Everybody knows the LGBTQ community — and especially gay men — are affluent, right? They all live in them most expensive cities, dress nicely and go on fabulous vacations.
Well, actually no. While there are certainly some wealthy LGBTQ people, that’s not the rule. According to the most recent research, gay men earn less than straight men, on average, and gay women earn less than either group. So, if you’ve been overspending or borrowing to keep up with your peers, you might want to stop right now.
This week, I’d like to share some insights into the income disparities that face the LGBTQ community, how the myth of gay affluence can hurt us all and how we can connect with each other to gain perspective on our financial challenges.
The Income Gap
First let’s look at the statistics. The most recent income and wealth data I’ve seen comes from The 2016/2017 LGBT Financial Experience study conducted by Prudential. Prudential first did the survey in 2012 and updated their findings in 2016, interviewing a nationally representative sample of 1,376 LGBT and 503 general population respondents.
Individuals
Here are the average income figures for individuals from their study:
- Bisexual Women: $35,980
- Lesbian Women: $45,606
- Heterosexual Women: $51,461
- Gay Men: $56,936
- Heterosexual Men: $83,469
- Bisexual Men: $85,804
It’s not surprising given our world-wide pay gap that men out-earn women, regardless of their sexual orientation. It is somewhat shocking that men who considered themselves bisexual earned the most, while bisexual women earned the least. And if you’ve bought into the myth of gay affluence, here’s a statistic that may raise some eyebrows. Some 23% of single LGBT respondents earn less than $15,000 per year.
Couples
The Prudential study also published income data for couples. It found that 33% earn between $50,000 and $100,000 and nearly a quarter make over $100,000. There’s more information about income for couples in the American Community Survey (ACS) data:
- 14.1% earn less than $35,000
- 10.4% earn between $35,000 and $49,999
- 17.3% earn $50,000 to $74,999
- 15.4% earn $75,000 to $99,999
- 42.8% earn over $100,000 or more
The ACS survey found that the median household income from all same-sex couples ($87,300) was higher than that of opposite-sex married couples ($82,923). But again, the gender pay gap seems to play a role here. Male couples had median household income of $98,486 versus just $79,494 for female couples.
Counter arguments
A NY Times article, “The Most Detailed Map of Gay Marriage in America,” also found that same-sex married couples earned more than opposite-sex couples. However, rather than using census data, The Times used information from an August 2016 Treasury Report based on 2014 income tax returns, which may be more accurate.
Specifically, the article found male same-sex couples earned an average of $176,000, which was $52,000 more than married lesbians and $63,000 more than married straight couples. In addition, same-sex married men with children averaged gross income of $275,000 — more than double that of opposite-sex and lesbian couples. Notice that these income figures are significantly higher than the ACS data study.
You have to dig into the statistics to really understand what these numbers show. First, as the article points out, most same-sex couples live along the coasts and in urban areas, where wages tend to be higher. When comparing the same zip codes, in turns out that heterosexual couples actually earn more than same-sex female couples, which coincides with the ACS data.
Childcare also affects the statistics. The Treasury report found same-sex female couples were four times more likely to have children than same-sex male couples. Combine the tough career trade-offs of child rearing with already lower wages, you can see why the gap between male and female same-sex couples is so large.
Lastly, married couples, in general, are likely a wealthier group. Consider that the average cost of the a wedding last year was $33,391, more than half of the median household income in 2017. Clearly, the people who get married are the ones who can afford to do so. As a result, the income of this select group might not reflect the true picture of the community as a whole.
This is also true for opposite sex couples. ACS data shows the median income for married opposite-sex couples is $82,293 and unmarried opposite-sex couples is $58,879.
What to do with this new perspective
Clearly not all gays are wealthy, and recognizing this fact may be a step towards better financial choices. Think about it. It’s natural to want things that we think other people have. It even makes sense to do whatever it takes to get them. But as we’ve noted earlier, money isn’t everything, and acquiring objects rather than experiences often turns out to be fruitless and unsatisfying. Just realizing that you’re actually not poorer than most of your LGBTQ peers can be liberating.
You’ll be happier if you stop competing with your friends about money, but even so, there are times when comparing yourself to others can be good for you. Talking openly and honestly with your friends and loved ones about money can lead to better results for all parties involved.
To make smart decisions about money, you need to get a full understanding of the decisions you’ve made up to this point. You need to know how much debt you carry, and what sacrifices you have made to get to where you are now. Sharing this information with friends and loved ones can give you valuable perspective.
For instance, it’s important to recognize that income doesn’t always translate into wealth. Some of your friends may make a lot of money but spend nearly all of it. Others may have modest incomes but save or invest it wisely. Talking with people about their whole situations can help you understand your own.
For example, say your friend has a new Porsche. Jealous? What if you knew that he had been saving for 15 years and drove a paid-for, compact Corolla the entire time in order to save the money for his dream car?
Or how about that sister of yours who bought the amazing new home? You might not envy her so much when you learn she hates it because she spent too much and now feels smothered by the debt.
Knowing the facts surrounding a money situation, rather than just making assumptions about how people around you live, will give the sobering picture you need to be honest about your financial situation.
I feel very fortunate to have amazing friends and family who share their financial lives with me, which can sometimes make me envious but also allows me to appreciate how they got there. I’m also thankful for the life that I have when I realize people have much harder circumstances than I ever imagined. (Like the massive amount of law school loans that still exist for some people 10 years after we have graduated.)
I’ve always argued that personal finance is just that — personal. But seeing how you compare to others in our community will help provide perspective when you’re developing your financial plan and dealing with the emotional baggage that we all have around money. The perspective can help ground you in your values and make your goals personal and realistic.
Additionally, knowing the strengths and weaknesses of our community can help us efficiently fight the systemic struggles that we face and help move forward.
How has this information changed your thinking around your finances? Tweet, message or email me at the links below.