Knowledge Center

Inc.: How Startups Can Make It Easier for LGBT Workers to Save Money

Originally posted on Inc.

It’s common to experience financial stress, but for some communities, those anxieties may be more acute. An increasing number of LGBT (Lesbian, Gay, Bisexual, Transgender) workers feel they are struggling financially, despite enjoying many of the same employee benefits once available only to same-sex couples.

That’s according to the recent LGBT Financial Experience 2016-2017 study, conducted by Chadwick Martin Bailey on behalf of Prudential Financial, a life insurance firm. Researchers analyzed how same-sex couples and LGBT individuals in the U.S. are faring financially–one year after Obergefell v. Hodges, in which the Supreme Court ruled all states must permit same-sex marriage.

Forty-one percent of LGBT workers said they have a hard time making ends meet (i.e., spending more than they save, or having difficulty landing steady employment), compared to the 31 percent in 2012, when the study was last conducted. Meanwhile, a significant portion of LGBT respondents said they haven’t begun saving for retirement, including 39 percent of LGBT Millennials, compared to 24 percent of general population Millennials.

Prudential surveyed 1,376 LGBT people and 503 general population respondents earlier this year in May.

There are a few ways small business owners can make it easier on their LGBT employees. First, it’s important to recognize the needs that may be specific to the community, says Kent Sluyter, CEO of Individual Life Insurance and Prudential Advisors.

“It’s critical for employers to examine their benefits closely in order to determine whether the packages offered ensure equal coverage for LGBT employees. Currently, there is no federal law that protects LGBT workers from workplace discrimination,” Sluyter tells Inc. via email. To his point, less than half (44 percent) of LGBT respondents say they live in states with explicit protections.

“LGBT employees need access to healthcare benefits and retirement benefits, as they are less likely to have a partner who can provide those,” he adds.

It’s also worth counseling all hires, regardless of sexuality or creed, on the subject of personal finance. The survey found that LGBT respondents overwhelming felt they needed more information to meet their long-term financial goals. Another pro tip: Consider providing family benefits, as more LGBT couples are electing to have children (more than one-third of lesbian women and 15 percent of gay men, according to the study.)

The good news? Things have gotten significantly better for LGBT workers since the 2015 ruling. Fifteen percent of survey respondents now say they have financial freedom, compared to just 2 percent in 2012. Same-sex couples may now file their taxes jointly, for instance, or pay for health benefits with pre-tax earnings. Spouses can also list their partner on a health insurance plan, thus ensuring that the partner’s interests could be protected if they pass away.

Still, the study found that income discrepancies limit LGBT couples’ ability to prepare for the future, creating fear, anxiety, and even depression. Lesbian women earn less than heterosexual women, reporting an average annual salary of $45,606, compared to $51,461. The gap is even larger between gay and heterosexual men: Just $56,936, compared to $83,469 in annual earnings.

“[I feel] nervous and edgy,” said one anonymous respondent, a gay male. “The cost of living rises without commensurate increases in pay. I’m worried about how to maintain a decent quality of life.”

Glennda Testone, executive director of New York City’s LGBT Community Center, encourages employers to take more action. “We must continue working to overcome the serious remaining barriers to leading happy, healthy lives that all of us deserve, and having professionals who know our community and can help us attain our dreams is vital to achieving that,” she said.