The big LGBTQ+ wage gap problem
The latest research into the sexuality pay gap reveals some blistering truths.
A decade after graduation, college-educated workers in the US who self-identify as LGBTQ+ earn 22% less than their heterosexual cisgender counterparts, according to preliminary findings published in the Social Science Research Network in April 2022. A year after graduation, the earnings gap was 12% – meaning the figure almost doubles within a decade, with a range of forces responsible for deepening the disparity over time.
Plenty of other studies have substantiated the LGBTQ+ salary gap; depending on the way data is collected and how sexual orientation is defined, each study posits a slightly different numerical figure. In surveying a nationally representative sample of more than 10,000 graduates, this new research posed specific questions about sexual orientation and gender identity as well as whether participants are out or closeted in the workplace, contributing to a clearer picture of earning disparities between LGBTQ+ workers and heterosexual workers.
Overall, these discrepancies are nuanced. In early 2022, the LGBTQ+ advocacy group HRC Foundation found that LGBTQ+ workers earn about 90 cents for every dollar earned by a typical heterosexual US worker. This gap is felt more starkly by LGBTQ+ people of colour, transgender women and men and non-binary people. LGBTQ+ Native American workers, for example, earn 70 cents for every dollar earned by a typical worker. A global meta-analysis from 2014 found that on average, gay men earned 11% less than heterosexual men. Lesbian women earned 9% more than heterosexual women, a premium that can be attributed to the income hit many women take when they have children, rather than a lack of discrimination.
Research shows the pattern of lower earnings across LGBTQ+ workers is set in motion long before people are established in the workplace, through choices they make in their younger academic years and early professional lives. Once in the workplace, discrimination compounds the effect of these decisions, holding people back from progressing the same way as their heterosexual peers.
Understanding how the gap forms and taking steps to close it is very much within reach – however concrete change is dependent on building inclusive talent pipelines and workplaces.
The impact of early choices
University of Chicago postdoctoral scholar Marc Folch, who authored the paper about US college graduates, believes the earnings gap begins with educational and professional choices workers make long before they consider an application for their first job. “For both males and females, their career choices – so their major and then their occupation – drives almost half of the earnings gap,” says Folch.
First of all, LGBTQ+ students in the US are less likely in general to finish school and attend university. Even if they don’t perform worse than their peers in standardised tests such as the SAT, they experience poorer educational outcomes, from fewer credits obtained at high school to lower grade averages, and are less likely to apply for and then attend college. Folch found that they’re also less likely to be in full-time employment a year after graduation. These gaps persist across the board, regardless of demographic characteristics, family background, US state and school profile.
When it comes to tertiary education, Folch's research revealed that LGBTQ+ graduates were more likely to pick majors with a higher percentage of females. Some 29% of people aged between 13 and 23 who identify as lesbian, gay, bisexual, transgender, undefined, asexual (LGBTUA+) chose to avoid a career in STEM because of fears that they would be discriminated against. Among those who do pursue STEM, attrition rates are higher: research published in 2018 found that 71% of heterosexual undergraduate students in the US were still enrolled in a STEM major at the end of their fourth year of college, compared to 64% of students of a sexual minority.
Once LGBTQ+ people enter the workforce, they occupy different roles, with an unusually high concentration of gay and lesbian workers in psychology, law, social work and university teaching. As shown by a 2015 paper published in Administrative Science Quarterly, there’s some truth in the ‘gay jobs’ stereotype, with occupational segregation linked to an LGBTQ+ employee’s desire for task independence, which makes concealing their sexual orientation easier.
LGBTQ+ workers may also be drawn to roles that require high levels of social perceptiveness. Faced with the threat of prejudice from a young age, anticipating and reading the reactions of others is an innate skill that complements disciplines such as therapy, training management, urban planning, producing and directing. Conversely, it is estimated that today’s STEM industries have lost up to 120,000 viable candidates due to the cumulative effects of anti-LGBTQ+ bias.
Gay or lesbian applicants in the UK are 5% less likely to be invited to an interview than heterosexual male or female applicants
The overall picture a number of studies paint is that LGBTQ+ workers often, consciously or unconsciously, steer clear of some occupations and workplaces they perceive they may not fit into or won’t be welcoming to them. LGBTQ+ men tend to pick female-dominated occupations more frequently than other men. Although not categorically connected with sexual orientation, this particular sample group said they avoided professions perceives to be masculine or macho, and sought out ones that are more female dominated, in the hope of finding a more comfortable work environment.
