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The Gay and Transgender Wage Gap

Many Workers Receive Less Pay Due to Sexual Orientation and Gender Identity Discrimination

See also: The State of the LGBTQ Community in the Labor Market: Pre-June 2018 Jobs Day Release” by Shabab Ahmed Mirza, Daniella Zessoules, Galen Hendricks, Michael Madowitz, and Laura E. Durso

Not all employees in America are paid the same for the same type of work. Decades of research document the significant gaps in earnings based on gender and race. But today, on Equal Pay Day, it is important to remember that women and people of color are not the only ones who see significant disparities in earnings.

Unfortunately, many gay and transgender workers receive unequal pay for equal work in the United States today.* What’s worse, these same workers lack the necessary legal protections currently afforded to other categories of individuals that would help combat and correct pay inequities that exist on the basis of sexual orientation and gender identity.

Given high rates of discrimination in hiring, firing, and wages that gay and transgender workers experience on the job, we need stronger laws and policies in place to ensure all workers have equal workplace protections under the law no matter their sexual orientation or gender identity. Below, we document the differences in pay between gay and transgender workers and their heterosexual counterparts and offer policies to ensure they receive the fair pay they deserve.

The gay and transgender wage gap

Recent research and data point to significant disparities in earnings for gay and transgender workers. This is especially the case for gay men and transgender women.

The Williams Institute finds that gay and bisexual men earn 10 percent to 32 percent less than similarly qualified heterosexual men, in a meta-analysis of 12 studies examining earnings and sexual orientation in the United States. This is true even when controlling for education, race, occupation, and years of work experience.

Williams’ findings for lesbian and bisexual women, however, are less clear. According to Williams’ analysis, lesbian and bisexual women earn the same or sometimes more than heterosexual women. But that’s not to say that lesbian workers do not experience gaps in pay. Research indicates that lesbian workers still earn less than both heterosexual and gay men.

Looking at three of the studies that formed the basis of Williams’ meta-analysis:

  • Lee Badgett (1995) found that gay and bisexual men earned between 11 percent and 27 percent less than their heterosexual counterparts while finding no statistical difference for lesbian and bisexual women.
  • Dan Black, Gary Gates, Seth Sanders, and Lowell Taylor’s (2000) research indicates that gay men earned 14 to 16 percent less than their heterosexual counterparts, while lesbian women actually earned 20 to 34 percent more.
  • Sylvia Allegretto and Michelle Arthur (2001) suggest that gay men in partnered same-sex couples earn 15.6 percent less than heterosexual married men.

Further, Williams’ meta-analysis comports with studies of wage earnings among public-sector gay workers. Together, these studies suggest that gay government employees earn 8 to 29 percent less than their heterosexual counterparts, indicating that discrimination in earnings in the public sector is no different than discrimination in earnings in the private sector.

Transgender individuals also face significant wage disparities on the job. This is especially true for transgender women. One study found that the earnings of female transgender workers fell by nearly one-third following their gender transitions. Interestingly, that same study found that the earnings of male transgender workers slightly increased following their transition. As such, transgender men may actually experience a wage advantage rather than a wage penalty.

This research strongly indicates that in addition to facing significant workplace discrimination in hiring and firing based on their gender identity, transgender women experience significant gaps in pay largely attributable to their gender.

Gay and transgender families are economically vulnerable

When gay and transgender workers suffer from pay disparities they have less money in their pockets to pay the mortgage, buy groceries, and pay their utility bills. It is no wonder then (contrary to common stereotypes) that families headed by same-sex couples earn significantly less than their heterosexual counterparts. The average household income for same-sex couples raising children is $15,500, or 20 percent less than heterosexual couples. This means the wage gap for many families headed by same-sex couples contributes to significant disparities in income earnings.

Further, these wage and income gaps in part explain why gay and transgender families are more likely to live in poverty. Children being raised by same-sex couples are twice as likely to live in poverty compared to children living in households with heterosexual married parents. Whereas 9 percent of children living with heterosexual married parents are living in poverty, 21 percent of children being raised by male same-sex couples and 20 percent of children being raised by female same-sex couples live in poverty.

Transgender people also face significant economic challenges. Fifteen percent of transgender people report making less than $10,000 per year, a rate of poverty that is nearly four times that of the general population. These socioeconomic disparities are especially acute for families headed by gay or transgender people color: Thirty-two percent of black male same-sex couples and 28 percent of female same-sex couples live in poverty, compared to just 13 percent of black different-sex married couples.

Gay and transgender workers need workplace protections

Clearly, the wage gap poses a significant threat to the health and wellness of many gay and transgender Americans and their families. In addition to discrimination in earnings, research shows that this population faces significant discrimination in hiring and firing based on their sexual orientation and gender identity.

Discrimination against these workers leaves far too many gay and transgender Americans without a job. Discrimination is also unwise from a business perspective, since it introduces significant inefficiencies and substantial costs that could have otherwise been avoided absent discriminatory workplace practices.

Policymakers can and should enact a broad range of policies to solve the problem of employment discrimination against the gay and transgender workforce.

First and foremost, we need a comprehensive federal law that ensures nobody is forced out of job, not hired, or paid differently than their co-workers simply because of their sexual orientation or gender identity. Congress should pass the Employment Non-Discrimination Act, or ENDA, which would prohibit most employers in the United States from discriminating against workers based solely on their sexual orientation or gender identity, characteristics completely irrelevant to job performance.

Additionally, ENDA would make it illegal to discriminate against gay and transgender workers with respect to pay and benefits. ENDA would thus help combat wage discrimination and give legal recourse to gay and transgender employees who receive unequal pay for equal work.

Similarly, President Barack Obama can and should issue an executive order barring federal contractors from discriminating on the basis of sexual orientation and gender identity. Current regulations already prohibit contractors from discriminating on the basis of race, color, sex, national origin, and religion. It is imminently sensible for the president to immediately issue this executive order, which will help reduce and combat all forms of workplace discrimination, including wage discrimination.

Lawmakers in Congress should also consider targeted legislation aimed specifically at eliminating the wage gap for gay and transgender workers. Prior to the passage of the Civil Rights Act, which provided women with a large range of workplace protections, Congress enacted the Equal Pay Act of 1963 aimed at abolishing the gender wage gap. Congress can follow this pattern for gay and transgender workers. Even without passing ENDA, Congress can pass legislation aimed at eliminating wage disparities based on sexual orientation and gender identity in a manner similar to the Equal Pay Act.

These laws and policies are incredibly necessary to ensure fair and equal treatment of gay and transgender workers in the United States. ENDA is especially crucial to ensuring that these gay and transgender workers nationwide have equal protections under the law.

Until ENDA is passed, however, it will remain legal to fire, not hire, or provide unequal pay to gay and transgender workers in a majority of states. Gay and transgender workers need comprehensive federal protections, and they need them sooner rather than later.

Crosby Burns is a Research Associate for the LGBT Research and Communications Project at the Center for American Progress.

* Unless otherwise specified, “gay” is used in this column is used as an umbrella term to describe individuals that identify as gay, lesbian, or bisexual.

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