Gay money

Two studies that show gay males earn slightly more than hetero males

Some of the gay-money research over the years has shown slight “earnings premiums” for gay males, i.e., a few papers here and there have offered evidence for the beloved myth that gay males have higher “disposable income” than hetero males. The consensus of research shows the opposite. It also shows that lesbians consistently out-earn straight females.

As always, science could simply be wrong. Now, though, two research papers show a consistent gay-male earnings premium in the U.S. I’d say this is the first time there’s been credible evidence of such a thing.

1. Clarke and Sevak (2013) report a steady decline in the earnings penalty for gay males – so much of a decline in that penalty it has turned into a positive.

   [F]or respondents who report more same-sex than opposite-sex behavio[u]r, there is a trend of an increase in income: For every year that passes, income for gay men increases by 3.9%. This finding is significant at the 5% level, and supports our hypothesis that the gay wage penalty has decreased over time.

   In contrast, when we classify individuals as gay if they report any same-sex behavio[u]r... we do not find significant differences in the time trend of earnings between gay and straight men.

   I interpret this to mean, further, that out gay males earn more than closeted gay males, which one Dutch study also found.

   We find that while there is a gay wage penalty in 1988, that is statistically significant at the 10% level, by the mid-nineties, the gap has disappeared, and in the post-millennial years, the gap has turned into a premium. In 2002, for example, gay men earn 2.45% more than straight men.... The trend we estimate suggests that, if there was a gay wage penalty in the 1980s and 1990s, it is no longer present.

   The authors could not conclusively explain why these results were found:

   Our results could reflect a number of factors. First, they could reflect that changing attitudes towards sexual orientation have resulted in a reduction in discrimination in the labor market. Second, they could reflect compositional changes in the population that is gay, either by human capital, occupation, or demographic characteristics. Indeed one could argue that they are not surprising given the higher level of education observed in our descriptive statistics. Third, they could reflect increased compliance with non-discrimination ordinances[.]

   Everyone, including researchers, wants to attribute gay earning gaps to discrimination, though the research shows very little evidence of that. But only researchers are prone to note that gay males show up in the workforce with more education than straight males.

   [W]e cannot statistically identify whether the trend of rising wages for men who report more same-sex than opposite sex behavio[u]r is due to a decrease in discrimination or an increase in human capital, although the findings are consistent with the changing laws and attitudes towards sexual orientation in the U.S.

2. Carpenter and Eppink (2017) start with useful demographic data. (Some elisions, as to charts in the original paper, not noted here.)

   • They note that 2%–3% of individuals canvassed in a huge government survey “self-identified as gay, lesbian[,] or bisexual,” a credible value.

   • • Self-identified lesbians are significantly more likely to have a bachelor’s degree, less likely to have children in the household, more likely to be full time workers, and have higher average annual earnings than heterosexual women. Bisexual women are significantly younger, less likely to be partnered, less likely to live in theNortheast, and less likely to have children in the household than heterosexual women.

     • Self-identified gay men are significantly more likely to have a bachelor’s degree, more likely to be white, less likely to be partnered, less likely to have any children in the household, more likely to live in the West, and less likely to live in the Midwest than heterosexual men.

     • [W]e find that lesbians are significantly more likely to have any employment than similarly situated heterosexual women, a difference on the order of 4.2 percentage points.... Lesbians are 5.9 percentage points more likely than otherwise similar heterosexual women to be in full-time work after controlling for detailed observable characteristics.... [W]e estimate the lesbian earnings difference to be about 9%.

     • [W]e find that both gay and bisexual men are significantly less likely to be in any employment and full-time employment than otherwise similar heterosexual men. Moreover, these differences are large: Gay men are estimated to be 5.4 percentage points less likely than comparable heterosexual men to be in full-time work.... [W]e find that gay men are estimated to have significantly higher annual earnings than comparable heterosexual men, a difference on the order of 10%[.]

   • These researchers can’t explain their findings either.

     • [W]hile this explanation of improving attitudes has intuitive appeal, there are several challenges with it as well. First, it is not clear why improving attitudes toward LGBT people would produce a gay-male earnings premium. While we might have expected that the well-documented gay-male earnings penalty would be reduced or even eliminated as compliance with nondiscrimination policies increased and attitudes toward LGBT people improved, it is not clear how these factors would result in gay men earning significantly more than comparable heterosexual men.

     • Second, and related to the first point, the... data continue to indicate that gay men have significantly lower employment rates than comparable heterosexual men. To the extent that the lower employment partly reflects discrimination against gay men, it is hard to imagine earnings improving substantially but not employment.

     • Third, the explanation of improving attitudes toward LGBT people is hard to square with the fact that our estimated lesbian earnings premium is right in line with prior estimates from different and older datasets in the United States (i.e., it is not substantially larger). That is, it seems unlikely that the LGBT civil rights movement would have substantially improved labo[u]r-market outcomes for gay men but not for lesbians. [...]

     • [R]ecent estimates of the association between sexual orientation and earnings using high quality data from other countries that have experienced similar improvements in attitudes toward the LGBT community do not show a similar pattern of a gay-male premium....

     These patterns are difficult to square with the simple hypothesis of reduced discrimination against sexual minorities.