The Impact of Wage Equality on Sexual Orientation Poverty Gaps

June 2015

This study examines which sources of wage differences — gender, race, ethnicity, or sexual orientation — have the most significant impact on poverty among same-sex couples. Using data from the 2012 American Community Survey, the study assesses hypothetical reductions in wage gaps.

Closing the gender wage gap would reduce the poverty wage gap between same-sex and different-sex couples.
Closing the racial and ethnic wage gaps would also reduce poverty rates for same-sex couples.
Eliminating the sexual orientation wage gap would help men in same-sex couples.
Data Points
of women in same-sex couples currently living in poverty
of women in same-sex couples living in poverty if the gender wage gap were eliminated

Introduction and Summary

A growing body of research suggests that lesbian, gay, bisexual, and transgender (LGBT) people are more likely to be poor than are heterosexual people with the same characteristics.1 These studies show that lesbian and bisexual women are especially vulnerable to poverty, as are LGB people of color. One reason for these differences could be that women and people of color face wage gaps when compared to men or to white people. Lower wages mean lower incomes, increasing the risk of a household falling below the federal poverty line, which is based on income.

This report uses data on same-sex couples in the 2012 American Community Survey to assess the impact on LGB and heterosexual poverty rates of several types of hypothetical changes: one that reduces the gender wage gap between men and women, one that reduces the wage gaps for people of color (the gap between white and black workers and the gap between Hispanic and non-Hispanic workers), and one that reduces the wage gap for gay and bisexual men compared with heterosexual men. These changes could come from new policies designed to address wage gaps, such as reductions in the gender wage gap resulting from a policy of paid family leave,2 or through more stringent enforcement of new or existing nondiscrimination laws.

Although we typically observe higher poverty rates for lesbian couples than married heterosexual couples, individual lesbians earn more than similar heterosexual women on average.3 However, most lesbians still earn less than either gay or heterosexual men. As a result, a couple made up of two lesbian earners usually has less household income than a heterosexual couple because of the gender wage gap, so lesbian couples and households are more likely to be in poverty than heterosexual married couples. In this report, our adjustment to eliminate the gender wage gap should account for this effect.

Given the lesbian wage “premium”, we also consider the impact of another source of wage differences: giving heterosexual women the same wages earned by lesbians. At least some of the lesbian advantage results from lesbians’ different decisions about working in the paid labor force, perhaps because lesbians do not face the same gender constraints that result from being in relationships with men.4 Lesbians work more hours per week and more weeks per year than heterosexual women, and eventually, that time would add up to more labor market experience for lesbians. It is also possible that lesbians make other kinds of labor market decisions that tend to increase their wages, such as getting more training or going into male-dominated occupations. These labor market differences between lesbians and straight women might be partly related to the fact that lesbians are less likely to have children than straight women. The different decisions made by lesbians give them an advantage from which heterosexual women could also gain if they made similar decisions.

After we simulate the changes in earnings, we then calculate the impact of the higher simulated incomes for all women, people of color, and heterosexual women on poverty rates and on poverty gaps between people in same-sex couples and people in different-sex couples. We use data from the 2012 American Community Survey for the exercise.

Overall, we find that eliminating wage gaps reduces poverty rates for people in same-sex couples and in different-sex couples in the following ways:

  • With the elimination of a gender wage gap, the poverty rate for women in same-sex couples would fall from 7.9% to 5.4%.
  • Eliminating the racial wage gap would reduce the poverty rate for African American men in same-sex couples from 14.5% to 10.9%, and would reduce the poverty rate for African American women in same-sex couples from 24.7% to 16.9%.
  • Without a wage gap between Hispanics and non-Hispanics, the poverty rate for Hispanic men in same-sex couples would fall from 4.9% to 3.8%, and the rate for Hispanic women in same-sex couples would drop from 9.2% to 7.4%.
  • If heterosexual women in couples had earnings similar to women in same-sex couples, their poverty rate would fall from 6.6% to 5.8% (for those heterosexual women in married couples, the change is from 5.8% to 5.1%, while it is from 14.5% to 12.3% for those in unmarried couples).
  • Reducing the sexual orientation gap for men in same-sex couples would reduce their poverty rate from 3.3% to 2.2%.

The impact on sexual orientation poverty gaps—the difference between rates for same-sex couples and different-sex married couples—also goes down slightly in some situations. In particular, we find the following patterns:

  • The poverty gap between different-sex married and same-sex female couples would disappear if women earned the same wages as comparable men earn.
  • Hispanic women in same-sex couples would no longer be more likely to be in poverty than Hispanic women in different-sex married couples if Hispanics earned the same as non-Hispanics.
  • African Americans in same-sex couples would still have much higher rates of poverty than heterosexual African Americans, but enforcing wage equality between black and white people would reduce poverty more for people in married different-sex couples (almost 40% for straight couples, but between 25-32% for same-sex couples.)

Looking at some simpler comparisons of poverty among all same-sex couples (5.6%) and different-sex couples (6.6%) shows that reducing the gender wage gap would have a larger impact on reductions in poverty for both kinds of couples than either reducing the racial/ethnic wage gap or the sexual orientation wage gap. Eliminating all three gaps would reduce poverty among people in all couple types by a third and would completely eliminate the gap in poverty rates between same-sex and different-sex couples.

Download the full report

The Impact of Wage Equality on Sexual Orientation Poverty Gaps

See Albelda et al. (2009); Badgett et al. (2013); Prokos & Keene (2010). Because we do not have data on transgender people, we cannot conduct the same exercise for that group, so here we use “LGB” instead of “LGBT.”

Misra et al. (2007) show that countries with paid family leave laws tend to have lower gender wage gaps than other countries, holding other factors constant.

See Klawitter (2015).

See e.g. Badgett (1995), Black et al. (2003), Antecol et al. (2008), Daneshvary et al. (2009), and Klawitter (2015).