Folch's research also found LGBTQ+ graduates were more likely to work in an occupation where there were also a higher percentage of females. These, on average, tend to be occupations where salaries are lower. Together, these educational and professional decisions can have a far-reaching impact on pay. “In many ways, all these choices are not actually made, they are cumulative,” says Folch.
Discrimination at work
Folch believes that roughly half of the earnings gap can be ascribed to these academic and occupational choices. While other factors are hard to measure definitively, there’s evidence that the pay gap is also caused by discrimination, whether during the hiring stage or across a worker’s career.
In recruitment situations, gay or lesbian applicants in the UK are 5% less likely to be invited to an interview than heterosexual male or female applicants. In the US, employers are more likely to view resumes from applicants who stated their sexual orientation as gay or lesbian with a critical eye.
Once employed, discrimination can derail careers. One in 10 LGBTQ+ people in the US said they had experienced workplace discrimination between 2020 and 2021, whether that was being passed over for a job, harassed at work, denied a promotion or raise, excluded from company events or denied additional hours. During that time period, 9% said they were denied a job or laid off due to their sexual orientation or identity.
Across the course of their careers, almost half of the workers surveyed said they had experienced employment bias – findings echoed in Folch’s study. As many as half of his graduate sample group had experienced some form of labour market discrimination in their first decade of work due to their sexual orientation or gender identity. A third of all college graduates surveyed in his study worked in a job where they considered their employer not to be accepting of LGBTQ+ employees. Discrimination can impact on earnings in different ways – whether by delaying a worker’s progression within a company or leading to more frequent job changes due to non-inclusive environments.
Whether employees are open about their sexuality at work results in both negative and positive outcomes. Being open about sexual orientation can lead to rejection, discrimination and greater pay discrepancy at work. A UK study published in the Industrial and Labor Relations Review found that the pay gap tends to be greater for gay men who are partnered – and therefore leading a visibly LGBTQ+ life – versus those who are single. However, gay men and lesbians who are open about their sexual orientation at their workplace are more likely to report higher job satisfaction.
Remaining in the closet – as 46% of the LGBTQ+ workforce are in the US – is one way to avoid possible discrimination, however non-disclosure can cause an increase in anxiety and stress. Concealing identity prevents people accessing community support as well as reducing potential work and social connections. It’s also connected with lower job satisfaction and curtailed career progression. On average, graduates who were closeted in either work, immediate family and/or social settings one year after graduation experienced 18% lower earnings and were 14% more likely to have a mental health issues, according to Folch’s research.
The end goal is to ensure that workers neither need to hide their sexual orientation or give an explanation – there should be no concept of being in the closet – Marc Folch
Folch says it is clear organisations should work to improve their environments for LGBTQ+ employees. “The end goal is to ensure that workers neither need to hide their sexual orientation or give an explanation – there should be no concept of being in the closet.”
Closing the gap
Until that becomes a reality, what can be done to reduce the pay gap?
Making big picture legal changes is one approach with a clear and concrete impact. “Research has shown that when laws change in favour of LGBTQ+ rights, social norms tend to follow,” says Pawel Adrjan, director of EMEA economic research at global recruitment site Indeed. “In the US, for example, in states that legalised same sex marriage, there was a positive impact on labour force participation of LGBT people – and the likely mechanism for that was less discrimination and less prejudice.”
Going deeper, enshrining anti-discrimination policies by law can effectively narrow the LGBTQ+ pay gap in the workplace. Research from the US in 2020 found that anti-discrimination laws cut hourly earnings penalties by 11% for gay men, compared to heterosexual men.
At company level, it is essential that organisations practise zero tolerance of any prejudice or harassment towards the LGBTQ+ community once they join the labour force. “Businesses must ensure there’s equality of hiring, promotion and opportunity - extending to medical benefits packages, which should be equally available for same-sex spouses and partners,” says Adrjan.
Workplace guidelines around gender transition are another essential approach for improving the lives of trans people. “This kind of positive workplace behaviour can make trans people feel more accepted, valued and trusted,” says Nick Drydakis, a professor of economics at Anglia Ruskin University, speaking about the findings from his 2020 paper.
But efforts can also begin well before the workplace. “Educational and occupational routes need to be open to people regardless of their sexual orientation,” says Adrjan. “Then people can choose a fulfilling career, whether they are LGBT or not.” Folch believes this should include more aggressive policies in favour of educating students about sexual orientation and gender identity, and the importance of diversity and acceptance.
With the sexuality pay gap seeded in people’s early years, and compounded as they move through education and into the workplace, reducing it, and in time eliminating it, calls for multi-pronged, cross-disciplinary action that will ultimately make the labour force a better place for everyone.