The Economics of Discrimination

Sunday, July 9, 2006

Discrimination and economic development just don't mix. For proof, look at the Jim Crow South, where economic growth lagged the rest of the nation from the end of World War II until the mid-1960s. Racism undermined prosperity. Then, as segregation waned, economic growth accelerated.

In November, Virginians will have the chance to self-inflict a fresh discriminatory wound on their economy. The Marshall-Newman amendment, the so-called "marriage amendment," seeks to amend Virginia's Constitution to ban gay marriage and to impose other legal limitations on unmarried couples, including heterosexual couples. The amendment is not only useless -- gay marriage has been outlawed in Virginia for 30 years -- but it is downright harmful to the state's economy in two important ways.

First, the amendment makes Virginia less attractive to companies that seek top employees without regard to race, religion or sexual orientation. Capital One, for example, is one of Virginia's biggest and best employers. It provides domestic-partner benefits for unmarried employees' partners, both for same-sex and heterosexual couples. The Marshall-Newman amendment could prohibit Capital One from providing these benefits. That would make it harder for Capital One and for the 15 other Fortune 500 companies based here that provide such benefits to hire the people they want to hire in Virginia.

Second, the amendment marks our Commonwealth as a place where people who are "different" or who have "different" ideas are not welcome -- be they gay or straight. This consequence is perhaps the most serious. Economic development today is all about attracting the best, most talented and most creative employees. These workers will determine in large part whether Virginia's economy roars or whimpers and whether Virginia companies can compete against overseas firms with cheaper labor pools.

Not surprisingly, these talented workers and the high-tech, high-wage companies that employ them tend to locate in communities that are diverse and open-minded. These communities are also ones that attract gays and lesbians, and for the same reasons. In his influential book "The Rise of the Creative Class," Richard Florida notes that the most statistically reliable indicator of a successful high-tech-friendly environment is the size and vitality of the gay population. Gays and lesbians "signal a diverse and progressive environment that fosters the creativity and innovation necessary for success in high-tech industry." That environment attracts talented gays but, in far larger numbers, it also attracts talented heterosexuals who want to work for companies and in communities that respect diversity and individual freedom. Virginia needs that type of environment if it wants to attract the best companies and most talented employees.

Virginia tried the economics of discrimination once before. It didn't work in the 1950s and '60s, and it left our state's economy at the bottom of the national heap. Surely we have learned from that.

Virginians should vote no this fall on the Marshall-Newman amendment not only because it's wrong but also because it's bad for business.

-- Michael Schewel


was Virginia's secretary of commerce and trade under Gov. Mark R. Warner (D).

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