Is There a “Pink Pay Gap” As Well as a Gendered One?

In this article, Lesley Traverso explores the nuanced issue of pay disparities within the LGBTQI+ community in the lead up to Mardi Gras celebrations, focusing on whether evidence exists of a wage gap that is influenced by sexual orientation alongside gender.

There is considerable research, discussion and handwringing about the (very valid) pay gap between men and women, but what of the evidence of a pay gap between straight and gay men or straight and lesbian women, or any other combination? Does it exist? What influences it? Has the situation changed as society has changed? 

Badgett (Badgett, 1995) was the first to apply tools used in the analysis of race and gender discrimination in employment to the question of pay-based sexual orientation discrimination.

Back then, his research showed that gay and bisexual male workers earned from 11% to 27% less than heterosexual male colleagues accounting for other variables, in contrast, lesbian women earned a wage premium.

In 2018, Hansen et al (Hansen et al., 2020) found a 20% gap for gay men in the US, whereas Preston and Birch (Preston et al., 2020) proposed a “gay man penalty” of just 8% in Australia, with lesbian and bisexual women on a par with each other.

There is more than one story behind the figures, of course

Firstly, robust data is difficult to access, there is a wide variation in methodologies, earnings measures, sexual orientation measures, and models.

In Klawitter’s (Klawitter, 2015) meta-analysis, findings indicated an average earnings penalty of 11% for gay men and an earnings premium of 9% for lesbians. In contrast via another aspect of diversity, research in the UK found a median ethnicity pay gap of 2% (Bewley, 2020).

But, how do sexual orientation factors influence, or are influenced by, gender differences as well?

Is it true that “Sexual orientation and gender interact in the labour market to produce a nested hierarchy of disadvantage”?(Waite and Denier, 2015 p.584).

An individual’s life wage earnings potential is influenced by many factors including the decisions made during school time, selecting a career, an organisation to work for, selecting their future family structure (marriage, children, etc.,), and location. Layered on top of that are social attitudes both at a macro and micro level, how comfortable an individual may be with themselves, how they choose to interact with others, and how they present their identity.

Research in the US (Burn and Martell, 2020) explored the choices of university majors and subsequent careers and workplaces of gay men and lesbian women. They found that gay men choose careers with lower levels of prejudice, higher levels of workplace independence, and occupations that emphasise relationships, even if they pay less. Lesbian women choose less prejudice and workplace independence. Both are willing to accept lower levels of earnings potential for more attractive workplace values.

Interestingly, they also found evidence of a ‘leaky pipeline’ in STEM fields for LGBT people and that their subject choices were more influenced by social stereotypes. They concluded that there are persistent differences in human capital attainment by sexual orientation.

Gay men and women complete more years of schooling than heterosexual people and those higher levels of education sort them into more highly paid occupational groups, however, within those groups, research indicated that gay men earn less than heterosexual men (Waite and Denier, 2015).

Early research (Martell, 2013) suggests that the labour market rewards masculinity, but that doesn’t explain those who don’t come out but could explain the higher earnings of lesbians who portray less feminine characteristics. For the gay man who must invest time and energy into constructing a false identity, he could be perceived as being less productive. For many, the creation of social capital is challenging.

For those who wish to pursue an international career, the challenges are greater, McPhail et al (McPhail et al., 2016) found evidence of a corporate ceiling, stereotyping, and self-discrimination.

Returning to the interaction of gender and sexuality, what about the influence of marriage, legal partnership and family choices?

Early studies show same-sex male couples earn less than married hetero counterparts (Bridges and Mann, 2019), but partnered lesbians earn significantly more. There was evidence that gay men experience a glass ceiling like that faced by women, but legally partnered lesbians are more likely than hetero females to occupy professional and management positions. This research showed the important role that partnership status plays in explaining the effect sexual orientation has on wages and employment.

Ultimately, the existence of wage differentials exists not only between males and females but is also an added complexity for LGBT individuals as well. The research I have considered for this paper has touched on several causes including family formation, educational and work choices, industry choice, social attitudes, and personal identity presentation.

One of the messages from this brief research is that LGBT-identifying individuals often make education, career and organisational choices with the preservation of their identity in mind, and this can lead to being the recipients of lower pay. Those organisations offering an alignment of individual and corporate identity, and sharing of values and philosophies can “bring out the best in employees” (McKinlay, 2010) p.239.

If organisations do not portray themselves as welcoming to the LGBT community, then self-selection away from those organisations will continue by the group. Indeed, those organisations that are open about equality and have strict pay equality measures in place (e.g. those with collective bargaining), can attract a more diverse employee base. This has issues for an organisation’s ability to develop breadth and diversity in their Boards.

Organisational culture is a subset of broader society. As new legislation is passed in support removal of workplace discrimination against the LGBT community and other significant changes such as marriage equality, so broader societal views change. Individuals themselves also evolve their own identities as they go through their adult life.

However, all organisations have a responsibility to encourage the creation of workplace cultures that are openly and genuinely welcoming to all. This includes encouraging everyday respect in the workplace, shaping workplace employee policies to be all inclusive, ensuring recruitment, training and development opportunities are transparent and accessible to all, and that the CEO and Board genuinely innovate to accelerate change.


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