Evidence of the Role of Sexual Orientation in the Determination of Earnings Outcomes

Analysis of 1989-96 General Social Survey data reveals the complex interplay of sexual orientation and gender in influencing earnings outcomes. Gay and bisexual men are shown to experience a 30-32% income disadvantage relative to heterosexual peers, while lesbian and bisexual women enjoy a wage premium of 17-23%. The disparate earnings effects of sexual orientation across genders belie facile attempts to portray orientation as a predictor of either affluence or labor-market disadvantage. Additionally, disaggregation of the effects of gender, marital status, and sexual orientation suggests that differentials long attributed to marital status may largely reflect previously unobserved effects of sexual orientation. For lesbian, gay, and bisexual persons, the acknowledgment of a sexual orientation that deviates from societal norms has ramifications at once personal, social, and political. The ramifications are also economic. In a society in which the issues of homosexuality and bisexuality remain contentious and provoke fiercely divergent responses, that a worker’s sexual orientation may alter earnings and career advancement outcomes is unsurprising. The nature of the impact, however, remains a matter of debate. Marketing research firms and conservative advocacy groups portray lesbians and gay men as an economically privileged minority, enjoying incomes higher than those of most Americans (DeLozier 1996; Hardisty and Gluckman 1997). At the same time, gay and lesbian rights organizations and an emergent academic literature focus on evidence of workplace intolerance to argue that sexual orientation discrimination has pervasive, deleterious effects on the employment environment experienced by non-heterosexual workers (Badgett, Donnelly and Kibbe 1992). Most significantly, early econometric study of the workplace effects of suspected sexual orientation bias show gay and bisexual orientations to be associated with a worker’s earning significantly lower wages (Badgett 1995). The present study argues that, while sexual orientation does indeed have a large and measurable impact on income patterns, empirical analysis of workers’ earnings undermine easy portrayals of lesbian, gay, and bisexual workers as either an over-achieving minority or as simple victims of bias. Further, the econometric evidence demonstrates that long-measured earnings differentials attributed to marital status may largely be accounted for by the previously unrecognized effects of sexual orientation. Thus, the study informs both the recent interest in the labor implications of sexual orientation, as well the long-studied effects of gender on earnings