As politicians across the country demand a change in Virginia’s embattled leadership, business leaders are largely sticking to the sidelines.
Leading Virginia business groups have stopped short of calling for the resignation of the state’s top three elected officials, all embroiled in personal scandals. Most corporate executives have avoided weighing in at all.
And there is no sign that the furor is scaring off investment: Amazon is reportedly wavering in its commitment to open a complex for thousands of workers in New York, where the internet giant has faced opposition, but it has sent no signals about backing out of expansion plans in Northern Virginia.
“I’d be very surprised to see business leaders and C.E.O.s weigh in on impeachment proceedings or calls to resign,” said Aaron Chatterji, a Duke University professor who has studied executives’ political interventions. “It’s more seen as an internal Virginia decision.”
That reaction stands in contrast to what happened when North Carolina passed a law in 2016 that was widely criticized as discriminating against transgender people. In that case, companies including PayPal and CoStar, a real estate research firm, canceled planned projects in the state, the National Collegiate Athletic Association refused to hold events there, and the National Association for the Advancement of Colored People and other groups organized economic boycotts.
Business and consumer groups deployed similar tactics in recent years to fight a “religious freedom” law in Indiana that critics said could be used to discriminate against gay couples and an Arizona law that cracked down on unauthorized immigrants. Such organizations also successfully pushed South Carolina to remove the Confederate flag from the grounds of its statehouse.
Those cases, however, involved state laws or policies that affected companies’ customers and employees. Virginia’s struggle involves individual behavior — albeit the behavior of three top elected officials. Gov. Ralph Northam has admitted darkening his face with shoe polish to impersonate Michael Jackson in the 1980s. Attorney General Mark Herring said he, too, had worn blackface as a college student. And Lt. Gov. Justin Fairfax has been accused by two women of sexual assault, charges he denies.
Derrick Johnson, president of the N.A.A.C.P., said there was a “huge distinction” between the issues in Virginia and those in other states. He has called on Mr. Northam to resign, but the organization hasn’t urged members to avoid the state or to punish businesses based there.
“Individual acts, the response to that should be individual accountability,” he said. “State actions, the response there is in fact state accountability.”
Mr. Johnson wouldn’t rule out a boycott in the future if Mr. Northam stayed in office. If such a boycott developed, or if businesses in the state began to struggle financially, it could increase pressure on Mr. Northam and Mr. Fairfax to resign, and on legislators to remove them. A 2017 study found that local politicians were more likely to support removing Confederate flags from public spaces when the issue was framed as an economic concern.
Analysts said there was little reason to expect the political disarray to derail a strong state economy. Virginia came through the recession better than most states, in part because it benefited more than other places from federal stimulus spending during the downturn, and now boasts one of the lowest unemployment rates in the nation, at 2.8 percent in December. In some Washington suburbs in the northern part of the state, the unemployment rate is below 2 percent.
The state has a triple-A bond rating, a history of fiscal responsibility and a longstanding reputation for business friendliness.
“They’ve done a very good job of managing their fiscal affairs, and that’s been true across both Democratic and Republican governments for a while now,” said Eric Kim, who analyzes the state’s finances for Fitch, the bond ratings agency.
Mr. Kim noted that past controversies involving governors had not affected state economies or bond ratings. Missouri, for example, didn’t suffer economically when Eric Greitens faced a series of sex and campaign-finance scandals that led to his resignation. Even the uproar over the North Carolina “bathroom bill,” though it cost business, had only a modest economic impact on the state.
“State governments, even if there’s a controversy or turnover at the highest level, the machinery of state government continues to function,” Mr. Kim said. “Tax revenue continues to come in, and states continue to operate.”
Sure enough, Mr. Northam last week signed a bill promising tax incentives to Amazon for its planned campus in the state. He did so in private, without the public ceremony and photo opportunity that often accompany such actions. But it was nonetheless a sign that the leadership crisis hasn’t derailed the basic operations of state government.
Tom Stringer, head of site selection for the consulting firm BDO, said that he wasn’t surprised to see the Amazon deal still moving forward, and that the turmoil was unlikely to cause companies to avoid the state. Virginia, he noted, limits governors to a single four-year term, meaning businesses are used to turnover in the executive branch. Investment decisions are based on a longer time frame, he said.
“I don’t think this will really have an effect,” Mr. Stringer said. “From a business development standpoint, this really seems like an anomaly.”
Still, the episode could have longer-run implications. Virginia in recent years has worked to move past its history as the capital of the Confederacy and to promote its young, educated and diverse work force. The deadly white nationalist rally in Charlottesville in 2017 was an unwelcome reminder of the state’s history. The recent controversy is a further setback, said Ravi Perry, chairman of the political science department at Virginia Commonwealth University.
“All of this drama distracts from the multiple other kinds of success that we can point to,” Mr. Perry said. “There’s always an economic effect when states have negative political news that is longstanding.”
Gregory B. Fairchild, a professor at the University of Virginia’s business school, said both the violence in Charlottesville and the current upheaval could give some young people pause about moving to the state. In theory, that could affect companies’ decisions as well, particularly at a time when employers are struggling to find talented workers. But he doubted that the scandals would have a measurable effect on Virginia’s economy.
“If someone were really thinking about moving to the state of Virginia, I’m not sure that this is thing that causes them not to move,” Mr. Fairchild said.