Today's challenging US economy and competitive labor markets mean that more and more business are seeking ways to engage and retain their most important assets—their workers. These employees often have a range of backgrounds and orientations, so understanding their needs, and the applicable laws and regulations can go a long way to supporting the success of businesses.
According to the latest US Census Bureau data, more than 1 in 10 US adults identify as lesbian, gay, bisexual, transgender, queer, questioning, or another nonstraight or noncisgender identities, or as LGBTQ+. The domestic buying power of LGBTQ+ consumers was estimated at $1.1 trillion in 2020, according to LGBT Capital, an advisory and asset management firm, with 76 percent of these consumers willing to pay a premium for brands that support their community. The nonpartisan and nonprofit research organization PRII’s 2022 American Values Atlas survey reveals that 8 out of 10 Americans support nondiscrimination protections for LGBTQ+ workers. Recent waves of state-level anti-LGBTQ+ legislation have created a timely opportunity for the private sector to meet consumer demand for a more equitable nation by engaging in best practices for supporting LGBTQ+ worker mobility.
Despite the 2020 Bostock v. Clayton County ruling that established sexual orientation and gender identity as protected classes against discrimination, LGBTQ+ Americans still encounter workplace discrimination, including hiring biases that can negatively influence employment opportunities. The most recent available data show that the most common industry of employment for these workers was restaurant and food services (15 percent).
These and other low-wage jobs often come with unpredictable work hours, unstable income, and limited career advancement opportunities, leading to lower overall economic stability. In fact, 36.6 percent of LGBTQ+ adults lived in households struggling to pay typical expenses, compared to 26.1 percent of non-LGBTQ+ adults. LGBTQ+ people are also less likely to have access to benefits such as paid leave or face barriers in health coverage for services such as mental and behavioral health care or gender-affirming care. In 2020, a quarter of firms offering health insurance coverage to opposite-sex spouses failed to include coverage for same-sex spouses.
Businesses play a pivotal role in driving progress in LGBTQ+ equity in the US labor market through their policies and practices, including pay, benefits, and workplace culture. Fostering an LGBTQ+ inclusive work environment requires updating norms and practices to ensure that no worker is deterred from pursuing a job where they could maximize their potential due to discrimination or lack of opportunity.
LGBTQ+ inclusive business practices positively affect firms’ long-term financial success
Many well-known companies show a range of LGBTQ+ inclusive practices, from Uber Technologies Inc.’s employee trans-inclusion guidelines to privately owned IKEA’s practice of using chosen names of trans and nonbinary workers on the company’s digital platforms. To better understand the motivations behind adopting LGBTQ+ inclusive business practices, a study was conducted in 2019 consisting of 32 interviews with senior management staff and tenured members of LGBTQ+ employee resource groups across 17 Fortune 500 companies headquartered in Minnesota.
The interviews revealed four key motivations for LGBTQ+ inclusive business practices: positive return on investment, corporate social responsibility goals, internal organizational pressure, and maintaining parity with other local companies. The interviewees noted greater retention, engagement, and satisfaction from employees and that their organization’s Corporate Equality Index score had influenced their choice of employer, particularly among more experienced LGBTQ+ professionals. Nearly half of the Fortune 500 companies in the study had a perfect CEI score, a rating tool of US businesses’ inclusiveness and treatment of LGBTQ+ employees, investors, and consumers.
Companies that score well on the Corporate Equity Index tended to have a higher market value, according to an analysis of publicly traded US firms between 2013 and 2017. CEI scores also are associated with even better corporate performance after the 2015 Obergefell v. Hodges ruling that federally legalized same-sex marriage. Additionally, another study of US companies between 2011 and 2014 finds a positive relationship between CEI scores and firm performance and innovation.
More than 375 Fortune 500 companies actively participated in the latest 2023–2024 CEI report, which estimates that more than 90 percent of all Fortune 500 companies currently include “sexual orientation” and “gender identity” in their nondiscrimination policies. This is just one of the core elements of the CEI score, and in fostering an inclusive workplace, that attracts and retains LGBTQ+ investment and talent.
