What Employers Can Do About the LGBTQ+ Pay Gap
Workspan Daily
June 24, 2024
Key Takeaways
  • The pay gap is real. Recent Glassdoor research identified a 16% pay gap for surveyed LGBTQ+ workers and a 23% gap for surveyed transgender workers.
  • There remains a lack of data. More research on pay inequities for LGBTQ+ employees is needed — but many workers don’t feel safe disclosing sensitive information.
  • Action can generate impact. Offering equitable pay and an inclusive work environment has been shown to boost recruitment and retention.

LGBTQ+ workers in the United States face a 16% pay gap — and transgender workers a 23% gap, according to a recent Glassdoor report

Some of these workers are just starting their careers. In general, workers ages 18 to 24 were most likely to identify as LGBTQ+ in Glassdoor’s survey. The gender pay gap likely plays a role as well, with more women than men among the survey respondents identifying as LGBTQ+. 

There was also a disproportionate representation of LGBTQ+ workers in lower-paying sectors, such as restaurant/food-service jobs or nonprofits/non-governmental organizations, compared to information technology, finance or aerospace/defense. 

But even within industries, gaps appeared. The largest pay gaps between LGBTQ+ and non-LGBTQ+ workers were seen in telecommunications (19%), retail/wholesale (17%) and pharmaceutical/biotechnology (16%), while nonprofit/NGO jobs had the smallest reported pay gap (5%). 

More time actively working in a career field doesn’t always help. A study published by the Social Science Research Network found that among college-educated workers who identified as LGBTQ+, their wage gap nearly doubled after their first decade of employment. 

All told, Glassdoor concluded, industry, age and gender only partially explain the LGBTQ+ pay gap. The “unexplained” or “adjusted” pay gap remains after “explainable” factors such as age or lack of experience are removed. 

The Impact of Inequities

Research has found various barriers affect where LGBTQ+ workers apply and are hired: Stigma and gender norms discourage some LGBTQ+ candidates from entering certain fields — for instance, gay men are less likely to work in male-dominated fields, which often are higher-paid. 

Bias, discrimination and non-supportive environments for LGBTQ+ workers in STEM (science, technology, engineering and mathematics) fields have significantly reduced the talent pool for those industries. 

Employers repeatedly rate candidates who disclose they are gay or lesbian during the application process as less competent and hireable.

“Gaps are partly driven by discrimination, generally at a manager level, where there is discretion in pay decisions,” said Brian Levine, a pay equity leader and partner at Merit Analytics Group. “But they are also driven by individuals being hired into different roles, being promoted at different rates and exiting at different rates.” 

The consequences can be even more significant for certain sub-populations. The pay gap grows to 30% for Native American LGBTQ+ workers and to 40% for transgender women, the Human Rights Campaign found. LGBTQ+ individuals also experience higher poverty rates — with transgender adults and cisgender bisexual women inordinately impacted. 

Disclosure Misgivings and Distrust

Closing the pay gap comes with challenges, experts say: Most employers don’t have demographic data related to their workers’ sexual orientation and gender identity. 

Only 17% of organizations currently collect LGBTQ+ pay equity data, according to Payscale’s 2024 Compensation Best Practices Report — although that was up from 13% in 2022

This data collection falls well behind pay equity demographic data based on gender, race and ethnicity — often due to workers’ hesitation to share such information. 

“Members of the LGBTQ+ population often feel they can’t be their true selves at work,” said Mariann Madden, North America pay equity co-lead at WTW. “Even though [their sexual orientation and/or gender identity] should not be used against them, they may not trust that will be the case.” 

Case in point: 46% of LGBTQ+ employees are closeted at work, meaning such workers are guarded or feel unable to share their true self to others, according to a 2018 Human Rights Campaign report — down only slightly from a decade earlier, when 50% were not out at work. 

“People’s lack of willingness to disclose correlates directly with how comfortable they feel about sharing that information in the work environment,” said Ruth Thomas, pay equity strategist at Payscale. “Employers committing to DEIB [diversity, equity, inclusion and belonging] need to lean into the inclusion and belonging aspects of this acronym to make this happen.” 

Build Trust, Analyze, and Report Back

If employers have access to comprehensive data related to sexual orientation and gender identity in their workforce, a pay equity analysis is a good first step, Levine said. 

Learn: Performing a Pay Equity Analysis

“The analysis points to areas of the organization where there are issues and would also highlight specific employees for whom pay adjustments should be considered,” he said. “Done well, the analysis would also represent the impact of planned pay adjustments on the gaps and allow companies to consider scaling up efforts to improve the impact, subject to what might be near-term budget constraints.” 

But businesses should also analyze hiring, promotion, performance evaluations, raises, where employees fall in salary ranges, and when and why they leave, said Katie Bardaro, chief customer officer and head economist at Syndio. 

This set of information and data can pinpoint trends indicative of gaps, such as the under-representation of LGBTQ+ workers in leadership, or excessive turnover in certain positions as LGBTQ+ employees repeatedly leave a company. 

After gathering demographic data, Bardaro advised organizations to effectively follow up. 

“If you’re going to commit that you’re a workplace equity organization, and that’s why you’re collecting this data, you need to make sure you have a plan to communicate and address your analysis as well — to ensure the trust you’re building isn’t eroded because you don’t come back to that conversation once the data is collected,” she said.  

Closing the Gap

Proactively closing pay gaps can help avoid complaints or lawsuits — but it’s also good for business, Bardaro said. 

Addressing pay equity — and communicating it — is 13 times more relevant to employee engagement and retention than levels of pay or benefits, according to research from The Josh Bersin Company. 

Offering equitable pay alongside an inclusive, welcoming work environment boosts talent recruitment of LGBTQ+ employees as well as other candidates, particularly in younger generations, “who want to demonstrate allyship and will make employer choices based on how you’re presenting yourself and actually delivering on being an inclusive employer,” Thomas said. 

Ultimately, Madden said, pay gaps cause employees to feel as though their work is unappreciated and their employer is not looking out for them. 

“An inclusive workplace creates a more-engaged workforce, and research has shown that businesses with an engaged workforce outperform their peers,” she said. “It creates an environment that allows employees to thrive and grow in their careers. And when you grow in your career, that pay typically follows.” 

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

Also, check out additional articles on equity and the LGBTQ+ workforce:

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