August 14, 2022
SB1 Will Be Deeply Damaging to Indiana’s Economy
If polls are true, Indiana’s new abortion law is so restrictive that it has the support of no more than 16 percent of Americans in any broad demographic group. When asked, only 11 percent of the 18-to-29-year-old crowd supports laws as restrictive as ours. The state-level polls are older and less reliable, but the best I’ve seen suggests that close to two-thirds of Hoosiers support broader abortion access than was granted in SB1.
Public opinion polls are useful because they provide some insight about the mechanisms of economic damage that will ultimately flow from our new abortion law. The U.S. has spent half a century under reasonably similar state regulation of abortion. That has now changed. The political and economic incentives to highlight and exploit these differences are profound. Indiana is especially vulnerable to the economic effects of an abortion ban.
Recall that Indiana’s workforce ranks near the bottom in educational attainment. Worse, we’ve seen the college going rate drop a whopping 12 percentage points in just six years. This puts us in the realm of the most economically fragile states in the Union—Mississippi, Louisiana, West Virginia—and just below Puerto Rico. This matters because nine out of 10 college-age people nationwide prefer more expansive abortion access than Indiana now has.
Just to be clear, Indiana now has the most restrictive abortion laws in the continent. Our laws are more restrictive than those of Ireland or Italy or Saudi Arabia. SB1 was passed with just a few days of testimony and signed hurriedly on a Friday evening. This shows that GOP leaders are exceedingly nervous about the economic fallout of the legislation. They are right to be.
I see two major economic challenges to Indiana that result from SB1.
First, this will result in far fewer out-of-state college students coming to Indiana. While this legislation won’t affect the decisions of out-of-state students coming to Indiana this month, it will influence 2023 college decisions. It is worth noting that for every man now in college, there are two women. We should expect a substantial decline in out-of-state students heading to Indiana and anticipate a higher outflow of Hoosier students.
Though our state’s college enrollment numbers will bounce back a bit after COVID, we should prepare for further declines in 2023 and beyond. Stemming the decline in Indiana college students will cost several hundreds of millions of dollars a year. Failing to stem the loss will be far more costly. However, higher brain drain among college-age students isn’t our biggest risk.
Businesses locate where they can access abundant workers of the types they need. They don’t come for tax incentives or cheap land, which we offer in profusion. They come for the right workers, of which we have far too few. Over the past three decades, more than 80 percent of job growth nationally has gone to college-educated workers. As that trend continues, which it will, Indiana is now at a fraught disadvantage.
Every human resource official in every major business in America is watching the abortion debate. They are changing healthcare plans for workers living in states with restrictive abortion bans, driving up business costs. They are well aware that abortion access is now a bellwether issue for many Americans considering relocating for a job. HR officials across the country are readying their bosses for years of difficult hiring and relocation to states with restrictive abortion laws.
Let me be abundantly clear. The abortion issue will erupt on college campuses this fall. Hoosier employers will be selectively disinvited from job fairs across the country. More importantly, college students will actively look in places with more mainstream legislation, or seek remote work from those businesses. It is no wonder why Lilly and Cummins as well as many others are deeply frustrated about Indiana’s SB1 and the effect it will have on their operations.
Some in the political world will label this as ‘woke capitalism.’ Baloney, it is math. Businesses located in states with highly restrictive abortion laws are at a significant hiring disadvantage. For businesses that need to attract educated young people, Indiana is already a challenging environment. Indiana’s new abortion law will significantly disrupt the employment needs of many businesses, and the louder the national debate on abortion, the worse the damage will be. Folks, prepare yourself, the debate will be deafening.
Still, I think most businesses will be publicly silent on the issue. James Briggs made this point in a recent column. He argued that unlike RFRA, few businesses will take a public stance on abortion laws. Yes, Lilly and Cummins have issued statements decrying the rushed nature of the legislation. However, for most businesses there’s not much benefit in a making a public declaration about abortion. I suspect this is especially true in Indiana. Business leaders have been quietly begging the state to reverse the brain drain and educational declines for more than a decade, without effect.
The hasty passage of SB1 illustrates the growing anti-business focus of Indiana’s supermajority. As a result, I think Indiana’s elected leaders should expect less business involvement in policy. Many will quietly give up on the state and shift operations and employment elsewhere. Some businesses cannot leave and will surely look to support more business-friendly voices across the state.
I wouldn’t expect these effects to change the minds of the principled supporters of SB1. A less prosperous Indiana is simply the price of maintaining restrictive and unpopular abortion laws. Public policy is about trade-offs, it is just imperative to know what they are.
Finally, one important lesson of economic history is that places with some extraordinary economic advantage can usually survive deeply unpopular policy choices. Think of Chicago or San Francisco. The problem is that Indiana has few economic advantages that are relevant to the 21st century. None that we have are sufficient to overcome policies that alienate the vast majority of the mobile, highly-educated young people we so desperately need.
About the Author
Educational Attainment, the 21st Century Fund and the Future of SchoolingIndiana ranks 42nd in educational attainment.
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Re-Thinking Economic Development A large share of the most mobile families—perhaps half—no longer need to live near where they work.
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