Gay money

The truth about lesbian & gay economics

Full findings

What does the research really say about lesbian and gay incomes and earning? What are the facts about lesbian and gay economics?

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General statement of the findings

There are two ways you can describe the findings of most of the research on the topic:

Both statements are the exact opposite of marketer’s claims that “the gay market” (less often, “the gay and lesbian market”) is “lucrative” or simply rich.

In case you aren’t clear on what I’m saying: When marketers tell you the gay market is a rich or lucrative one, they don’t have any evidence to back it up. The evidence shows the opposite – at least for gay males, the group they’re really talking about. Put harshly, they’re lying.

Things to remember about this project

Download a summary of findings

I have a summary of papers that arrived at quantitative findings available as Excel and OpenOffice spreadsheets.

General explanations

After reading all the research, the truth about gay money boils down to a few facts.

One table of numbers that sums up the phenomenon

If you’re the kind of person who likes to look at numbers, let me show you some. Blandford 2003 (p. 633) has an excellent table that, while deriving solely from that paper’s research, does a great job of summarizing the trends in lesbian and gay incomes. Remember, this is just one example, but it tells you a lot about the patterns found by most researchers. The highest percentages in each relevant column are emphasized.

Income distribution patterns for full-time workers,
by gender, sexual orientation, and marital status
Income category Male workers Female workers All workers
Heterosexual Gay/
bisexual
All men Heterosexual Lesbian/
bisexual
All women
Married Unmarried Married Unmarried
≤$13,999 8.9% 19.3% 19.4% 12.7% 28.6% 27.4% 22.0% 27.9% 20.0%
$14,000 to $21,249 13.6% 17.8% 24.1% 15.5% 24.3% 25.9% 18.0% 24.9% 20.0%
$21,250 to $28,249 17.7% 21.0% 16.2% 18.8% 20.8% 21.2% 22.0% 22.0% 19.9%
$28,250 to $39,999 24.8% 24.0% 17.7% 24.3% 16.3% 17.0% 20.0% 16.7% 20.4%
≥$40,000 35.0% 17.9% 22.6% 28.7% 10.0% 8.5% 18.0% 9.5% 19.7%
Wealthiest 5%: ≥$63,325 11.9% 5.0% 3.2% 9.3% 2.3% .7% 4.0% 1.6% 5.0%
Median income (1992 dollars) $31,700 $25,042 $24,212 $28,937 $20,216 $20,216 $23,807 $20,216 $24,618

Singles as opposed to couples

Most studies use data on gay or lesbian couples, and most of those studies use some kind of inference to determine that people actually are gay or lesbian and/or that they actually are couples. As such, most of the research could be completely wrong in several different ways – people deemed gay might not be, people deemed in a partnership might be single, and everybody who’s single is left out completely.

But some papers have isolated gay and lesbian singles, i.e., gay males or lesbians who do not have partners of the same sex. (It is conceptually easier to define “being single” than “having a partner,” but definitively identifying the singles in large data sets turns out to be harder.)

Hours worked

Gay males work fewer hours than straight males, in turn partially explaining why they earn less. Various studies show results similar to Tebaldi 2006, so I’ll just quote that paper: “After controlling for other factors, the labour-supply analysis provides evidence that lesbian women supply, on average, 7% more hours of work per week than heterosexual married women do” (and more than unmarried hetero women). “[G]ay men work about 8% fewer hours per week than married men and about 6% fewer hours than heterosexual men who cohabitate with a woman.”

Is there a marriage premium?

Economics research has found that, in general, married men earn more than unmarried men (and in fact more than everyone else).

Now, why is that? There are some accepted theories.

Cases in point:

Balance between economic and non-economic work

The work you do can still be “economic,” and represent an economic choice, even if no money changes hands. This may seem counterintuitive at first, but it really is true. Housework and childrearing in the home are both economic choices, even though most homemakers don’t get paid. As such, those tasks are examples of home production. Meanwhile, working a job for wages is an example of market production.