LGBTQ+ workers still face workplace discrimination across various dimensions of identity
Discrimination against LGBTQ+ employees is widely reported across many US workplaces and can result in barriers to job satisfaction, retention, and career advancement. A 2021 survey of LGBT workers finds that 45.5 percent experienced unfair treatment at work, including being fired, not hired, or harassed due to their sexual orientation or gender identity. (At times, this survey and others referenced in this article only refer to LGBT-identified participants.) Many of the participants reported engaging in “covering” behaviors to avoid harassment or discrimination, such as changing their physical appearance, changing their bathroom habits, or keeping their personal lives private, some at the explicit request of coworkers or supervisors.
LGBTQ+ workers are not a monolith and experience varied outcomes in employment and income based on their identities. Even though LGBT individuals were generally more likely to report working during the pandemic, transgender respondents tended to report lower rates than both other groups within the LGBT community and among non-LGBT people. Additionally, LGBT individuals were more likely to report a household income of less than $25,000 in 2020, with 20 percent falling into this category compared to 14 percent of those who are not LGBTQ+. This figure was even higher among transgender respondents (28 percent) and LGBTQ+ respondents of color (26 percent).
Race significantly influences workplace experiences for LGBTQ+ employees of color, who face higher rates of job denial and harassment due to their sexual orientation or gender identity. In 2020, 11.3 percent of these workers reported being fired or not hired due to their LGBT identity, compared to 8.9 percent of LGBT employees overall. Additionally, they experienced more verbal harassment than their white counterparts, with rates of 35.6 percent versus 25.9 percent, respectively.
Employment discrimination directly impacts the career mobility of LGBTQ+ workers of color. A 2015 survey of federal employees found that LGBT employees of color reported lower levels of support for their success and work-life balance, less transparent performance evaluations, less respect from supervisors, and lower perceptions of workplace leadership integrity compared to white LGBT respondents. Consequently, they reported lower levels of work satisfaction.
Creating an inclusive workplace environment is crucial to maximizing satisfaction and productivity for LGBTQ+ employees, even if they do not disclose their identity due to fear of negative repercussions. Proactive steps to inclusion may prevent others from experiencing subtle forms of harassment, such as microaggressions or ostracism, which can take a toll on workers’ mental health and productivity.
Closing these gaps in employment satisfaction through inclusive practices benefits both businesses and society. An analysis of federal employees found that inclusive work environments positively impacted LGBTQ+ employees’ job satisfaction and commitment to their departments and agencies. Additionally, preventing discrimination in career advancement opportunities is essential for transparent and equitable representation throughout all levels of an organization.
What does an LGBTQ+ inclusive workplace look like?
To examine the characteristics of an inclusive workplace, researchers at Florida State University conducted a series of interviews with 50 LGBTQ+ youth aged 18–25 between 2011 and 2018. Many participants viewed their workplaces as accepting or affirming, with some attributing it to working in industries with higher concentrations of LGBTQ+ individuals or desired diversity, such as hospitality, health care, and public media.
Others reported instances of discrimination by coworkers and customers while working in service industries, including restaurants and hair salons. Support or intervention from other colleagues during instances of harassment helped them to feel accepted in their workplaces. This is supported by other workplace research literature that finds emotional support such as showing concern, listening, and empathizing with their experiences of prejudice and discrimination at work can help workers feel belonging and acceptance. Another common theme among those who felt supported was the presence of friendly, respectful management and visible LGBTQ+ representation among their colleagues, including senior or executive positions.
Yet signs of heteronormative behaviors were also observed, with coworkers making insulting comments or jokes, enforcing heteronormative workplace rules and rituals, treating LGBTQ+ customers unfairly, and assuming everyone is heterosexual. In response, some LGBTQ+ employees took proactive steps to create a more inclusive workplace, such as advocating for unbiased language in workplace communications.
