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The Effect of Marriage Equality and Domestic
Partnership on Business and the Economy

by M.V. Lee Badgett, PhD, and Gary J. Gates, PhD
© October 2006, Badgett and Gates


This report is also available in the original PDF format.

Introduction and Summary

As public discussion of the issue of marriage equality for same-sex couples continues in many parts of the United States, policymakers have asked about the larger economic impact of recognizing same-sex couples. This brief outlines the potential benefits and costs to businesses if states grant marriage rights or domestic partner/civil union status to same-sex couples. We assume that those state policies would require employers to treat same-sex spouses or partners of employees in the same way that different-sex spouses are treated.

  1. We find several potential business benefits of equal treatment for same-sex couples:
    • Current employees will be healthier, more satisfied, and less likely to leave their jobs if they get domestic partner benefits.
    • Domestic partner or spousal benefits will increase the competitiveness of employers in recruiting and retaining talented and committed employees.
    • New weddings or other ceremonies would be a $2 billion boon for wedding-related industries in the United States.
    • Marriage equality would make it easier for multistate and multinational businesses to transfer employees and to create consistent benefit and salary policies. With a potential hodge-podge of growing jurisdictional requirements, business leaders are likely to crave uniformity and simplicity in responding to diverse family needs and sustaining fair treatment for all employees.
  2. We find some potential costs to businesses:
    • Marriage equality would increase the number of employees’ spouses or partners who must be covered in employer health care plans.
    • Most businesses would see no new spouses to cover. Large businesses would see very small increases in health plan enrollment and benefits costs.
    • Larger businesses are likely to incur one-time transition costs to adapt their accounting systems to accommodate the tax consequences of same-sex partners, as well as other related software and compliance requirements.
  3. We find net benefits for state and federal budgets:
    • Marriage equality would lead to a net gain for state and federal government budgets.
    • Marriage equality would reduce the number of uninsured people in the United States, which could reduce pressure on health care costs for the government and employers.
While these effects are difficult to quantify directly for a bottom-line comparison, both research and business trends suggest that the net impact of equal treatment for same-sex couples is positive for businesses. Corporate America has been a leader in voluntarily creating policies that promote equality for lesbian and gay employees and recognize the families of gay men and lesbians. Today, 98 of the Fortune 100 companies have policies that prohibit discrimination based on sexual orientation and 79 of those companies offer domestic partner health benefits to employees with a same-sex partner or spouse.1 Over one half of the Fortune 500 companies provide domestic partner benefits. These voluntary changes in policy support the conclusion that policies of equal treatment will improve the financial bottom line.

Positive Impacts on LGB Employees

A growing body of research shows that offering domestic partner benefits has several positive effects on lesbian, gay, and bisexual (LGB) employees. These effects on employees would likely benefit employers.

  • A supportive workplace climate and supportive policies, including domestic partner benefits, increase disclosure, or “coming out,” of lesbian, gay, and bisexual employees.2
  • Disclosure has potentially positive benefits to worker health. Several studies find that people who are more out report lower levels of anxiety and less conflict between work and personal life.3
  • Lesbian, gay, and bisexual workers who are more out will be better workers. Several studies show that out workers report greater job satisfaction.4 In addition, in one study participants who are more out also report sharing their employer's values and goals more than workers who are more closeted.5 Another study shows that more out workers report higher levels of satisfaction with their co-workers.6
  • Research also shows that partner benefits reduce gay, lesbian, and bisexual workers’ turnover and increase their commitment to firms.7
Positive Benefits for Employee Recruitment and Retention

Domestic partner benefits increase the competitiveness of employers in recruiting and retaining talented and committed employees. Partner benefits are becoming increasingly important in competing for talented and committed employees of all sexual orientations. Recruitment and turnover are costly for employers; therefore, offering partner benefits could lower those costs. Survey results from recent national polls by Harris Interactive/Witeck-Combs support the notion that domestic partner benefits provide both tangible benefits and positive signals to all employees:

