LGBT Economics: From spending power to stereotypes, the big-picture LGBT economy

The marketing firm Witeck Communications estimated the 2013 buying power of American LGBT adults was $830 billion, but additional studies revealed that poverty rates are higher for certain demographics within the LGBT community. They show that between extreme depictions of affluence and poverty, there’s a bigger, more complex picture of LGBT economics.

“Buying power simply means one thing,” said Bob Witeck, President and Founder of Witeck Communications, a public relations and marketing firm that includes the lesbian and gay market as one of its specialties. “It means the amount of money that households or people have available to spend and to save after paying their taxes or their pension contributions.”

Also known as disposable personal income (DPI), the buying power of the adult LGBT community in the U.S. is growing, up from $790 billion in 2012 (compared to total U.S. consumer buying power was at $12.4 trillion that year).

“I hope what the data does is tell some of the economic truth about who we are,” said Witeck, emphasizing that LGBT people have long suffered from being made invisible — and that the $830 billion figure represents to him more than just the ability to spend.

“We are part of every neighborhood,” Witeck said. “We buy homes. We have jobs. We pay taxes. We get promotions. We open businesses.

We do all the same things everyone else does.

We want that to be realized, that we’ve actually contributed a lot. We want success in life as much as anybody else, and by doing that we want to show you value in who we are.”

Witeck calculated DPI using hundreds of population samples implemented by marketing research partner Harris Interactive, which showed 6 to 7 percent of Americans age 18 and up identifying themselves as LGBT — which translates to about 15 to 16 million people.

“There are some estimates that put it around 5 percent, there are other estimates that put it higher,” said Witeck, adding that estimations are usually undercounted since many LGBT individuals are reluctant to identify their sexual orientation or gender identity in a survey.

“We’ve been doing samples with Harris interactive for almost 14 years and no matter how we sample American adults, if we ask sexual orientation, it normally comes between 6.5 and 7 percent almost every time.”

In addition to robust buying power, the overall financial health of the LGBT community is strong, according to Prudential Finances, Inc. which released a study in 2012 asking 1,401 LGBT Americans about their economic well-being.

The report cited statistics indicating LGBT individuals have a higher median income than the general population: at $61,500 compared to $50,000, attributing higher education levels and living in LGBT friendly cities with elevated median incomes as contributing factors.

But the Prudential study stressed that the LGBT population includes a wide spectrum of demographics and incomes. For example, although gay male couples had the highest median household income at $103,100, they only represented 19 percent of the whole LGBT community.

Comparing same-sex couples to heterosexual couples in income

The Williams Institute, a national think tank  in Los Angeles at the University of California, released “Same-sex and Different-sex Couples in the American Community Survey: 2005-2011,” outlining the economic condition of male and female same-sex couples compared to opposite-sex couples.

Although the study found that lesbian couples reported a median personal income of $38,000 in 2011 — $8,000 higher than women of opposite-sex couples — women still earn less than men regardless of sexual orientation.

“None of it overcomes the basic gender gap,” said Dr. Gary Gates, author of the study and distinguished scholar at the Williams Institute on Sexual Orientation and Gender Identity Law and Public Policy. “You still see lesbians earning less than gay men.”

One of the possible reasons lesbian couples make more than women in opposite-sex relationships is that lesbians are less likely to have children, which means they are less likely to have had disruption in workforce participation, Gates said.

But that income gap is shrinking, as the wage difference between lesbian same-sex couples and women of opposite-sex couples has narrowed by $2,000 since 2008.

And although gay couples in the labor force make more than women, their median personal income is slightly lower than male members of opposite-sex couples.

This is despite the fact that same-sex couples have higher levels of labor force participation and higher levels of education, with 46 percent of same-sex couples in 2011 reporting having a college degree, compared to 32 percent of opposite-sex couples.

Discrimination in the workplace is one of the more obvious factors for lower wages, Gates said. The Williams Institute reported that 21 percent of LGBT people in the work force experience unfair treatment in hiring, pay, or promotions.

Gates also cautioned that the results of the survey do not provide an accurate representation of the LGBT community as a whole.

“I don’t know if the same-sex couple sample gives you a very good picture of what we might see if we had the entire LGBT community,” Gates said, “particularly around this issue of economic advantage or disadvantage.”

