Being Gay-Friendly Makes You Money
By: Robert Castillo, ADPA®
October is LGBT history month and this year it will certainly be one for the books! This month the Supreme Court will hear cases to decide whether sexual orientation and gender identity are forms of sex discrimination under Title VII of the Civil Rights Act. That's basically courtroom talk for, "Can you get fired from your job for being LGBT?" The sad reality is that there are still 28 states in the country that have no protections for LGBT employees. It, therefore, becomes the responsibility of employers to implement work policies that protect its employees from discrimination. This is a win-win situation for everyone involved including shareholders of publicly traded companies. Studies have shown that companies with LGBT-inclusive policies tend to perform better because it pays to have a business model that depends more on the talent of an employee than on the gender of their spouse.
Implementing work policies that promote diversity and inclusion will benefit more than just LGBT employees, it also helps create growth for companies by being efficient through maximizing existing human capital. The theory is simple: hire employees who will do the job best. If a company decides to fire an employee for being LGBT, they are doing themselves a disservice by discriminating against workers who are otherwise qualified for the job, as outlined by Gary Becker in his book The Economics of Discrimination. This is particularly important for companies that depend on having the best talent like those in technology, engineering, and design. It's no surprise that 91% of all Fortune 500 companies include sexual orientation in its nondiscrimination policies. As a gay Financial Planner who works specifically with same-sex couples, I can confirm that the LGBT community flocks to where we feel the most comfortable being ourselves. According to the US Chamber of Commerce Foundation, 2 out of 5 LGBT employees have left a job because they felt bullied. Meanwhile, 72% of LGBT employees reported they would leave a company for another that was more inclusive and 80% said inclusion is an important factor in choosing an employer. Nondiscrimination policies can lead to a higher retention rate, greater productivity, and better talent acquisition of LGBT employees—all of which translate to higher profits for the company.
One might argue that the LGBT community's trillion-dollar purchasing power alone is reason not to be discriminatory against us. After all, it wasn't too long ago that Equinox was in the news for losing its gay-friendly card over politics. When the chair of the luxury gym's parent company decided to throw a multimillion-dollar fundraiser for Trump's reelection bid, all hell broke loose for their LGBT clientele who immediately called to cancel their memberships. It's no surprise that Equinox rushed to salvage their otherwise inclusive brand by donating to a charity that serves the LGBT community. But companies who aren't inclusive have more to worry about than our spending dollars, their own performance in the stock market could be on the line. Studies by the US Chamber of Commerce Foundation have indicated that the stock performance of public companies increased an average of 6.5% within 5 to 10 years after enacting LGBT-inclusive policies when compared to similar companies in the same industry.
Ten years ago, the percentage of LGBT employees who disclosed their sexual orientation in the workplace was only 5% according to the Human Rights Campaign. As of 2018, HRC has reported that 54% of LGBT employees were out at work. And according to the Pew Research Center, 50% of Generation Z and Millennials say same-sex marriage is a good thing for our society. New generations will inevitably grow more comfortable with LGBT issues and companies will be forced to adapt to the changing times or be left behind. Being inclusive is productive for all people and ultimately companies will benefit financially in measures of stock prices, return on assets, output per worker, and employee innovation. So, how gay-friendly are you and your investment portfolio?
Securities offered through LPL Financial, Member FINRA (http://www.finra.org/)/SIPC (https://www.sipc.org/). Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Gerber Kawasaki and Gerber Kawasaki Wealth and Investment Management are separate entities from LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures the success or protects against loss.
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