What Disney’s $1 billion project exit from Florida says about California’s business climate

A few months ago, Mickey Mouse thumbed his nose at Florida Gov. Ron DeSantis.

Disney had plans to build a roughly $1 billion employee campus and relocate about 2,000 jobs from California to Orlando but then nixed it, citing “changing business conditions.” The company didn’t explicitly say the canceled project was due to its ongoing legal fight for control of the Florida resort. But DeSantis’ tussle with Disney over the state’s so-called “Don’t Say Gay” law – banning classroom instruction on sexual orientation and gender identity – is as notorious as his tiresome phrase that Florida is where “woke goes to die.”

So it didn’t come as much of a surprise then that Disney’s reversal was a relief to the California-based employees, some of whom had been cold to the move and incensed by then-CEO Bob Chapek’s tepid response to DeSantis and his allies. 

Gov. Gavin Newsom, a frequent critic of Florida’s policies, wasted little time seizing on the corporation’s change of heart, suggesting in a statement that Disney’s move may strengthen its business ties in California. The company, he said, has pumped billions of dollars in the state, and anticipates even more investment.

“Authoritarian policies have consequences,” Newsom said. “This announcement is a victory for California, and the tens of thousands of Disney employees who know they can live in a state where they are respected and safe.”

More than three years after the George Floyd protests, with a nation increasingly divided and a U.S. Supreme Court barring affirmative action in higher education, it’s unclear whether company pronouncements and programs around diversity, equity and inclusion still matter. Is California’s more inclusive ideals an asset or a liability for business? 

Of course, it depends on who you ask.

Disney’s commitment to increasing racial and ethnic representation in its entertainment arm and its support of the LGBTQ community has made it a cultural leader in diversity, equity and inclusion, at least in the world of conglomerates. But the intensifying drama between the California-based company and its Florida rivals show that some businesses are willing to take a stand. And in the case of California companies, that means a commitment to keeping jobs here, despite what many deem as an inhospitable business climate. 

In recent years, California has seen several high-profile companies exit, including Caterpillar, Charles Schwab and Tesla. Inclusivity wasn’t a factor.

A recent survey by the advocacy group BizFed, which represents 240 organizations and 420,000 employers mostly in Southern California (Disney not included), affirmed that the cost of doing business still determines whether a company stays or leaves. BizFed president David Englin said that includes the high cost of housing, which “consistently comes up for every employer.”

But the survey also found that pleasant weather, family ties, the right consumer base, and yes, a diverse workforce, are also strong motivating factors to stay. BizFed members, Englin said, understand diversity is a strength and that it helps them better accomplish their goals.

“Businesses that reflect the communities they serve will always be stronger and more effective, more profitable and more successful,” he said.

California is a dominant economic force and first in the nation in forming businesses, access to venture capital and tourism spending, according to the governor’s office. Census data shows that business license applications are up nearly 50% since May of last year – the largest increase of any state.

Initiatives that promote diversity, equity and inclusion yield rewards for businesses and are likely to remain in place, said Deniece Maston, HR knowledge advisor at the Virginia-based Society for Human Resource Management. If anything, corporate values around such initiatives are gaining greater traction within the last few years, she said.

“About every day, I talk to a member, and a lot of people are still saying that they want to keep doing these programs,” Maston said. “They’re talking about how to enhance them, and we’re giving them tools and resources to add to it.”

But not everyone agrees that “woke” is the way to go. (For those unfamiliar, “woke” refers to someone being attune to racial prejudice and discrimination. But in recent years it lost its significance after the word was co-opted and misused by the political right.)

Mark Schniepp, director of the California Economic Forecast, said businesses flee because of the burdensome costs, onerous regulations, expensive housing, workers’ comp and other policies. What’s more, he said, employers in California – just like those in other states – are “not going to tolerate woke policies,” which he believes are being pushed by government entities. 

“I talk to businesspeople all the time, and in some cases, they are looking at adopting it, but they are adopting it holding their nose and not knowing how it will come off,” said Schniepp. “The verdict is still out on how long wokeness will be in place.”

It’s possible that corporate values and programming around diversity, equity and inclusion may fade. The motivation to appear virtuous during a national reckoning was rewarded, with many companies reaping the benefits of improved public perception and increased brand exposure. However, there are already signs of regression, perhaps out of fear of a different backlash spurred by diversity fatigue and anti-woke crusaders. Politics has always ebbed and flowed.

Businesses exist to make money. Regardless if companies complain about doing business in California, principles that ensure people from every background feel a sense of belonging do not compromise the bottom line. They actually help it.

No one knows how the story will end between Disney and its villains in Florida. But the “most magical place on Earth” is sending a message to its employees, fans and other business leaders that some things are worth the fight.