Financial challenges faced by the LGBTQ+ community

It's 50 years since the first pride celebration in the UK. And while the LGBTQ+ community has made huge strides in overcoming legal and financial discrimination, barriers to equality still exist, from the sexuality pay gap to higher rates of homelessness.

TL;DR:‍

• LGBTQ+ workers encounter an earnings gap in employment
• Poverty is generally higher amongst LGBTQ+ groups
• As many as 24% of homeless youth (aged 16 to 25) in the UK identify as LGBTQ+
• FinTechs should consider how both their work culture and the products they build can create a more equal society

The earnings gap

Many studies have found a wage hierarchy among LGB people. On average, gay men earn less than straight men and lesbian women earn more than straight women but still less than all men.

It is thought that this is down to a mix of discrimination in the workplace and choices made by individuals.

Discrimination can impact on earnings in different ways – whether by delaying a worker’s progression within a company or leading to more frequent job changes due to non-inclusive environments.

1 in 10 LGBTQ+ people in the US said they had experienced workplace discrimination between 2020 and 2021, whether that was being rejected from a job, harassed at work, denied a promotion or raise, excluded from company events or denied additional hours. During that time period, 9% said they were denied a job or laid off due to their sexual orientation or identity.

In a report conducted by Gov.uk, evidence was found of discrimination in recruitment, in promotion, deployment and access to social networks within particular occupations in the UK. The study found that "the workplace remains LGBT-unfriendly for many LGB people and even more so for transgender people, with many experiencing harassment and bullying, impacting on job choice, reduced progression and inability to openly identify at work".

Other factors at play

It is thought that personal choices can also account for the earnings gap. There are many factors at play feeding into this:

• Some 29% of people aged between 13 and 23 who identify as lesbian, gay, bisexual, transgender, undefined, and asexual chose to avoid a career in STEM because of fears that they would be discriminated against. Non-STEM industries are typically lower paid.

• One in five of the LGBT young people surveyed on a YouGov online panel said that there were some jobs that they either would not or had not considered because of their sexual orientation. The police service, armed forces, teaching and manual trades were negatively associated with homophobia and avoided.

• LGBTQ+ students in the US are less likely in general to finish school and attend university.

• LSE found that there may be some truth to the 'gay jobs' stereotype, with people actively seeking out industries that have a reputation for being accepting.

• Unlike in straight couples, where women tend to take on more of the childcare and housework, same-sex couples may have a more equal distribution of work, which could account for the wage difference between lesbian and straight women. Studies have shown that same-sex households share chores more evenly than heterosexual ones, and that lesbian couples work more equal hours, even when they have children.

Higher poverty rates among LGBTQ+

LGBTQ Americans face significantly higher poverty rates than heterosexual Americans. The American think tank the Williams Institute found that 29.4% of transgender people and cis-bisexual women live in poverty, compared to 17.8% of cis-straight women and 13.4% of cis-straight men.

Aside from discrimination, one possible cause of this is that many same-sex couples and LGBT Americans choose to live in large cities that are generally seen as more LGBT-friendly, though also tend to have a very high cost of living.

Other findings include:

• In a survey by Experian, 62% of LGBTQIA+ respondents said they had experienced financial problems because of their gender identity or sexual orientation.

• 33% of LBQ women have faced a personal financial crisis like declaring bankruptcy or not being able to pay bills. 24% of straight women, 23% of GBQ men, and 15% of straight men have gone through a crisis like this.

• Only 10% of non-LGBT households would be unable to cover an unexpected $400 expense, while 14.5% of LGBT households would struggle to cover it.

• LGBTQ Americans feel less prepared to make decisions that support their financial goals than the general population. For example, 43% of the general population of the United States feels able to make a wise decision about reducing or paying off personal debt, compared to 32% of LGBTQ Americans.

• LGBT Americans are almost twice as likely as non-LGBT Americans to have "poor" or "very poor" credit scores

LGBTQ+ people are more likely to face homelessness

Despite a relatively small bank of data, there is evidence to suggest that LGBTQ+ people are more at risk of homelessness.

• 24% of homeless young people in the UK identify as LGBTQ+

• Homophobic and/or transphobic abuse was identified as the most prolific cause of homelessness within the LGB&T population, with young people coming out thought to be at particular risk.

• Consistent evidence suggests LGB&T people experience and expect discriminatory practice from housing services.

• In a survey conducted by queer homeless charity Akt, just 13% of LGBTQ+ young people said they felt supported by parents or step-parents while homeless.

• In the same survey by Akt, almost two-thirds (61%) felt frightened or threatened by family members before they became homeless.

What does this mean for the FinTech industry?

There are three key ways that these insights are important to FinTech businesses (and companies in general at that).

Firstly, it's important culturally. Organisations need to practice a zero tolerance of any prejudice or harassment towards the LGBTQ+ community. At Ophelos we want our place of work to be welcoming of everybody, and a place where no one is held back by being authentic to themselves.

Secondly, it impacts the way companies build products and services. It could be as simple as adding more options to a 'Male/Female' dropdown menu, or allowing people to choose a different name from the one on their ID.

And thirdly, it's a case of knowledge is power. It's important for companies to have an awareness of the ways that a person may have been discriminated against or faced extra challenges in order to be empathetic, fully accepting, and treat all customers with respect.

At Ophelos, we know that many of our customers unfortunately battle with shame from being in debt and can feel afraid to speak up about their money issues. We're trying to remove this stigma, and the last thing we want is our customers to be stigmatised or made to feel ashamed in other areas of their lives.