As we reach the halfway point of Pride month, we want to dedicate this week’s insights to the LGBTQ+ community. Especially to the unspoken wage gap, as well as emphasizing the challenges and economic disparities experienced by this community in the workplace.

Salary differences between cis hetero people and LGBTQ+ (lesbian, gay, bisexual, transgender, queer, and questioning) people are complicated and can depend on many aspects, such as region, industry, education, and experience. It is important to keep in mind that these differences can not be applied to everyone in this community as a whole, because it is really varied and people’s experiences can be very different.

Discrimination

Discrimination can show up as bias in how employers hire, promote or pay people. It can depend on a person’s sexual preference, gender identity, or how they show their gender. Transgender people in particular may experience more harassment, which can lead to lower pay and fewer job opportunities.

Experimental evidence of discrimination

That said, several studies have shown that LGBTQ+ people, especially transgender people, may face more problems and differences at work, which can lead to wage gaps. The size of the pay gap, on the other hand, depends on the group and study.

The UCLA School of Law’s Williams Institute is an academic organization that has done studies on LGBTQ+ issues, such as discrimination in the workplace and differences in pay. Their studies have shown that there is proof that gay men may earn less than straight men. In addition, most of these studies found that employers are less likely to call LGBTQ+ job applicants for an interview or to give them a job. In fact, employers in the UK are 5% more likely to ask to an interview straight males and females than homosexual candidates.

Furthermore, Tilcsik (2011) found that companies are less likely to hire gay men when the job ad asks for stereotypically male traits like being aggressive, direct, confident, and ambitious. Lesbians, on the other hand, should find it easier to get a job because they are less likely to have kids.

Discrimination in the workplace may be a career-killer. In the United States, one in ten persons who identify as LGBTQ+ reported experiencing some kind of discrimination at work in 2020 or 2021. This might have taken the form of not being hired, being harassed on the job, not getting a raise or promotion, being left out of corporate activities, or not getting any extra hours. A total of 9% of respondents during that time period said they were denied a job or laid off due to their sexual orientation or identity.

Differences in wages in the LGBTQ+ community

Another way to determine if someone is being discriminated against is to compare their earnings to those who are not LGBTQ+. So far as we know, no population-based study has looked into whether or not LGBTQ+ people have told people at work about their identities. Klawitter’s (2015) meta-analysis showed that gay and bisexual men made, on average, 11% less than straight men with the same qualities. Burn (2019) and most other studies that have come out since then also confirm this.

On the contrary, salary distributions for women from different sexual orientations are distinct from those of men. Klawitter (2015) and Valfort (2017) both found that gay and bisexual women often made more money than straight women. A premium that can be attributed to the income hit many women take when they have children, rather than a lack of discrimination. However, groups of cisgender women tended to earn less than groups of cisgender men, no matter what their sexual preference was.

Carpenter, LGBTQ Economics 161, and Gonzales (2020) used data from the Behavioral Risk Factor Surveillance System to find that transgender-identified people in the US had lower family wages and lower job rates than straight men with similar reported traits. Their pay gap is even harder to measure because companies are only required to report on “men” and “women” by law.

Early in 2022, the HRC Foundation found that LGBTQ+ workers make about $0.90 for every $1 a straight US worker makes. More specifically, queer people, trans people, and non-binary people feel this gap even more than others. You can observe such gaps in the graph below, in which the pay gap is determined by gender. The highest pay gap is for trans women, since they receive $0.60 for every $1 a straight cisgender man receives. However, the pay gap for trans men is a bit lower since they receive $0.70 for every $1 a straight cisgender man gets. This gives us proof that gender influences wages.

Additionally, Geijtenbeek and Plug (2018) looked at transgender people before and after they changed their gender. They discovered that transgender female-to-male people made much less per hour than straight men before they changed. And, their wages didn’t change much after they did change. Transgender male-to-female people, on the other hand, had the same hourly earnings as straight cisgender men before they changed. However, their earnings and hours dropped a lot after they changed.

According to preliminary results released in April 2022 by the Social Science Research Network, college-educated workers in the US who self-identify as LGBTQ+ earn 22% less than their straight cisgender peers a decade after they graduate. This same comparison was 12% a year after they graduated from college. This means that the difference almost doubled in a decade, due to a number of factors.

Moreover, if we do not take gender into account, the pay gap is still going to be influenced by ethnicity. For example, LGBTQ+ Native American workers make 70 cents for every dollar a cis-hetero worker makes. Or, for instance, a gay black worker makes $0.80 while a gay white worker makes $0.90 for every dollar a straight white worker does.

Occupational segregation

LGBTQ+ people are prone to work in jobs that pay less or offer fewer promotions in their careers. This can happen because of biases in society, discrimination at work, or the lack of women in certain areas. People who are LGBTQ+ can feel underrepresented in certain fields or jobs because of prejudice. An example would be biased decision-making during the hiring process or when being a potential candidate for promotions.

Intersectionality

When looking at pay differences, it is important to think about how groups overlap. People who are LGBTQ+ and also in other underrepresented groups, like people with disabilities, may face even more problems. People who are LGBTQ+ can come from many different ethnical, national, cultural, religious, and social groups. All of these traits can affect how they feel in the LGBTQ+ group and in society as a whole. A black transgender woman, for example, may face abuse because of both her ethnicity and her gender identity. Whereas a white transgender woman or a white gay man would not get that much abuse since they represent only one minority group.

Mental health and well-being

LGBTQ+ people may have more mental health problems than cis people because of how society treats them. They often deal with what professionals call minority stress. Because of their sexual orientation or gender identity, exposure to discrimination, prejudice, and shame exists, which causes stress. This constant worry can make people feel more stressed, anxious, and depressed. Thus, it leads to more work undone, less job satisfaction, more time off work, and more people leaving their jobs. Possibly hurting their ability to make money.

Conclusions

It is important to keep studying and collecting data about differences in pay and problems that LGBTQ+ people face.

Organizations and lawmakers should try to give everyone the same chances. Making sure everyone feels welcome, and treat everyone fairly to fix these problems. This includes putting in place rules against discrimination, making sure workplaces are diverse and welcoming. As well as giving LGBTQ+ sensitivity training and assure hiring and promotion practices are fair. Also, making an effort to reduce social shame can help remove challenges when choosing a job and moving around.

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