It seemed that not even threats of economic backlash could dissuade social conservatives from writing anti-LGBT laws. In North Carolina, Mississippi and others, the business community tried its best to force legislators to back down from bigotry, but Republicans laughed. Such threats were toothless, they said — merely a scare tactic being used to quell the First Amendment rights of good Christian folks. Then PayPal drew blood, and everything changed.

The online electronic payments giant had planned to build a global operations center in Charlotte, North Carolina, that was expected to employ more than 400 people. But the company announced last week that it would seek out other venues for its expansion in light of the passage of HB 2, a law invalidating local LGBT nondiscrimination ordinances and placing restrictions on the types of restroom and changing facilities available to transgender people.

PayPal slammed the law, which North Carolina lawmakers jammed through in a matter of hours as part of a special legislative session. Given it puts PayPal’s LGBT employees at risk of discrimination, moving forward with any planned expansion in the state was “simply untenable.”

“I think PayPal, when they announced that they would be halting future expansions, set a precedent that others will follow,” says Jonathan Lovitz, vice president of external affairs at the National Gay & Lesbian Chamber of Commerce (NGLCC). “We’re seeing some of these companies commit to pulling jobs, pulling investments, and it’s certainly a powerful message and a gesture that is clearly resonating, as we’re hearing rumblings that some of these states are reconsidering on their own, regardless of some of the conversations about there being a legal fight.”

Indeed, PayPal is alone in supporting North Carolina’s LGBT community. Lionsgate Entertainment, which was planning to shoot Hulu sitcom Crushed in North Carolina, pulled out of the state after the passage of HB 2, choosing to relocate production to Vancouver, Canada. And the New Jersey-based pharmaceutical company Braeburn Pharmaceuticals, which had previously announced plans for a $20 million manufacturing and research facility to be built in Durham, has walked back its plans, saying it is now “re-evaluating” its options.

And the backlash is not limited to North Carolina. Mississippi, which passed a bill allowing individuals, businesses, and even government workers to refuse to serve LGBT people or others who do not conform to preferred sexual mores under the guise of religious freedom, is now under fire from major corporations. The CEOs of eight major companies, among them Levi Strauss & Co., Hyatt Hotels Corporation, Whole Foods Market, and PepsiCo, have signed onto a letter demanding that Magnolia State lawmakers repeal the act, which is slated to go into effect on July 1. In Tennessee, where legislators have passed a bill allowing counselors and therapists to refuse to treat LGBT clients, and have revived another measure seeking to restrict transgender students’ access to restrooms based on their biological sex at birth, corporations and event planners have been putting pressure on the government. Nashville Mayor Megan Barry told reporters that at least 12 conventions expected to bring millions of dollars to the city have threatened to pull out should either bill be signed into law.

Deena Fidas, director of the Human Right Campaign’s Workplace Equality Program, says businesses that adopt a strategy of divestment in states with anti-LGBT laws, while also speaking out against the law and demanding their repeal, can help influence lawmakers to drop anti-LGBT schemes.

“Corporate interest speaks to both sides of the political aisle,” she says. “In the past few weeks, you have seen Republican governors heed the call of major businesses to veto anti-LGBT bills in South Dakota and Georgia, for example. You’d be hard-pressed to find anyone who seriously suggests that businesses are in on some politically liberal agenda. These businesses are demonstrating that, similar to what the American public shows in survey after survey, equality is a shared value. It is both part of a viable economic and business strategy, and it’s also reflective of what most Americans believe in terms of basic protections for the LGBT community.”

A 2014 worldwide study from the Williams Institute, a think tank that studies LGBT-related issues at UCLA found a positive correlation between countries with greater LGBT rights and those with higher per capita income and a greater degree of economic development. But that same concept can be applied stateside, as many corporations have found that embracing equality and inclusion have resulted in higher levels of employee satisfaction and increased productivity.

“Look at the bottom line of America’s most inclusive companies,” Lovitz notes. “Look at the companies who are NGLCC’s supply chain partners, and how they correlate to being at the top of the list of the Human Rights Campaign’s Corporate Equality Index. And then compare that to their profit margin and their bottom line. It is no longer anecdotal; it is a hard numerical fact that companies that commit to diversity and inclusion are more successful.”

Despite setbacks in some states, others, such as Minnesota and Pennsylvania, are beginning to catch on when it comes to the connection between greater LGBT inclusion and increased economic output.

“It’s inspiring that in the same month when we’re seeing North Carolina and Mississippi take a step backwards, we’re seeing Pennsylvania’s governor commit publicly and proactively to LGBT inclusion and protections in state contracting and state public accommodations, which will only make it more attractive to businesses, make it more attractive to conferences, make it more attractive to new investments,” Lovitz says. “People want to be able to go where they’re the most free.”

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