Research on gay and lesbian economics, like other econometrics, has a hard time putting a dollar value on home production because it doesn’t actually involve dollars. But it’s still part of the whole picture.

Choice of occupation

Most studies that address this topic find that gay males are overrepresented in female-dominated occupations and underrepresented in traditionally male, often much-higher-paying, occupations. The converse is true for lesbians, who are found less often in female-dominated occupations and more often in male-dominated ones.

One paper (Black 2003) found no real difference in occupational categories between gay/lesbian and straight populations. A later paper (Black 2007) found that “gay men are in occupations that are more ‘typically female’ than other men while lesbian women are in occupations that are less ‘typically female’ than other women.”

These are noncontroversial findings when we think of our own experience. Almost no research makes the following observations, but gay males are generally uninterested in working on the factory floor or as a truck driver. Lesbians tend to have little or no interest in working as secretaries or hairdressers. But those AIDS hospices and rape crisis centres aren’t going to run themselves, now, are they? As Badgett 1997b plainly states: “Lesbians and gay men” – presumably in that order – “who have been politically motivated by the experience of prejudice, discrimination, and harassment may choose to work in nonprofit organizations dedicated to social change, where we also find women and ethnic minorities overrepresented.” (But Plug 2004 writes, working with Dutch data: “Do heterosexual and homosexual workers differ in their preferences for leisure and paid work? Or do they differ in their taste for public‑ versus private-sector jobs? We do not know.”)

When kids are present

Rich gay, poor gay

A paper with a disturbing title to match its findings – “Poverty Among Cohabiting Gay and Lesbian and Married and Cohabiting Heterosexual Families” (Prokos 2010) – looked at two-parent families with kids. The authors developed a ratio of income to poverty. How many of the different kind of families had the worst ratio, i.e., were in absolute poverty?

[L]esbian couples’ higher levels of education account for their lower poverty rates relative to cohabiting heterosexual families.” But married people are least likely to be poor, followed by gay and lesbian couples (attributable in some ways to higher education, but all the reasons are not known), then followed by cohabiting straight couples, the poorest of all.

Meanwhile, separate research shows the richest gays suffer the least: For a single stratum of gay and straight workers, gay marketers’ claims that gays are rich has some foundation. But these gays are merely as rich as comparable straight people. Antecol 2008 found that “top-earning gay men earned wages nearly identical to those of their married counterparts.” Even top-earning lesbians had only a small premium over top-earning married women.

Carpenter 2008 found similar results for Canada.

Education

Gays get more education than straights, but only lesbians end up earning more as a result, broadly stated.

Gay males and lesbians, nearly all papers find, have more education (in all definitions, from high school to Ph.D.) than straight people. In this respect the stereotype is correct: Gays do put a premium on education. But it doesn’t always pay. As Allegretto 2001 found, “Unlike most standard wage analyses, in this analysis the ‘disadvantaged’ group has higher levels of education than the ‘advantaged’ group.” That same paper also found huge wage penalties (compared to married hetero men) in sales and admin jobs, where gays outnumber straights. Antecol 2008 found that gay males and lesbians with less than a high-school education had much higher wage penalties than straight people did. Apart from the fact that we prefer education and academia, education really does pay.

One reading of these findings is as follows: We sign up for a lot of education but work low-end jobs where we’re paid less.

Rothblum 2007 hypothesized that “heterosexuals prioritize income (especially if they have children)” while gays and lesbians “may feel a greater sense of responsibility in helping to create a more just society and therefore may be more likely to have jobs explicitly aimed at creating social change or in helping the underserved.” That paper also suggests that heterosexuals have better networking options and can wrangle better or more conventional jobs that way.

