texas is likely to continue unless two things happen, according to experts. One would be that liberal-leaning voters decide to start voting in higher numbers earlier in the process, said Blaylock. In the most recent primary election, more than 16 million Texans who could have voted didn't go to the polls; 14 million of those were registered voters who didn't show up and the rest were people eligible to vote who didn't register. The Texas primaries were decided by fewer than 1 in 5 registered voters, according to a Dallas Morning News analysis.
Anyone concerned by the direction social policies are taking in the state needs to "understand that if they want change here in Texas, they need to get involved where 90% of races are decided," said Texas Election Source's Blaylock. "That's the primary."
And second would be that the demographic trend of growth in urban areas continues its natural course until it reaches a tipping point.
"Everybody expects there will be Democratic statewide elected officials by 2030" in Texas, said Rice University's Fulton. However, he doesn't foresee the dramatic swing in politics from conservative to liberal that California experienced in the 1990s and 2000s. While the Hispanic population has continued to grow in Texas and now represents almost 40% of the whole population, "Hispanics in Texas are more conservative than Hispanics in California," he said.
In the meantime, only a few tech companies and organizations have spoken out in response to the wave of far-right policies recently issued in the Lone Star State.
Texas Competes, a business coalition of 1,500 members, including large corporations like Amazon, Facebook and Oracle, that is focused on making the state more inclusive for the LGBTQ community, issued a statement strongly opposing "Texas' attempt to violate parents' rights to decide what is best for their children" in response to Abbott's order against gender-affirming care.
"Anti-LGBTQIA policies go against Dell Technologies policies," a spokesperson for Dell, one of the largest tech companies in the world headquartered just outside of Austin, said in an email response to a comment request about Abbott's directive. "We believe in fair treatment in the workplace, regardless of race, gender identity or religion."
"We've not taken a position on that legislation," Adam Bauer, spokesperson for Hewlett Packard Enterprise, which relocated its headquarters from San Jose, Calif., to Houston last year, said in an email response to a comment request about the state's new voting law. "As a company of 60,000 employees worldwide, we encourage our team members to make their voices heard by engaging their elected representatives through advocacy and at the ballot box."
Facebook, which has a growing presence in Austin, referred CNET to a Freedom for All Americans letter the company signed, along with 157 other companies, including Apple, Amazon and Google, denouncing attempts to discriminate against LGBTQ communities. Other companies and organizations didn't respond to CNET's requests for a comment on these policies including Apple, Google, the Austin Chamber of Commerce, the Greater Houston LGBT Chamber of Commerce, and the Texas Economic Development Council, a statewide nonprofit dedicated to the development of economic and employment opportunities in Texas.
"The Texas economy is booming. People and businesses vote with their feet, and month after month they are choosing to move to Texas more than any other state in the country," Nan Tolson, a spokesperson for Abbott's office, said in a statement emailed to CNET. "Businesses in diverse industry sectors, including tech companies, are relocating to and investing in the Lone Star State at a record pace because we've built a framework that allows free enterprise to flourish and hardworking Texans to prosper."
In October, freelance journalist Omar L. Gallaga wrote in Texas Monthly about the new abortion law and its potential impact on tech companies' recruitment efforts in the state. His findings mirrored CNET's.
"I was a little bit surprised that there weren't more official statements from companies saying, 'We're not going to do business with Texas' or 'We're moving out.' None of that," he said over Zoom.
Tech companies are struggling to take a public stand about these social issues because they're afraid to be perceived as too left or too woke and awaken the ire of right-leaning political leaders and consumers, several experts said. "They're scared of this kind of extremist boogeyman that will come at them [and] regulate them," said Stark from the Tara Health Foundation.
But will Texas' accelerating hard turn to the right eventually harm businesses? Experts and executives interviewed were divided.
"Any state that makes it harder to recruit and retain employees is going to lose in the long run," said Vivek Bhaskaran, founder and CEO of QuestionPro, a digital survey and market research company that relocated to Austin from California in 2020. Bhaskaran is also an opponent of the new abortion law.
The Texas Miracle has been many decades in the making and is not going to lose its glow overnight, said Jessica Shortall, managing director at the Texas Competes coalition. But this slew of right-wing policies "does feel to businesses we talk to like an absolutely unforced error and something that's not conducive to long-term competitiveness."
The Texas brand is almost tarnished by design, SMU's Jillson argued -- and that's partly what makes the state so competitive. CEOs who brought their companies here seeking business incentives now argue that "right-wing policies will make recruitment more difficult," he said. "But does it? Has it? Not so much."
For Stark, the combination of "layer cake of crazy" -- as somebody described to her the package of far-right policies that came out of the Texas legislative and executive branches -- "will in the long term cause top talent to think twice about where they might want to raise families and do business in an increasingly mobile business environment," she said. "Texas has a lot of [business] incentives. How far can that go to cancel out the social harm [inflicted by these policies] is the experiment we're seeing right now."
Some leaders from tech companies, particularly from the Bay Area, may eventually get tired of the radicalization of Texas politics, Rice University's Fulton said. "And if home prices moderate in the Bay Area, which they might, that might stem the flow" of expansion in the Lone Star State.
All the data to support these predictions is anecdotal so far. Shortall from Texas Competes heard from a job candidate who turned down a high six-figure offer from a Texas employer because the person themselves is transgender. As part of his reporting on the local tech community, Gallaga has met people in Austin who've decided to leave the state, but recruiters he's talked to have told him they haven't seen that big of an impact.
One week before the start of SXSW, Clubhouse, the social audio app that describes itself as a "more human place on the internet" and is headquartered in San Francisco, announced its decision to not attend the conference following Abbott's directive on gender-affirming care.
"We realized we wouldn't feel comfortable asking LGBTQ+ voices from the Clubhouse community to come to Texas.... and if we feel that way, we shouldn't be there at all," the company said in a statement. SXSW didn't reply to a request for comment.
In several recent conversations he's had trying to recruit people, QuestionPro's Bhaskaran has noted a change in sentiment about the state that, for many, holds the future of the country.
"Texas is doing dumb shit right now, I'm not sure about" moving to Austin, potential candidates have told him. "They say it as a joke," Bhaskaran said, "but it's obviously in their mind. It's a conversation that's come up a bunch of times now, which, frankly, one or two years ago, we never had -- and we've been recruiting for a long, long time."