Wage Penalties and Sexual Orientation: An Update Using the General Social Survey

I. INTRODUCTION Discrimination against particular groups of workers (women, racial and ethnic minorities, homosexuals, bisexuals, etc.) may take a number of forms. First, members of marginalized groups may not be hired at all or they may be hired with much lower probability than members of preferred groups. On the other end of the job cycle, preferred workers may find themselves protected during periods of slack demand, while others are being laid off. In between, discrimination may reveal itself in the form of lower wages for comparable work, for example, by women vis-a-vis their male coworkers. Evidence of discrimination in the form of lower wages is widespread if not universal. Certainly, there appears to be a large and robust penalty against gay men (Allegretto and Arthur, 2001; Badgett, 1995; Berg and Lien, 2002; Black et al., 2003; Blandford, 2003; Carpenter, 2007; Klawitter and Flatt, 1998). However, much of the research to date on lesbians has found a wage premium for lesbians (Berg and Lien, 2002; Black et al., 2003; Blandford, 2003; Klawitter and Flatt, 1998). The typical explanations for discrimination based on personal prejudice seem unable to reconcile the disparate results for gay and lesbian workers unless we posit that employers, customers, or coworkers have a preference for lesbian workers over comparably skilled heterosexual workers. Alternatively, it could be the case that employers engage in statistical discrimination against heterosexual women based on the perceived likelihood of short-or long-term separation from the workplace to give birth and care for children. If employers believe lesbian women are as attached to the labor force as men then there is no reason to penalize them in anticipation of work disruption.(1) Of course, this hinges critically upon the employer knowing the sexual orientation of the employee. Jepsen (2007) finds little support for the hypothesis that differences in specialization across households account for the lesbian wage premium. While this theory may help explain the empirical wage premium for lesbian workers over heterosexual women, it still fails to explain the gay wage penalty. Alternatively, perhaps the wage penalty for gay men is really measuring unobserved productivity differences. For example, homophobia can reduce homosexual workers' productivity. Sexual orientation stigma can cause homosexual workers stress and anxiety, which are likely to have a negative effect on their working ability. (2) Again, however, this theory cannot explain why heterosexual women earn less than lesbians earn. If there is debilitating homophobia in the workplace, women should suffer from this as well as men, though not necessarily to the same extent that gay men suffer (3) (see below). Carpenter (2006b) finds evidence of harassment of lesbian workers in Australia that may be the result of exactly this kind of homophobia. We return of to this point about harassment (and other forms of heterosexism) below as well. In this article, we address two questions. First, are the wage differences by sexual orientation declining over time? Second, are these wage differences robust to correction for selection bias? Our research suggests that the answer to the former is yes and the answer to the latter is no. This study uses data from 1988 to 2006 from the General Social Survey (GSS) to examine the effects of sexual orientation on earnings. Previous research using data from the GSS has found that gay men earn 16%-34% less, whereas lesbians earn 18%-23% more than similarly qualified heterosexuals. Using a behavioral definition of homosexuality based on sexual behavior in the past 5 yr or in the past year, we find the familiar wage penalty/premium for gay/lesbian workers, respectively, in our ordinary least squares (OLS) estimates. In contrast to the earlier results, however, correcting for differential selection into full-time work reduces the penalties for gay men and eliminates the entire wage premium for lesbians--actually revealing a sizeable but insignificant penalty for married lesbians. …