Research also shows that formal LGBTQ+ inclusive policies and practices, such as nondiscrimination protections, same-sex benefits coverage, and the establishment of employee resource groups, are essential components of ensuring employee well-being. A number of studies over the past few decades have found that inclusive workplace climates and supportive relationships are associated with improved mental health, job satisfaction, and perceived discrimination for LGBTQ+ workers.
Strategies for fostering LGBTQ+ inclusive workplaces
Although research has not yet fully explored the effectiveness of individual employment practices in US firms, numerous studies of LGBTQ+ workers have provided valuable insights into what contributes to inclusive environments. Best practices include the following:
Establish formal policies and practices that promote LGBTQ+ worker equity
- Firms can establish explicit nondiscrimination protections for sexual orientation and gender identity. They can review internal documents such as job descriptions, handbooks, and benefits for inclusive languageto ensure compliance with these protections. This could include gender-neutral titles such as “server” instead of “waiter or waitress” in job descriptions, including “their” as an alternative to “his/her” in company documents, and changing language in benefits information to include “partner” instead of “spouse.” It may also involve updating guidance around dress codes and restroom use. Likewise, benefits can be inclusive of diverse needs, such as offering equivalent benefits for same-sex partners and covering gender-affirming care.
- Firms can provide accountability mechanisms to reliably address reports of adverse incidents because policies must be consistently implemented and enforced to be meaningful to employees. They can allow for multiple avenues of reporting and resolving complaints, such as through HR personnel, a trusted colleague, or an anonymous reporting system. They can clearly communicate reporting procedures and the handling of complaints and investigation outcomes to build trust in these mechanisms. And they can ensure that all actions are consistent with organizational policies and values and communicate the processes transparently.
Engage employees to normalize LGBTQ+ inclusive culture
- Firms can conduct training sessions to educate all employees on microaggressions, normalizing pronouns, and harassment prevention to cultivate an environment of respect and acceptance. While research has found mixed results for different diversity training initiatives, a recent study finds that an LGBTQ+ specific program can change attitudes, significantly reducing overt homophobia and transphobia among participants.
- Firms can create employee resource groups to connect employees, either across locations or within larger networks, for support. These groups can increase job satisfaction for members and help achieve organizational diversity, equity, and inclusion goals. Employee resource groups can also provide an alternative setting for employees to voice issues than formally going to HR.
Regularly assess workplace climates for employees at all levels for parity in pay, benefits, and job satisfaction
- Firms can collect inclusive data to understand and ensure equitable outcomes across intersections of identity. They can gather demographic data by sexual orientation, gender identity, race/ethnicity, military or disability status, and education. They can include measures related to benefit participation, career advancement, and representation at all company levels in assessments. Additionally, they can evaluate factors such as satisfaction and pay alongside demographic information to identify areas for improvement, and take proactive steps to promote equity and inclusion. These data can also contribute to a company’s CEI score, providing a valuable metric of LGBTQ+ inclusion for shareholders.
- Firms can handle data responsibly by ensuring anonymity in any data collection or reporting, recognizing that workers may choose not to self-disclose their identities due to potential discrimination. They can leverage employee resource groups to facilitate engagement between senior leadership and LGBTQ+ employees, supplementing data collection efforts with context and the experiences of actual workers. This can serve as a feedback loop for policy development, cultural humanization, and mutual education.
Conclusion
LGBTQ+ workers face high rates of discrimination that affect their productivity, mental health, and employment decisions. To attract and retain talent, businesses can foster inclusive environments where all workers can thrive. Practices associated with the Corporate Equality Index have been shown to improve long-term corporate performance, probably due to consumer support for greater LGBTQ+ equity. Efforts such as changing policies to be LGBTQ+ inclusive, normalizing inclusive workplace cultures, and regularly collecting and analyzing impact data can contribute to a company’s success by promoting a diverse, committed, and productive workforce while supporting broader social goals.