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Research Summary

Understanding Diverse Economic Outcomes in the Transgender Community

Oluwasekemi OdumosuSeptember 12, 2023
Source: Labour Economics Title: The Labour Market Outcomes of Transgender Individuals Author(s): Matthew Shannon Original Publication Date: May 2021 Read Full Research Article

In recent years, there has been a significant increase in societal awareness of the transgender community, with greater representation in popular media and a rise in public policy discussions and legal debates surrounding issues that affect transgender people. The US Supreme Court's landmark ruling in Bostock v. Clayton County (2020) to outlaw employment discrimination based on gender identity highlights the growing importance of transgender rights and protections. Additionally, topics such as transgender individuals serving in the US military, bathroom access, and health care discussions related to medical transition have become regular features in news and opinion media.

Despite the heightened visibility and recognition of transgender issues in public discourse, the economics literature has been relatively silent on the economic outcomes of transgender workers. This lack of quantitative research on labor market outcomes is due, in part, to the scarcity of data available, with few federal US surveys collecting data in a transgender-inclusive manner until recently. As a result, there has been a notable gap in understanding the economic disparities and challenges faced by transgender individuals, who are estimated to represent 0.6 percent (1.4 million) of the adult population in the US.

In this study, researcher Matthew Shannon uses data from the 2015 US Transgender Survey (USTS), which is the most comprehensive survey of transgender adults to date. He examines variations in labor market outcomes based on factors such as transition status, the degree of being “out” as transgender, and the age at which respondents began living as their current gender identity. Income and employment gaps between the wider cisgender (i.e., nontransgender) population and various minority gender identities (transgender men, transgender women, assigned male at birth genderqueer or nonbinary, and assigned female at birth genderqueer or nonbinary individuals) are estimated using data from the 2015 American Community Survey.

 Key findings

  • Transgender workers receive lower pay: Compared with similarly situated cisgender men, all transgender groups have significantly lower individual incomes. The income differences range from –14 percent for transgender women to –38 percent for those assigned female at birth who identify as genderqueer nonbinary.
  • Transgender workers face poorer economic outcomes: Across transgender groups, there are higher rates of unemployment (ranging from 9 to 16 percent) and poverty (ranging from 8 to 16 percent) compared to the overall 2015 US unemployment rate of 5.3 percent and poverty rate of 13.5 percent.
  • Transgender workers are more likely to work part time: Despite similar to lower rates of labor force participation, transgender workers are more likely to work part time than cisgender men, with differences ranging from 2 to 19 percentage points.
  • Sex assigned at birth influences economic outcomes for transgender workers: Among all transgender workers in the study, those assigned female at birth tend to have lower incomes and are more likely to work part time than their similarly situated counterparts assigned male at birth.
  • The economic impact of “passing” varies among transgender workers: Transgender women who have socially transitioned to living as women but do not “pass” experience a 15 percent income penalty compared to their "passing" counterparts. Transgender men who do not “pass” as men face a 12 percent income penalty compared to those who do. When transgender individuals "pass" as their gender identity, disclosing their transgender status does not significantly affect their income.
  • Gender pay gaps align with gender expression for certain transgender workers: Younger transition ages—more highly correlated with "passing"—are associated with higher incomes for transgender men and lower incomes for transgender women. This suggests that income profiles tend to align more closely with gender identity rather than the sex assigned at birth for these groups, with a pay premium for “passing” male presentation.

Policy and practice implications

The author identifies the following implications for research and policy:

Implications for Researchers

  • Diversify Data Collection: Federal, state, and local agencies can improve data collection practices to capture the diverse experiences of transgender individuals. This includes health agencies, educational institutions, and other organizations that use data for decisionmaking. Representative data on transgender populations are essential for better understanding their needs and informing evidence-based policies.
  • Conduct More Research on Outcomes: Researchers can delve deeper into transgender income and employment outcomes. In particular, they should investigate the role of labor market discrimination, identify the determinants of transgender economic outcomes, and explore the impact of public policies.

WorkRise has identified the following implications for policy and practice:

Implications for Employers

Implications for Policymakers

This research study is one of few to analyze the relationship between gender identity and labor market outcomes within the transgender community, highlighting the need to consider the diversity of minority gender identities in quantitative research. Emphasizing the importance of avoiding a one-size-fits-all approach, the study reveals significant variation within different gender identities and subgroups, critical for understanding labor market disparities. To promote greater equity and inclusivity, researchers should use broader data collection methods, minimize biases, and ensure that diverse life experiences are well represented in data and policies.

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