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RELEASE: The Costly Business of Discrimination Against LGBT Employees

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Contact: Christina DiPasquale
Phone: 202.481.8181
Email: cdipasquale@americanprogress.org

Read the full report here.

See the findings in graphic form here.

Washington, D.C. — The Center for American Progress today released “The Costly Business of Discrimination: The Economic Costs of Discrimination and the Financial Benefits of Gay and Transgender Equality in the Workplace,” showing that discrimination against gay and transgender employees hurts companies in the areas of recruitment, retention, job performance and productivity, marketing to consumers, and exposure to lawsuits.  The cost of losing and replacing the more than 2 million American workers who leave their jobs each year due to unfairness and discrimination has been estimated to cost $64 billion.

Conversely, businesses that implement and maintain gay and transgender friendly workplace policies realize significant financial gains that accrue from enhanced recruitment, retention, productivity, marketing, and elsewhere.  That is why 96 percent of Fortune 50 companies, 93 percent of Fortune 100 companies and 85 percent of Fortune 500 companies have sexual orientation nondiscrimination policies on their books.  Businesses that discriminate based on a host of job-irrelevant characteristics, including sexual orientation and gender identity, put themselves at a competitive disadvantage compared to businesses that evaluate individuals based solely on their qualifications and capacity to contribute.

According to a recent survey, 42 percent of gay individuals say they have experienced some form of employment discrimination at some point in their lives and 90 percent of transgender individuals report experiencing some form of harassment, mistreatment, or discrimination on the job, or taking actions such as hiding who they are to avoid it.  Unfortunately it remains perfectly legal in a majority of states to fire someone because they are gay or transgender. Only 21 states and the District of Columbia have outlawed employment discrimination on the basis of sexual orientation, and only 16 states and the District of Columbia have done so on the basis of gender identity.

Considering the high rates of discrimination facing the gay and transgender workforce today, discrimination based on sexual orientation and gender identity represents a serious threat to the profitability and financial health of businesses large and small throughout the United States. Specifically discrimination against employees based on their sexual orientation and gender identity negatively impacts the economic performance of businesses in the following ways:

  • Recruitment: When employers hire individuals based on job-irrelevant characteristics such as sexual orientation and gender identity, businesses are left with a substandard workforce that diminishes their ability to generate healthy profits.
  • Retention: Discrimination forces otherwise qualified gay and transgender employees out of a job and into the ranks of the unemployed and introduces numerous turnover-related costs. According to a recent study, to replace a departing employee costs somewhere between $5,000 and $10,000 for an hourly worker, and between $75,000 and $211,000 for an executive making $100,000 a year.
  • Job performance and productivity: Sexual orientation and gender identity discrimination in the workplace needlessly compromise maximum labor productivity and workforce output. Moreover, it introduces unnecessary costs by increasing absenteeism, lowering productivity, and fostering a less motivated, less entrepreneurial, and less committed workforce.
  • Marketing to consumers:. When companies discriminate and allow unfairness to go unchecked in the workplace, consumers increasingly react by actively choosing to do business elsewhere.
  • Litigation: Businesses are increasingly liable for discrimination lawsuits even in states that have not outlawed gay and transgender discrimination, making discrimination economically unwise for companies in all 50 states. In 2010 the top 10 private plaintiff employment discrimination lawsuits cost firms more than $346 million.

Given the substantial costs associated with discrimination, Congress and other federal policymakers must pass the Employment Non-Discrimination Act, or ENDA, to provide gay and transgender workers uniform and comprehensive employment protections nationwide.  Absent federal policy on workplace protections, employers seeking to enhance their financial standing can and should take the commonsense steps necessary to ensure a workplace free of discrimination, including instituting a series of internal human resource policies that prohibit discrimination and harassment against gay and transgender employees. Businesses will realize significant cost savings when they implement and enforce these policies.

Read the full report here.

See the findings in graphic form here.

To speak with Crosby Burns, please contact Christina DiPasquale at 202.481.8181 or cdipasquale@americanprogress.org.

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