OPINION: Should we measure pay for gay?

* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Delving into the sexuality pay gap might be problematic, but it would foster a more inclusive corporate culture

Paul Donovan is the chief economist at UBS Global Wealth Management

Since 2017, larger UK companies have been required to report their gender pay gap. This measures the difference between average pay for men and women in a company, and it was hoped that increasing transparency would help bring pay rates closer together.

The reported pay gap has fallen since 2017, and companies seem to have focused more management time on tackling gender inequality. There are efforts to introduce reported pay gaps for ethnicity and disability.

Should companies also report a sexuality pay gap? This is not so simple to achieve and may do more harm than good.

Is there a problem?

Academic studies suggest that the price of being queer at work is lower pay. Estimates of the pay penalty vary, but the gap is sizeable for most groups. In developed economies the range runs from 7% to more than 20%. The exception is lesbian women, who tend to earn more than their straight counterparts (although, because of the gender pay gap, less than straight men). Lesbians’ positive pay gap may be influenced by perceptions about queer women being less likely to take career breaks to have children.

Academics can measure a pay gap, because people are more willing to talk about their sexuality in the anonymous environment of academic research. Fear of being out to an employer is likely to make this harder to do in the workplace.

Out or not?

Surveys suggest that around half of queer employees are not out at work. Closeted queer employees are still victims of prejudice. Casual homophobia from colleagues can still be heard within the wooden walls of the closet. When a prejudiced colleague suggests queer people are “less than”, the closeted employee will think “they mean people like me” and the fear of being outed at work will rise. Not being honest about who you are at work, and of constantly having to self-censor workplace conversations creates stress. Stressed (closeted) workers are likely to be less productive. Less productive workers get paid less.

This sets up an obvious problem. Hetero-normativity means closeted queer employees will be treated as straight until proved otherwise. Closeted queers’ lower pay lowers reported straight pay and narrows the reported sexuality pay gap. Of course, the uncloseted reality is a wider pay gap.

It is probable that queer employees who are public about their sexuality are not representative of the community as a whole. Confidence is a quality that is often prized (and paid) in the workforce, and it takes a lot of confidence to come out at work. Some people may delay coming out until they have reached a position of relative seniority and associated job security, and senior people are paid above average. There is also what is referred to as ‘the best little boy in the world syndrome’ – internalised homophobia pushes queer people to overachieve to ‘offset’ the perceived stigma of being different. All these things would raise the reported average pay level of openly queer employees.

Taking these two effects together there is a real risk that the pay of high-earning LGBTQ+ employees is recognised, and the pay of low-earning LGBTQ+ employees is ignored (and classified as straight pay). This creates a smaller sexuality pay gap than actually exists. 

What can we do?

Publishing a sexuality pay gap may underestimate the effect of prejudice on pay, but not measuring the pay gap is also dangerous. Companies tend to allocate resources to issues that are in the public eye. A company with a visible gender pay gap and an invisible sexuality pay gap is naturally likely to focus time and money on the former. For pay gap reporting, the threat is that the queer community is damned if they do, and damned if they don’t.

A two-stage approach might resolve some problems. Larger companies could report the proportion of their staff who are out. A company with more than (for example) 7% of staff out at work could be asked to report their sexuality pay gap. That company is still likely to have closeted staff, but the reported pay gap would measure a reasonable share of the company’s queer employees. A company with fewer than 7% of staff out at work would not report a (misleading) sexuality pay gap, but instead would have to present a strategy to improve their culture and promote openness.

Prejudice has a high economic cost, and pay is one manifestation of that. But we must have numbers that reflect reality.