Discrimination

There seems to be an assumption that if gay males earn less than straight males, it must be due to on-the-job discrimination. I speculate that this theory is most prominent among journalists, who are liberal by nature and refuse to countenance the notion there is anything “different” about gay and lesbian job choices or outcomes. If the results are different, that must be due to outside forces, i.e., discrimination, according to this thinking. This soft bigotry of equal expectations underpins a lot of the popular-press discussion of the facts of gay-male wages (which are, as we know, lower).

The discrimination theory seems to maintain that employers can tell which of their male employees are gay, go right ahead and hire them anyway, then pay them worse than straight males. As we have found, the evidence shows that gay males earn less than straight males mostly because they work fewer hours and choose lower-paying jobs, not because of workplace discrimination.

And anyway, if there were really widespread discrimination against gays and lesbians in wages and earnings, lesbians wouldn’t be earning more money than straight females. But they are! You can’t argue for across-the-board discrimination if one group (gay males) takes a wage hit while the other group (lesbians) earns a payday. This is not a statement that gay males could not specifically be subject to discrimination; it is a warning not to generalize. (Blandford 2003, pp. 638–639, is especially instructive here.)

As I read it, there is no proof in these papers that discrimination has occurred, nor that such discrimination resulted in lower wages. All that researchers can do is read between the lines and draw inferences. Plus the theory works well only for gay males; a couple of papers imply that gay males face earnings discrimination because employers find gay males distasteful but are OK with lesbians. But you can’t prove that by running numbers.

Is there actual evidence of discrimination?

I found two papers that make a plausible case for discrimination as a cause of lower earnings.

The cost of staying in the closet

It stands to reason there are gay-male and lesbian employees whose homosexuality is completely unknown to everyone in their workplace, or to everyone that matters, like bosses and the HR department. These people may not really be in the closet elsewhere in their lives, but they are at work. Of course, some people are completely or somewhat out in their workplace. But researchers are loath to admit that some employees are so obviously queer that nobody in the office has any illusions. This is another soft bigotry – an assumption that everyone is so truly equal as to be indistinguishable. People aren’t that stupid.

Bisexuals

The findings for bisexuals, of which there aren’t a lot, are distinct from the findings for actual gays and for straight people.


Results from outside the U.S.

A few papers have been published looking at gay money in Canada, Sweden, the Netherlands, and the U.K. In all but the last country is the general finding true, and some of those U.K. results are simply unreliable.

Canada

The very richest gays may suffer less, at least in Canada: Carpenter 2008a found, for gay men, “that a minority sexual orientation was associated with a smaller personal-income penalty at higher income quantiles.... That is, for both gay men and lesbians the income differentials associated with sexual orientation are somewhat smaller at higher points in the income distribution.” Also, the income disparity is much worse for partnered gays and lesbians than singles.

Netherlands

Plug 2004 rather ingeniously looked at recent college graduates just entering the workforce. The paper admits that its method makes it almost impossible to measure on-the-job discrimination during the entire work life, but it has the advantage of showing that trends start early. The study found about a 4% wage penalty for gay males and a 4% wage premium for lesbians.

Sweden

Only one paper (Ahmed 2010) examines Swedish data and it supports the general finding.

The richest lesbians are much richer than straight females and the poorest gay males are much poorer than straight males. The lesbian earnings advantage “to a large extent is driven by relatively high earnings among lesbians at the top of the earnings distribution, while the earnings differential between lesbians and heterosexual females at the bottom of the earnings distribution is smaller and statistically insignificant.... It is a striking result that the earnings differential between gay and heterosexual men is considerably larger in the bottom than around the median and in the top of the earnings distribution.”

However, lesbian earnings premiums disappear when we factor in controls for education and so on. The most reliable explanation for the earnings gain for lesbians is the fact that lesbians have more education.

United Kingdom

Arabsheibani 2007 found about a 5% gain for gay males, which disappeared when controls were added. The lesbian wage premium starts out at an astounding 36%, then whittles down to 6% when controls are added. Effectively, then, findings with controls added approximately match U.S. findings, the study states.