Gates added that patterns regarding income gaps within the LGBT community mirror that of the overall population. “For instance, people in same-sex couples, racial minorities, have similar kinds of economic disadvantage as they would in the general population.”

The LGB community and poverty

In June 2013, the Williams Institute released a report, New Patterns of Poverty in the Lesbian, Gay, and Bisexual Community, which revealed that members of the LGB community are more vulnerable to poverty — particularly women, people of color, and children of same-sex households.

Though the study reported that poverty rates since 2008 have increased for both the LGB and heterosexual communities, African American same-sex couples have poverty rates at least twice that of opposite-sex married African Americans.

In addition, African American male same-sex couples are more than six times more likely to be poor than white male same-sex couples. African American lesbian couples are three times more likely to be poor than white lesbian couples.

“We see the same kinds of patterns for Hispanics,” said M.V. Lee Badgett, co-author of the study, distinguished scholar at the William’s Institute, and Director of the Center for Public Policy & Administration at the University of Massachusetts Amherst. “They are more likely to be poor than non-Hispanic or white people in same-sex couples.”

Badgett added that the only difference is that Hispanic opposite-sex couples are actually more likely to be poor than same-sex Hispanic couples.

The report also showed that same-sex families are especially vulnerable to poverty, with children living in same-sex households almost twice as likely to be poor as children of married opposite-sex couples.

Strikingly, 52.3 percent of African American children in a same-sex male household live in poverty, the highest rate for any children in any household type.

Badgett said discrimination and lack of proper policy protections are contributing factors to the higher poverty levels since LGBT individuals who are treated poorly are less likely pursue benefits they may be entitled to — assuming they even quality for those benefits in the first place.

Badgett said legislative policies cannot entirely eliminate wage gaps and working to explicate all of the factors contributing to these income disparities is a challenge. “It’s still a bit of a mystery. Very few people have studied this. I’m very interested in it and plan to do more in-depth studies in the future.”

Later this year, Badgett will work with the Williams Institute to create simulations that will test additional factors which contribute in broadening economic disadvantages.

“We’ve decided to ask, what would happen if the minimum wage went up? What would happen if we got rid of the gender wage gap? What would happen if gay men’s wages were equalized to straight men’s wages?”

Badgett stated that the biggest challenge in organizing the survey was finding all the necessary data to paint a comprehensive picture of the economic LGB landscape. The transgender community, for example, lacked the essential census information regarding gender identity to be included in the report.

Poverty in the transgender community

But a 2011 survey from the National Center for Transgender Equality and the National Gay and Lesbian Task Force revealed that the transgender community is one of the most vulnerable demographics to discrimination, harassment, and poverty.

The survey showed that, compared to the general population, a transgender household is four times more likely to have an income of less than $10,000 a year. The rate of unemployment was twice that of the general population, with rates for transgender people of color four times the national unemployment rate.

“Everybody is struggling,” said Dr. Karen M. Scarpella, Executive Director and Program Director at the Gender Identity Center of Colorado (GIC), “but the additional challenge is that there’s so much discrimination, the transgender person really in this economy doesn’t stand a chance.”

Scarpella said that there are several unique challenges facing the transgender community, especially when it comes to special healthcare needs regarding medicines, hormones or counseling. Though the Affordable Care Act now provides protections so that transgender individuals cannot be denied insurance, the obstacles that reinforce poverty endure.

For example, something as simple as accessing a food bank can be problematic. “Transgender people are afraid to go to a food pantry,” Scarpella said. “Or if a religious organization is running food pantry services, the transgender person is probably not welcome or wouldn’t know if they’re welcome or not and won’t go.”

The GIC offers food assistance at their headquarters for those who cannot access food banks.

But to defeat these steep income disparities, Scarpella said that a transformation in the often-skewed perception of the transgender population is needed. “I think the backdoor key to fixing this is education. If society at large understands what transgender is, the discrimination goes away, and the additional barriers go away.”

Part of GIC’s work in Colorado includes educating companies to be more culturally competent, but Scarpella said fostering a shift in how the public views the transgender community will take time.

Scarpella added that it wasn’t that long ago the LGB community faced similar amounts of harassment and discrimination, but the transgender community got left behind.

“People are becoming more and more comfortable with gays and lesbians, and part of it is that who they are attracted to is their private business,” Scarpella said. “For transgender people, their stigmatized identity is very public, and people are uncomfortable with something they don’t understand.”

