Gay People Make More Money Than Their Straight Peers

But it's a small consolation for lower job security.

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Sep 14 2017, 5:00pm

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The data is clear: People are paid differently based on their gender. Specifically, women earn about 80 cents for every dollar that men earn. Are people also paid differently based on their sexual orientation? A new study suggests that they are, but probably not in the way you're thinking.

Intuitively, most people would guess that there's a sexuality wage gap favoring heterosexuals. Because gays and lesbians—like women—face a lot of prejudice and discrimination in the workplace, it seems plausible that they would make less than their straight counterparts, right?

Data from the 1990s and early 2000s supported this idea, at least for gay men, with study after study showing that gay men earned less than heterosexual men. Lesbians, however, actually earned more than straight women.

But has this pattern changed in recent years? Economists have begun to wonder, especially in light of the dramatic social progress made by the LGBT community in the last few years. For instance, in the last decade alone, support for same-sex marriage has gone from 37 percent to 62 percent among Americans in public opinion polls.

In a new study published in the Southern Economic Journal, researchers analyzed the link between sexual identity and income using data from a large, nationally representative US sample collected between 2013 and 2015. Each year, approximately 35,000 households were surveyed and, consistently, 2 to 3 percent of respondents each year identified as sexual minorities.

The researchers focused on earnings data for adults aged 25 to 64—in other words, people who are likely to be finished with their education. What they found was that, consistent with previous research, lesbians continued to out-earn straight women. Specifically, the average annual earnings (pre-tax) for lesbians were $47,026 compared to $39,902 for heterosexual women.

In contrast to the earlier data, however, it turns out that gay men now earn more than straight men. The average annual earnings for gay men were $59,618 compared to $57,032 for straight men.

That said, when accounting for differences in employment status (lesbians were more likely to have full-time work than straight women, while gay men were less likely to have full-time work than straight men) and other differences between groups, the overall earnings premium for both lesbians and gay men translated to roughly 9 to 10 percent.



The question then becomes why: Why are both gay men and lesbians out-earning their heterosexual counterparts? There are several potential explanations.

One possibility is that it's a function of increased LGBT acceptance and less anti-gay discrimination. However, while that could explain why the wage gap between gay and straight men has closed, it's not clear why it would translate to an earnings premium for gay men. Plus, these data simultaneously show that gay men are less likely to be employed than straight men. As the authors of this study point out, "to the extent that the lower employment partly reflects discrimination against gay men, it is hard to imagine earnings improving substantially but not employment."

Another issue with this explanation is that the lesbian data were right in line with earlier studies—so why would increasing LGBT acceptance only influence gay men's earnings while having no effect on lesbians?

An alternative possibility is that maybe there's a selection effect in terms of who is coming out today. For example, maybe being out about one's sexuality is disproportionately likely among sexual minorities who are more highly educated and have other characteristics that increase their odds of higher earnings.

This explanation gains appeal when you compare the demographics of gay and heterosexual men in this sample: Gay men were more likely to hold a college degree and less likely to be high school educated, a higher percentage were white, and far fewer were married with children. In addition, gay men were more likely to live in the Western US, while being less likely to live in the Midwest.

Lesbian and heterosexual women also differed, but in fewer ways: Lesbians were more likely to be college educated and less likely to have children.

It's important to note that the gay and lesbian earnings premium was still observed even when the researchers statistically controlled for these differences; however, the fact that gay and straight folks differed in so many ways suggests that there could be other, unaccounted for differences between these groups that could potentially explain the wage differences.

We need more research to replicate these findings and also to determine which, if any, of the above explanations for them are correct. However, the take-home from all of this should not be that gays and lesbians are being paid more because of their sexual orientation. There's no evidence that this is the case, especially when there are so many other plausible explanations, like self-selection.

It would also be wise to avoid concluding that discrimination against gays and lesbians in the United States has disappeared and is no longer a problem. To the contrary, anti-gay discrimination is very much alive and well and at least partially evidenced by the fact that gay men have lower levels of employment.

Plus, even if gays and lesbians do have slightly higher earnings, that's a small consolation for lower job security: In most US states to this day, you can still be fired for no reason other than being gay.

Justin Lehmiller is the director of the social psychology program at Ball State University, a faculty affiliate of The Kinsey Institute, and author of the blog Sex and Psychology. Follow him on Twitter @JustinLehmiller.

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