Neeru Paharia, an associate professor at Georgetown University, weighs in on the leaked Supreme Court decision draft regarding Roe v. Wade and how companies will likely find themselves forced to take one side.
SEANA SMITH: We want to continue talking about this and exactly what this means for businesses, how corporate America is handling this landmark case. And for that, we have Neeru Paharia, Associate Professor at Georgetown University. And, Neeru, it's great to see you. We've heard from a number of companies ahead of this leak-- Yelp City, Amazon, just to name a few of them, laying out some plans just in terms of what they plan to do for employees if, in fact, Roe v Wade is overturned. But my question to you, though, is talk to us just about what this means for companies and the pressure that businesses are facing these days to take a stand on an issue like this.
NEERU PAHARIA: Yeah. It's uncharted territory we're in right now. And in this particular case, companies are really going to be forced to take a side. You have to pick one side of the fence to be on, especially if you operate in one of these states where they're predicting the law is going to change.
And so, you know, not only-- I mean, we can think about the benefits they're offering their employees, and the access to these kinds of services, and helping employees travel across state lines in order to meet their health care needs is one thing, but, you know, there are other things as well. You know, are you going to open up a new factory or a new office in a state or not based on these kinds of health care policies, because these companies are thinking about their employees and they're thinking about their customers. And the sort of political alignment of both of those constituencies matters tremendously to these companies.
RACHELLE AKUFFO: And obviously, we're already in the middle of a labor shortage here in the United States. If you're one of these bigger companies, you're, perhaps, better equipped to budget for some of these travel expenses for people who want to travel. What do you think this might mean, though, for smaller companies who, perhaps, can't afford these things?
NEERU PAHARIA: Yeah. I mean, in that case, you're definitely kind of stuck, right? If you think about it, you're a small coffee shop in the middle of Texas, what can you offer? And so I think in that case, maybe you can speak out publicly against some of these things. If you have the resources to offer those kinds of services to your employees, you can do that as well.
But there are other ways to make your political position known. And that's just one side of the issue, right? There are also a lot of people who are anti-abortion and would be happy to see these laws change. But either way, it's going to be hard to stay neutral, especially as a as a larger company.
DAVE BRIGGS: Very difficult. And if there's been a fire drill the last couple of weeks, Neeru, it's, of course, been Disney versus Ron DeSantis in Florida. What do you think CEOs across the country ought to have learned from what happened in Florida?
NEERU PAHARIA: Yeah, I mean, that-- that is truly unprecedented. There were some grumblings of similar things happening in Georgia post the election with Delta and a few other companies. But in the case of Florida, it's unprecedented that a government would retaliate against a company for taking a political position.
And in the case of Disney, they kind of were stuck between a rock and a hard place. Like, their employees were really pressuring them to say something about the Don't Say Gay policy. And so they had to-- they were trying to stay out of it, but their employees kind of pushed them into making a statement. And now they're being sort of penalized by the government.
So that's a line that was recently crossed. And I'm sure executives are thinking about that.
SEANA SMITH: And, Neeru, just digging into that a little bit deeper-- I guess, if you were to be advising some of these CEOs, if you were telling them exactly how or the best way to go about handling a situation like this-- like you said before, it's impossible now for companies to stay out of something like this-- what are the one or two things, maybe, these executives could focus on when they're determining how to address this issue?
NEERU PAHARIA: Yeah, so if you can't stay out of it, then you do have to pick a side. If staying out of some of these very polarizing political issues is an option, that might be something to really consider. But in the case where you don't really have a choice, then what do you do?
So here, you want to think about acting early. Acting early is a sign of authenticity. So if you're the first person to make-- first company to make a decision one way or the other, that resonates with consumers, as opposed to you're, like, the 10th or the 20th company. Because when you get to that point, now you're kind of stuck.
Like, you're going to get in trouble if you don't do anything and you're going to get in trouble if you do something. So it's better to act early and to kind of get ahead of these things.
RACHELLE AKUFFO: And I know you talked about employees, but you also have investors like Warren Buffett, who says, look, I have shareholders who, perhaps, may not share the same beliefs as me. So he tends to not speak out on some of these political issues. What about some of these publicly traded companies? Does the CEO, perhaps, owe them, perhaps, silence? Or do they have to take a side if they're also having to worry about, perhaps, well-being of some of these companies and shareholders that rely on them?
NEERU PAHARIA: Yeah, it's incredibly complicated. There's so many different stakeholders-- your employees, your shareholders, your customers. And we live in a very politically divisive world. So it's a tightrope to walk. And all the constituents-- you have to think about all the constituents.
DAVE BRIGGS: How do you expect that future business decisions will be made in regard to this? You hinted this earlier-- new buildings, expansion, hiring new employees-- will this impact the greater economy?
NEERU PAHARIA: I personally think so, yes. I mean, when you're making these decisions about what state to locate your business in, where to hire more employees, where to expand your operations, you know, you think about the tax climate, but you have to also think about the political climate, because it is something that matters to your employees, and especially in these knowledge-intensive industries. The employees have strong opinions, and particularly often on one side.
And so you may want to locate in a particular state because they have a low cost of living and low state tax rate. But then you also kind of have to weigh that against your ability to attract and retain your employees and whether that's a location that talented employees will want to actually be in for these kind of political issues.
DAVE BRIGGS: And it is sure to shake up the midterms. Neeru Paharia from Georgetown, thanks so much.