Research reveals a gay wage gap and the cost of exclusion

The wage gaps that exist between males and ladies and between white and black individuals have acquired a lot of consideration lately. However there’s one other wage gap that tends to be missed—between heterosexuals and LGBT+ individuals.

Curiously, it really works in two totally different instructions: most research present a wage penalty for gay males however a wage premium for lesbian ladies in contrast with their heterosexual counterparts. One analysis of 32 research from a number of nations discovered that on common, gay males earned 11% lower than heterosexual males, whereas lesbian ladies earned 9% greater than heterosexual ladies. Research and surveys have additionally proven a unfavorable wage gap for bisexual and additionally for transgender people, although the proof is far more restricted, significantly for transgender individuals.

Inside the information on gay individuals, there are additionally variations between nations and relying on how precisely sexual orientation is assessed, for instance, whether or not it’s primarily based on survey proof or cohabitation—and there are research such as this one from the U.S. that discovered gay males truly incomes extra. But when the numbers above replicate a broad common, why do such variations come up?

One doable clarification is the work decisions that gay individuals make. Research suggests gay males are more likely to keep away from occupations which can be extra male-dominated than different males (which includes the best paid jobs), whereas lesbian ladies usually tend to keep away from female-dominated occupations than different ladies (that are sometimes worse paid). Lesbians may also earn extra as a result of they have a tendency to work longer hours.

However why do gay individuals enter totally different professions? It could be as a result of they make totally different instructional decisions. As an example, LGBT+ college students in the U.S. are less likely to complete faculty and attend college than different college students. American males in same-sex {couples} usually tend to get hold of a bachelor’s diploma than males in different-sex {couples}, however they’re 12 percentage points much less prone to full their diploma in a STEM subject.

The function of discrimination

A key query is whether or not these differences in wages and selection of employment are pushed by prejudice, or whether or not they’re the outcome of some innate, work-relevant traits of gay individuals associated to their preferences or expertise. If gay males are paid much less as a result of of prejudice, then society isn’t making the greatest use of their expertise and productiveness. This might be economically inefficient and would maintain again output, as a result of it will recommend that gay males do not make the contribution that they might.

It’s not simple to get to the backside of why these variations in wages and employment exist. However current analysis utilizing numerous strategies has actually discovered that discrimination is a key driver.

I’ll spotlight three examples. First, research from Australia has proven that gay and lesbian staff select to enter occupations with fewer prejudiced staff, with male-dominated occupations extra prone to function discrimination.

Second, in a research experiment in the US, individuals have been requested to judge CVs. Some of the CVs made references to LGBT+ actions whereas others didn’t. Male individuals penalised CVs that included an LGBT+ exercise.

Third, discrimination of LGBT+ individuals emerges in office surveys. As an example, Stonewall and YouGov found in 2017 that 18% of LGBT employees in the UK had been a goal of unfavorable feedback or conduct from work colleagues in the earlier 12 months as a result of of their sexual orientation.

Inclusion and financial advantages

Discrimination towards gay individuals is a international situation. The Franklin & Marshall Global Barometer of Gay Rights gave 62% of nations a failing grade on authorized and social protections afforded to LGBT+ individuals in 2018. Contrasts amongst nations are huge. For instance, Finland scored 96% in the barometer, whereas Russia scored simply 19%.

This raises the query of whether or not it’s doable to quantify the potential financial penalties of this discrimination, significantly in nations that lag the world’s leaders in each financial output and LGBT+ rights.

One strategy is to estimate the misplaced productiveness because of discrimination amongst gay individuals, primarily based on analysis from nations the place such information can be found. These estimates can then be utilized to the GDP of different nations. Open For Business, a international coalition of firms, on whose analysis advisory board I sit, has simply achieved precisely that for Hungary, Poland, Romania, and Ukraine—4 nations with GDP per capita and LGBT+ inclusion ratings nicely beneath the European common.

At the low finish, the report estimates that LGBT+ discrimination prices the Hungarian economic system between 0.1% and 0.2% of GDP annually, or round £200 million. At the excessive finish, the estimated cost to the Romanian economic system is between 0.6% and 1.7% of GDP, or as much as £3 billion.

Whereas these figures are unlikely to make or break a nation’s economic system, they’re substantial in context. As an example, the Romanian authorities’s spending on schooling was 3.1% of GDP in 2017. Misplaced GDP from restricted LGBT+ inclusion may fund half of that spending yearly.

Furthermore, these estimates solely symbolize direct prices of exclusion. There may very well be extra, oblique financial prices associated to brain drain, adversarial results of discrimination on well-being, and even overseas buyers going elsewhere as a result of they fear that the prejudice in a nation’s workforce may hurt their reputations.

One factor that this report doesn’t take into account is the potential unfavorable results of inclusion. As an example, may larger participation of gay individuals in the workforce truly deter prejudiced heterosexual individuals from, say, working as productively, and even working in any respect?

There are two the explanation why that is unlikely. First, several studies on the legalisation of same-sex marriage in the U.S. have discovered no impact on different-sex {couples}, together with no affect on the likelihood of whether or not they’re employed.

Second, although prejudice does exist, attitudes do shift as LGBT+ rights evolve. Current analysis has shown that attitudes in direction of LGBT+ individuals turned extra constructive after legal guidelines recognising same-sex relationships have been enacted throughout Europe. Extra inclusive legal guidelines led to extra tolerant views—not the reverse.

One clarification is that equality legal guidelines confer legitimacy towards sexual minorities—and attitudes regulate in response. This implies that such legal guidelines may ultimately be accepted, even in nations the place acceptance of LGBT+ individuals is low.

In that case, and given the potential financial advantages, it’s another excuse why larger inclusion is value pursuing. Past the stage of particular person nations, this could also carry advantages for the international economic system.


Pawel Adrjan, Research Fellow in Economics, Regent’s Park Faculty, University of Oxford