  • One-third of heterosexual survey respondents believed that an anti-gay law preventing employers from offering domestic partner benefits would have “quite a bit” or “a great deal” of a negative impact on employers’ ability to recruit and retain the most qualified employees.8
  • 69% of heterosexual employees agreed that “Regardless of their sexual orientation, all employees are entitled to equal benefits on the job, such as health insurance for their partners or spouses.”9
  • Almost half (48%) of lesbian, gay, and bisexual employees said that partner benefits would be their most important consideration if offered another job.10
  • 6% of heterosexual workers reported that domestic partner benefits would be the most important factor in deciding to accept a new job — more than those who would look for on-site child care.11
  • 7% of heterosexual workers who actually changed jobs reported that partner benefits were the most important factor in that decision — a factor almost as common as changing jobs for better retirement benefits (12%).12
In his book The Rise of the Creative Class, Richard Florida found that heterosexual employees, even those without domestic partners, often look for domestic partner benefits as a signal of an employer that values diversity and creativity.13 In his follow-up book, The Flight of the Creative Class, Florida argues that regions that do not embrace the benefits of diversity-friendly policies risk alienating the creative workforce that is the key to gaining a competitive edge in the global market.14

State-by-State Differences in Recognition of Same-Sex Couples Could be Costly for Business

The varied legal statuses being created for same-sex couples could limit multistate and multinational corporations’ ability to manage and retain staff.15 Employers with employees in Canada, Massachusetts, or other jurisdictions that allow same-sex couples to marry or register are already adapting to legal changes and gaining experience on the process of change, but such employers may face future challenges:

  • Lesbian and gay employees may avoid and even refuse promotions and reassignments that require transfers to places where they and their families lack critical legal protections. Under state laws hostile to same-sex unions, spouses could become legal strangers to each other and to their children. Without a legal parent designation, some partners may not be allowed to authorize emergency medical treatment for their children.
  • An uncertain policy climate can raise business costs. Varying state laws and regulations regarding the status of same-sex couples increase the complexity of corporate salary and benefit policies and can put multistate and multinational companies in legal limbo regarding appropriate treatment of these couples.
Weddings of Same-Sex Couples Would Provide a Boost for Wedding-Related Industries

Numerous businesses gain from new spending in this area: retail gifts, hotels, florists, restaurants, caterers, etc. Same-sex couples’ weddings would create approximately $2 billion in new business for those industries nationwide. The experiences of San Francisco, California, and Portland, Oregon, suggest that the local economic benefits of same-sex weddings are substantial. The couples who married in San Francisco during a one-month window of availability in 2004 came from 46 states and eight countries.16 Businesses in Portland17 and San Francisco reported that same-sex wedding visitors spent substantial amounts of money on wedding-related goods and services. Furthermore, Massachusetts witnessed an increased demand for hotels, catering services, and other weddingrelated goods and services when same-sex couples began to marry there in May 2004.19 To estimate potential wedding expenditures, we first estimate the number of couples who might marry using Census 2000 data on same-sex unmarried partner couples. Then we multiply the number of couples by average wedding spending to get an estimate of total spending.

  • According to Census 2000, there are over 594,000 same-sex couples living together in the United States. Based on Vermont’s experience with same-sex civil unions, we predict that half of a state’s same-sex couples would marry (or enter some similar legal status) during the first few years of being offered the opportunity — almost 300,000 couples.20
  • According to industry sources, the average wedding in the United States cost $27,490 in 2006.21 However, since some couples may already have had commitment ceremonies, their spending on a wedding may be less than the typical wedding. Also, due to societal discrimination, same-sex couples may receive less financial support from their parents and other family members to cover wedding costs. Finally, only spending that comes from couples’ savings would truly be new spending for a state's businesses, rather than money diverted from some other use. Accordingly, we assume that the average samesex couple will spend only 25% of the average amount, or $6,873.
  • Even using the low end of the estimates for weddings and spending, the total for all couples in the U.S. would be $2 billion in additional wedding spending.
In the appendix we present estimates of spending by in-state couples for each state. However, it is important to note that as long as only a few states allow same-sex couples to marry, those states are likely to see added spending by out-of-state couples. For instance, if Massachusetts permitted out-of-state same-sex couples to marry, one study estimates that the state would experience new spending in excess of $100 million.22 As of today, though, Massachusetts does not currently allow out-of-state same-sex couples to marry there.23

Potential Costs to Businesses

Giving same-sex couples marriage rights would mean that gay and lesbian employees could sign up their partners for health care benefits, the most expensive benefit that is commonly offered to employees. However, both employers’ reports of enrollment changes and other research suggest that business costs for benefits for partners and/or new spouses are low.24

  • More than 96 percent of firms will have no additional costs for health care benefits as a result of extending marriage to same-sex couples. At most, only about 190,000 out of 5 million U.S. firms will even have one new spouse covered by its health benefit programs.
  • The vast majority of small businesses, those with 0-19 employees, will see no change in costs at all.
  • Large businesses, i.e., those with more than 500 employees, will see an average increase of just under $25,000 per year for providing additional health benefits.
  • Implementation costs might involve small one-time costs to adapt accounting systems to accommodate the tax consequences of same-sex partners, as well as other related software and compliance requirements.
Marriage Equality has Positive Effects on Public Budgets

