Whether or not sexual orientation can be made a protected class by Virginia agencies has been a very prominent news topic the past few weeks. When Governor McDonnell eliminated anti-discrimination protections for gays and lesbians, I doubt he expected a political quagmire to erupt. The heat on McDonnell only got worse last week when Attorney General Cuccinelli issued an opinion stating that Virginia’s public schools and colleges were prohibited from treating sexual orientation as a protected class.

Those opposing Governor McDonnell policies, however, now have a new argument to add to their list of reasons reversing McDonnell’s exclusion of gays and lesbians from state protection: economic policy.

Although gay rights have long been debated on the basis of morality, human rights, and equality, the current debate in Virginia has started to strike a rather pragmatic tone. While the Falls Church School Board reacted to Cuccinelli and McDonnell’s recent actions by defying the State government and adding gays and lesbians to its anti-discrimination policy, the Falls Church Chamber of Commerce has released a (draft) statement focusing on the fiscal considerations. If McDonnell’s policies stand, they argue,

“[M]any new and relocating businesses will choose to avoid Virginia because this posture on discrimination (by Cuccinelli-ed.) will have a profoundly chilling effect on prospective employees, contractors, vendors and customers… Surveys confirm overwhelmingly that those seeking employment in the high-tech sectors of the national economy, such as defines the predominant economic growth of Northern Virginia, hold very strongly to values of equal rights and justice for all persons.”

This is more than a hypothetical. Northrop Grumman, a California-based company, is planning to move to the East Coast — the mid-Atlantic, to be precise, and Virginia, Maryland, and D.C. are all courting the corporation. Last month, a Maryland representative wrote a letter to Northrop suggesting that Maryland would make a better new home for the company, as it does not have the exclusionary policies Virginia does.

Yesterday, however, a State Senate panel voted to add the following language to a bill designed to encourage Northrop Grumman to relocate to Virginia: “The Commonwealth of Virginia maintains an ecumenical atmosphere in its sexual orientation hiring policies in the private and public workforce.”

And passing this sort of legislation makes sense, from the perspective of a state seeking to vitalize the local economy. On first blush, whether or not Virginia provides protections to gays and lesbians wouldn’t seem to be an important business consideration, as State discrimination policies have no effect on a private corporation’s own internal regulations. However, it could make a very real difference in acompany’s operations, through affecting the signaling strategies the company hopes to adopt as well as the quality of the local talent it hopes to recruit. A state with an open minded and modern view on gays rights may well prove to be a better source of the dynamic, modern work force that corporations need in order to synergize and break the paradigm, or whatever else it is big corporations do.

A company could also help establish a “hip and vibrant” image by settling in a more socially progressive state in order to improve its corporate branding. For instance — and no offense intended to my home state’s lovely next door neighbor — but if Google were based in Alabama instead of Northern California, it would probably not have succeeded in attracting a lot of the young, college-educated talent that it does have.

Unfortunately, the gay-friendly language was eliminated from the Bill today, showing that Virginia is not quite ready to embrace gay rights as a fiscal policy initiative. This whole episode, however, does indicate the potential of using market forces as a way to promote human rights.

-Susan