Papers by Frank focus solely academics, making them instantly irrelevant even if there weren’t a raft of other reasons marking them as second-rate, which there are. Frank produced the worst research on gay and lesbian economics I read for this project. The less attention it gets, the better.

Australia

Carpenter 2008b found about a 30% gain in personal income for lesbians in Australia – an unusual finding, but still an earnings premium.


Do any studies contradict the general finding?

In other words, are there any studies that fail to show that gay males earn less than straight males and lesbians earn no less than straight women? Is there research that contradicts what otherwise would amount scientific consensus?

Yes, but not a lot of it.

American Community Survey 2010 findings

The data that seem to most resoundingly contradict the general finding came out in October 2010, just before the release of this project in November 2010. The U.S. Bureau of the Census’s American Community Survey reports data from localities with populations of 65,000 and greater. It found much higher incomes for gay-male couples – by far the highest, in fact.

Now, these findings were reported in the popular press and by academics, but incompletely. I must say I found it suspicious that the first mainstream press coverage came from the anti-gay Washington Times; American right-wingers are happy to insist that gays are rich, hence undeserving of “special rights.” This is not a claim that the Washington Times coverage was wrong or inaccurate.

But a legitimate research insitution, the National Center for Family & Marriage Research at Bowling Green State University, produced a report (PDF) entitled “Same-Sex Couple Households in the U.S., 2009.” It stated:

Male same-sex couple households... have the highest average household income of all couple households at nearly $117,000, while unmarried different-sex couple households have the lowest average household income at approximately $64,000....

The Williams Institute produced a press release (PDF) stating:

While the average household income of same-sex couples exceeded that of different-sex married couples ($104,048 vs. $93,351, respectively) in 2009, the incomes of same-sex couples fell by 3% between 2008 and 2009. This compares to a 1.8% decline among different-sex married couples. Same-sex male couples were particularly affected as evidenced by the 4.4% decline in their household incomes. This figure also exceeds the 3.6% decline in income among all households in the U.S.

Williams Institute researcher Gary Gates produced a PowerPoint presentation (typically information-poor, as PowerPoints almost invariably are; PDF) showing that same-sex couples receive public assistance much more often than straight couples.

So let’s recap: A single data set is claimed to report that gay-male couples are richer than everybody else and also that gay and lesbian couples receive public assistance much more often. Could both these claims be correct? In a word, yes.

Let me be the first to report all the relevant data from the ACS, not just whatever fits an agenda. To save you the trouble of looking around for the raw data, you can just download my version (.XLS) of the original Census Bureau Excel spreadsheet. (The original is found under “Data from the American Community Survey: 2009 Tables” on a lengthy page of other spreadsheets.)

Average household incomes:

Percentage earning less than $35,000 vs. $100,000 or more:

Put all these figures together, and the impression they leave coincides tightly with that of 1990s gay marketers – that gay males (not “the gay community”) are well-off. More so than straight people, in fact.

Now, what about the DINK stereotype? What proportion of these couples have children in the household?

So that part of the marketers’ stereotype is disconfirmed, consistent with absolutely all the other data that looks at presence of children.

Do these ACS findings mean all the other research is wrong?

Actually, yes, they might – but not that other findings are categorically wrong across the board.

The ACS data are extremely interesting and are a welcome addition to the corpus. But in and of themselves, I don’t see how they can be interpreted as validation of the stereotype of rich gays. They certainly show that high-earning gay males (and – less so – lesbians) exist in the United States.

Could all these results put together just be totally wrong?

It’s unlikely but possible, for several reasons.

Ridiculous explanations

A couple of papers propose ridiculous explanations for why gay males and lesbians make certain occupational choices. The last thing researchers want to do is admit that gay men like certain jobs (not just “occupational sectors”), that lesbians like different jobs, and that neither group would be caught dead working certain jobs. Some researchers float explanations that strain credulity.

Other facts

Posted: 2010.11.16