Recent studies demonstrate the positive impact of marriage equality on state and federal budgets, even after considering the effect of added spending on state employee benefits and tax law changes.25 A Congressional Budget Office analysis found that if same-sex couples could marry in all fifty states, and if those marriages were treated like all other marriages in federal law, the policy would add almost a billion dollars per year to federal coffers.26 Increased state revenue most often results from two primary sources:

  • States would spend less on public assistance, since family-level income thresholds associated with some means-tested social programs would reduce the eligibility of some same-sex couples and their children if they are treated as a family unit.
  • The increased spending on weddings noted earlier would also generate sales tax revenues.
An additional positive effect is that domestic partnership or marriage equality would reduce the number of uninsured people. A recent study shows that people in same-sex couples are almost twice as likely to be uninsured as those in married couples.27 If employers treated same-sex couples as married, then more people would be insured, which would lead to improved health, reduced state and federal Medicaid expenditures, and reduced government spending on uncompensated care. Reducing the number of uninsured people would also likely reduce pressure on health care costs for employers.

Conclusion

Employer policies that treat employees with same-sex partners or spouses equally would improve the health and well-being of their families, which results in gains for both the employee and his or her family as well as to the employer. Small costs to the employer are balanced out by benefits to employers from positive effects on employees’ productivity, health, and stability. Businesses in the wedding-related industries will experience increased revenues and profits from more weddings. In addition, state and federal budgets will see a net gain.

Acknowledgements

We thank Brad Sears, Bob Witeck, and Stephen Gould for their comments on earlier versions, and Lynn Comella and Rebecca Stotzer for their research support.

1
State
2
Total Cost per Wedding
3
Same-Sex Couples
4
Couples likely to marry (50% of Col.3)
5
New spending per wedding (25% of Col.2)
6
Total Spending (Col. 4 times Col.5)
US $27,490 594,391 297,196 $6,873 $2,042,476,074
Alabama $20,620 8109 4055 $5,155 $20,900,948
Alaska $30,790 1180 590 $7,698 $4,541,525
Arizona $27,760 12,332 6166 $6,940 $42,792,040
Arkansas $20,620 4423 2212 $5,155 $11,400,283
California $32,160 92,138 46,069 $8,040 $370,394,760
Colorado $29,690 10,045 5023 $7,423 $37,279,506
Connecticut $36,560 7386 3693 $9,140 $33,754,020
Delaware $29,410 1868 934 $7,353 $6,867,235
DC $30,790 3678 1839 $7,698 $14,155,703
Florida $25,570 41,048 20,524 $6,393 $131,199,670
Georgia $28,040 19,288 9644 $7,010 $67,604,440
Hawaii $30,510 2389 1195 $7,628 $9,111,049
Idaho $22,540 1873 937 $5,635 $5,277,178
Illinois $28,860 22,887 11,444 $7,215 $82,564,853
Indiana $23,640 10,219 5110 $5,910 $30,197,145
Iowa $23,090 3698 1849 $5,773 $10,673,353
Kansas $25,290 3973 1987 $6,323 $12,559,646
Kentucky $22,270 7114 3557 $5,568 $19,803,598
Louisiana $20,620 8808 4404 $5,155 $22,702,620
Maine $21,170 3394 1697 $5,293 $8,981,373
Maryland $32,710 11,243 5622 $8,178 $45,969,816
Massachusetts $34,910 17,099 8550 $8,728 $74,615,761
Michigan $26,120 15,368 7684 $6,530 $50,176,520
Minnesota $30,510 9147 4574 $7,628 $34,884,371
Mississippi $19,240 4774 2387 $4,810 $11,481,470
Missouri $24,190 9428 4714 $6,048 $28,507,915
Montana $18,970 1218 609 $4,743 $2,888,183
Nebraska $23,640 2332 1166 $5,910 $6,891,060
Nevada $27,490 4973 2487 $6,873 $17,088,471
New Hampshire $30,510 2703 1352 $7,628 $10,308,566
New Jersey $35,460 16,604 8302 $8,865 $73,597,230
New Mexico $21,440 4496 2248 $5,360 $12,049,280
New York $30,240 46,490 23,245 $7,560 $175,732,200
North Carolina $23,640 16,198 8099 $5,910 $47,865,090
North Dakota $21,170 703 352 $5,293 $1,860,314
Ohio $25,570 18,937 9469 $6,393 $60,527,386
Oklahoma $21,170 5763 2882 $5,293 $15,250,339
Oregon $25,020 8932 4466 $6,255 $27,934,830
Pennsylvania $26,120 21,166 10,583 $6,530 $69,106,990
Rhode Island $26,120 2471 1236 $6,530 $8,067,815
South Carolina $22,540 7609 3805 $5,635 $21,438,358
South Dakota $21,990 826 413 $5,498 $2,270,468
Tennessee $22,540 10,189 5095 $5,635 $28,707,508
Texas $26,390 42,912 21,456 $6,598 $141,555,960
Utah $27,490 3370 1685 $6,873 $11,580,163
Vermont $23,370 1933 967 $5,843 $5,646,776
Virginia $31,340 13,802 6901 $7,835 $54,069,335
Washington $26,940 15,900 7950 $6,735 $53,543,250
West Virginia $18,420 2916 1458 $4,605 $6,714,090
Wisconsin $25,020 8232 4116 $6,255 $25,745,580
Wyoming $22,820 807 404 $5,705 $2,301,968
              Note: See text for explanation of assumptions.


