If States Got LGBT-Friendlier, They Could Earn Billions

Studies show that states lose millions when they discriminate against LGBT people. They are also losing out on potentially billions of dollars by failing to pass pro-LGBT laws.

Photo Illustration by Lyne Lucien/The Daily Beast

If Texas lawmakers piled up hundreds of millions of taxpayer dollars in the middle of an empty field and set it on fire, there would be massive public outrage.

But according to data from the Williams Institute at the UCLA School of Law, that is effectively what Texas and other states are already doing by not creating a more supportive atmosphere for their LGBT citizens.

As the state-level Williams Institute numbers start to add up nationwide, it’s becoming clear that legislators don’t just cost their states big money by passing attention-grabbing—and boycott-inducing—laws like North Carolina’s HB 2; they are also losing out on potentially billions of dollars by failing to pass laws that protect LGBT people.

Those invisible costs of inaction are hard to estimate—and even harder to convey to the public.

“The boycotts and stuff make headlines because they often involve big companies or famous people and that link is very clear,” Williams Institute State and Local Policy Director Christy Mallory told The Daily Beast. “But we’re trying to illuminate this other link.”

Mallory has co-authored several analyses showing the economic impact of allowing statewide discrimination against LGBT people to continue—and thereby incurring the sort of public health costs associated with “minority stress,” a psychological term for the stress that often accompanies social marginalization.

A Williams Institute report released last year, for example, estimates that if Texas could reduce the disparity in depression rates between LGBT and non-LGBT citizens—one of the many public health outcomes linked to minority stress—by just 25 percent, the state could save nearly $290 million dollars in costs associated with lost productivity, health care, and suicide (PDF).

Add another $118 million for reducing the LGBT binge drinking disparity by a quarter—and another $1.6 million in estimated shelter and Medicaid expenses that could be reduced by banning discrimination against transgender people—and the report proves that Texas is missing out on a load of cash by being one of the nearly 30 states that has yet to prohibit discrimination based on sexual orientation and gender identity. Or, as the Dallas Voice recently summarized it, "discrimination in Texas is expensive."

“We’re not saying that the disparity is going to totally go away or that a certain law would completely close that gap, but we do say that these health outcomes that have been linked to minority stress do have a cause,” Mallory told The Daily Beast. “So we try to look at [the effects of] even narrowing that gap.”

The Williams Institute also compiled similar reports on Georgia and Florida last year with similarly striking findings: Florida could cut $224 million in annual costs by reducing the disparity in LGBT and non-LGBT smoking rates by 25 percent, for example, and Georgia could save $80 million every year by doing the same.

Mallory told The Daily Beast that a similar report on Arizona will be forthcoming in March, with two more scheduled to follow by the end of the year.

And considering that a majority of states still do not have full statewide protections for LGBT people, it’s easy to imagine the total tally of wasted cash nationwide reaching into the billions as more states come under the microscope—especially because the Williams Institute is only able to estimate some of the many economic variables at stake.

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For instance, Mallory said, there are economic costs associated with the number of LGBT children who enter foster care—or the number of youth under state care who could otherwise be adopted out to a same-sex couple in states where religious organizations are allowed to discriminate on the basis of sexual orientation—but it’s harder to put a price tag on these phenomena.

“We’re continually looking for new data and information that we can use to measure costs,” Mallory told The Daily Beast, adding with a look forward to 2018: “We’re hoping to look at some new and different angles this year, but it will all depend on the data we can get.”

LGBT advocates are quick to point out that if lawmakers can’t understand these costs—even as they get spelled out for them over the course of 2018–then businesses already do, and they’re taking action as a result.

“I think in some ways this is the untold story of the non-discrimination fight right now,” Kasey Suffredini, president of strategy for the organization Freedom for All Americans, told The Daily Beast. “Because even though a lot of the discussion and coverage nationally over the last 18 to 24 months or so has been about these high-profile defensive fights like North Carolina… there have been places with proactive legislative fights underway where businesses really have come forward.”

In 2016, for example, Massachusetts passed a bill protecting transgender rights with overwhelming support from the business community, as The Boston Globe and other outlets reported. Some of that business support is motivated by “bottom-line” concerns, Suffredini says, like maintaining a competitive edge in recruiting, but they are also, he adds, simply listening to their LGBT employees.

As Justin Nelson and Chance Mitchell, cofounders of the National LGBT Chamber of Commerce, put it in an Advocate op-ed this week, “now, more than ever, the private sector is listening to the collective voice of the LGBT community.”

That proactive corporate support for LGBT people may be quiet but it is powerful nonetheless.

Indeed, so much of 2017 was spent guessing how much North Carolina or Texas would lose by passing an anti-transgender “bathroom bill”—potentially $3.76 billion according to an AP estimate for North Carolina and $3.3 billion in Texas tourism dollars, according to another study—that the recurring long-term costs highlighted by the Williams Institute have not become widely known to the public, even as corporate decision-makers took them into consideration.

For instance, as Amazon searches for its second headquarters, there is widespread speculation in outlets as wide-ranging as Bloomberg and the Washington Blade that the retail giant may be less likely to select a city in a state with a recent history of anti-LGBT legislation—or a threat of anti-LGBT laws to come in the near future.

In 2018, a record 609 companies achieved a perfect score on the Human Rights Campaign’s Corporate Equality Index.

Suffredini says that companies are increasingly realizing that their own policies aren’t enough when it comes to LGBT issues; they also want state and local governments to reinforce the internal protections they offer. Minority stress, after all, can’t be fully alleviated by a company handbook if the environment outside of work is a hostile one.

“Employees want more,” Suffredini told The Daily Beast. “Employees don’t just live in the four walls of that company. Employees get on the bus to go home. They go across the street to eat lunch. They rent an apartment, they buy a home.”

So if 2017 was the year when the public watched corporations stand up to anti-LGBT legislation in North Carolina, Texas, and Mississippi, Suffredini predicts that “2018 will be the year when we see them pushing for the proactive protections.”

It may also be the year when we are able to move beyond a simplistic approach to the cost of anti-LGBT discrimination—namely, the idea that bad laws cost states money—to a more holistic and interconnected understanding of discrimination’s costs.

As Suffredini put it, “Nobody does well socially or culturally when they live in an environment where they have poor health outcomes just because of who they are—and that also takes an economic toll on the state.”