And those misconceptions are not limited to communities outside of the LGBT population. “There’s transphobia in the gay and lesbian community, and there’s homophobia in the trans community,” Scarpella said. “It’s interesting because I really believe it’s based on fear and internalized issues based on society’s marginalization.”

Brand loyalty to pro-LGBT corporations

While studies are providing a more nuanced understanding of the entire LGBT economic experience, many corporations have taken notice of the LGBT buying power. In doing that, they have moved ahead of inadequate public policies and established their own workplace protections for LGBT employees.

“Only in the last five years have they (corporations) become much more engaged in public policy,” said Witeck. “There were only 3 companies that signed the amicus brief in California’s Prop 8 case.”

By the time Proposition 8 and the Defense of Marriage Act reached the US Supreme Court last year, more than 200 companies had filed briefs calling for same-sex marriage equality, including Google, Facebook, Amazon, CBS Corporation, Starbucks and the Walt Disney Company.

The Human Rights Campaign reported in the 2014 Corporate Equality Index that for the first time ever, more than 60 percent of fortune 500 companies have implemented sexual orientation and gender identity protections.

“Marketers who are truly invested and engaged in the LGBT market are looking not at today’s customers necessarily,” Witeck said. “They’re looking on how to make tomorrows customers.”

Polls have consistently shown that an overwhelming majority of Americans under the age of thirty support same-sex marriage. Witeck commented that if businesses want to engage that particular demographic, companies must reflect analogous perspectives on important social issues.

“Brands should look as forward thinking as they [younger Americans] do,” explained Witeck. “Ten years ago, a marketer would have divided the world into risk and reward. If we’re going to do this, connect with gay people, what are we risking? Today it’s not what are we risking, it’s just what rewards are we losing.”

And studies show the LGBT population and its allies are loyal to pro-LGBT companies, with 88 percent of gay and lesbian adults and 70 percent of heterosexual adults more likely to consider a brand that provides LGBT workplace benefits, according to a Harris Interactive study.

Dismantling  stereotypes

With the combination of brand loyalty and $830 billion in disposable personal income, marketers are taking notice of the LGBT community — but Witeck cautioned that buying power is not synonymous with wealth. “There’s a lot of mythology about gay affluence or gay incomes,” he said. “Along the way, gay people pretty much look a lot like other people.”

M.V. Lee Badgett of the Williams Institute hopes that current and future studies, which analyze how that $830 billion in buying power is disseminated within the LGBT community, will help dismantle the common misconception that being gay means being wealthy.

“There is this stereotype of gay people as this very affluent group,” Badgett said. “One way that it’s harmful is that it makes it look like same-sex couples maybe don’t really need marriage. They can go hire a lawyer to try to make-up for the fact that they can’t get married, when in fact no lawyer can create something that’s equivalent to marriage.”

Badgett said the stereotype of gay affluence can also cultivate roadblocks in establishing equality safeguards, the lack of which can contribute to financial uncertainty.

Though Colorado has workplace discrimination protections for LGBT employees, there are 29 states where workers can be fired on the basis of sexual orientation, and an employee can be fired based on gender identity in 33 states.

The Employment Non-Discrimination Act (ENDA) would provide workplace protections for the LGBT population nationwide, but House Speaker John Boehner recently told the LGBT Equality Caucus that there was “no way” ENDA would pass this year.

“People look at LGBT people and think, well, if they’re doing so well, how can they be victims of discrimination?” Badgett said. “Stereotypes can sometimes blind people to the fact that inequality has economic harm.”

And though protections such as ENDA would directly impact LGBT employees and their ability to establish financial independence, Badgett hopes her work will also broaden the political framework of what is defined as an LGBT issue.

“Congress is about to cut food stamps,” Badgett said, citing the report she co-authored which found 14.1 percent of lesbian couples and 7.7 percent of male couples receive food stamps, compared to 6.5 percent of opposite-sex couples. “Now we know the issue of food stamps is an LGBT issue.”

On Feb. 4, the U.S. Senate voted 68-32 to pass the 2014 Farm Bill, which included a cut of $8.7 billion from the food stamp program — now referred to as the Supplemental Nutrition Assistance Program. The bill heads to President Obama where he is expected to sign the legislation into law.

“Think about some of our policy debates with an LGBT lens,” Badgett said. “Think about what it means to be a community and what the community’s responsibilities are for all of its members, not just the ones doing well economically.”