Notes

1. Samir Luther (2006). “Domestic Partner Benefits: Employer Trends and Benefits Equivalency for the GLBT Family,” Human Rights Campaign, www.hrc.org.
2. Badgett, M.V.L. (2001). Money, Myths, and Change: The Economic lives of lesbians and gay men. Chicago and London: University of Chicago Press; Driscoll, J. M., Kelley, F. A. Kelley, and Fassinger, R.E. (1996). “Lesbian Identity and Disclosure in the Workplace: Relation to Occupational Stress and Satisfaction,” Journal of Vocational Behavior, Vol. 48, 229-242; Griffith, K. H., & Hebl, M.R. (2002). The disclosure dilemma for gay men and lesbians: “Coming out” at work. Journal of Applied Psychology, 87(6), 1191-1199; Ragins, B.R., & Cornwell, J.M. (Forthcoming). “We Are Family: The Influence of Gay Family-Friendly Policies on Gay, Lesbian and Bisexual Employees,” in Sexual Orientation Discrimination: An International Perspective, edited by M. V. Lee Badgett and Jefferson Frank, Routledge; Rostosky, S.S., & Riggle, E.D.B. (2002). “Out” at Work: The relation of actor and partner workplace policy and internalized homophobia to disclosure status. Journal of Counseling Psychology, 49(4), 411-419. Button, S.B. (2001). Organizational efforts to affirm sexual diversity: A cross-level examination. Journal of Applied Psychology, 86(1), 17-28.
3. Jordan, K. M., & Deluty, R. H. (1998). Coming out for lesbian women: Its relation to anxiety, positive affectivity, self-esteem, and social support. Journal of Homosexuality, 35(2), 41-63; Day, N., & Schoenrade, P. (1997). Staying in the closet versus coming out: Relationships between communication about sexual orientation and work attitudes. Personnel Psychology, 50, 147-163; Griffith & Hebl.
4. Driscoll, Kelley, and Fassinger; Day & Schoenrade; Griffith & Hebl.
5. Day & Schoenrade. However, some studies looked for but did not find this link: Ellis, A.L., & Riggle, E.D.B. (1995). The relation of job satisfaction and degree of openness about one’s sexual orientation for lesbians and gay men. Journal of Homosexuality, 30(2), 75-85; Ragins & Cornwell, 2001.
6. Ellis and Riggle.
7. Ragins and Cornwell. A related study finds that experiences of heterosexism increase the likelihood of turnover for GLB employees: see Waldo, C.R. (1999). Working in a majority context: A structural model of heterosexism as minority stress in the workplace. Journal of Counseling Psychology, 46(2), 218-232.
8. 2004 poll by Harris Interactive/Witeck-Combs.
9. 2006 poll by Out & Equal/Harris Interactive/Witeck-Combs, www.outandequal.org/news/pr/documents/2006_Workplace_Survey052306.pdf
10. March 2003 poll by Harris Interactive/Witeck-Combs.
11. March 2003 poll by Harris Interactive/Witeck-Combs.
12. March 2003 poll by Harris Interactive/Witeck-Combs.
13. Florida, Richard. (2002) The Rise of the Creative Class, Basic Books, New York.
14. Florida, Richard. (2005) Flight of the Creative Class, Harper Collins, New York.
15. Gates, Gary and Witeck, Robert (2004) Same-sex Marriage: What’s at Stake for Business, Investor’s Business Daily, 21 July. (see www.urban.org/publications/900722.html)
16. Teng, Mabel S. (2004). San Francisco Assessor-Recorder, Demographics Breakdown of Same Gender Marriages slides 2-3 (2004), available at www.alicebtoklas.org/abt/samesexmarriagestats.ppt (last visited December 7, 2005).
17. Jung, Helen. (2004) “Gay Marriages May Bring Joy to Tourism,” Oregonian, Mar. 5, p. D1. Joe D’Alessandro, president of the Portland Oregon Visitors Association, is quoted as saying that same-sex marriage has provided an “economic boost” to Portland as same-sex couples and their families fly in for weddings. Sarasohn, David. (2004) “Gay Marriage, Tourism: A Package Deal,” Oregonian, Apr. 11, p. C4, also quotes D’Alessandro as saying, “It’s definitely having a positive impact, because more people are coming to Portland. They fly in, sometimes with families, friends, children, whatever. I’ve talked to the hotel people, and they say they’ve seen an increase in gay and lesbian customers.”
18. Belkin, D. (2004) “Wedding Bell Bonanza Tourism, Marriage Industry Foresee Boom in Same-Sex Nuptials,” Boston Globe, Feb. 26, p. 1; Bly, Laura (2004). “Localities Cashing in on Same-Sex Marriages,” USA Today, Feb. 27, p. 1D. Jung reports that hotels were full and Macy’s department store ran out of wedding rings during the month that San Francisco let same-sex couples marry. Knight, Heather (2004). “Windfall in Castro: ‘Giddy’ Newlyweds Have Been Boon For S.F. Neighborhood,” San Francisco Chronicle, Feb. 18, p. A1, reports that same-sex marriages were “great for businesses as newlyweds throw their money at the neighborhood’s florists, jewelry stores, liquor shops, bookstores and photo processors.” Murphy, Dean E. (2004). “San Francisco Toasts Gay Weddings,” New York Times, Feb. 29, p. 3.
19. See, e.g., Bly, p. D1; Singer, Thea (2004). “Three Swank Cities are Becoming Marriage Meccas for Gay Couples,” Boston Herald, Mar. 22, p. 27. Singer reports that wedding-related businesses such as hotels, banquet halls, florists, and jewelers, in Boston, Cambridge, and Northampton have seen “an upsurge of 10 to 100 percent in inquiries and bookings from gay couples” looking to marry. See also Szaniszlo, Marie (2004). “P’town Set for Gay-Wed Rush,” Boston Herald, Apr. 11, p. 10.
20. According to state sources, 57% of Vermont’s same-sex partners have chosen to enter civil unions. Vermont civil union statistics provided by Richard McCoy, Office of Vital Records, Vermont Department of Health, email dated July 11, 2005 (on file with authors).
21. The source for this figure and the state figures in the appendix is The Wedding Report, at www.theweddingreport.com/wmdb/index.cfm?action=db.textviewstate, last accessed August 11, 2006.
22. Singer, at 27.
23. Shortly after same-sex marriage became legal in Massachusetts, Governor Mitt Romney ordered clerks to comply with a 1913 Massachusetts law that makes it illegal for out-of-state couples to enter into a marriage that would not be legal in their own state. See, e.g., Belluck, Pam (2004). “Romney Won’t Let Gay Outsiders Wed in Massachusetts,” New York Times, April 25, p. 1.
24. Badgett, M. V. Lee, and Gary J. Gates (2004). “The Business Cost Impact of Marriage for Same-Sex Couples,” Badgett and Gates, IGLSS and HRC, www.iglss.org/media/files/busimpact.pdf. See also Ash and Badgett.
25. For reports on New Jersey, Connecticut, New Mexico, Washington, California, and New Hampshire, see www.law.ucla.edu/williamsinstitute/publications/Policy-Econ-index.html.
26. Congressional Budget Office, The Potential Budgetary Impact of Recognizing Same-Sex Marriages, 21 June 2004, see www.cbo.gov/ftpdocs/55xx/doc5559/06-21-SameSexMarriage.pdf.
27. Ash, Michael Ash, and M. V. Lee Badgett (forthcoming). “Separate and Unequal: The Effect of Unequal Access to Employment-Based Health Insurance on Same-Sex and Unmarried Different-Sex Couples,” Contemporary Economic Policy.



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