Economic Impact of LGBT
Discrimination in Michigan
By Kaif Syed
Overview of Current Policy
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Although both Michigan’s 1976 Elliot-Larsen Civil Rights Act (ECLRA) and the 1955 federal Fair
Employment Act prohibit discrimination in the workplace (as well as in public
accommodations and government housing) based upon race, gender, marital status, age,
national origin, height, weight, and family status, they do not prohibit discrimination based
on sexual orientation or gender identity/expression.
The Michigan Civil Rights Commission issued a statement in 1983 stating that the ECLRA
should be amended to include the prohibition of LGBT discrimination.
Former Michigan governor Jennifer Granholm issued two executive orders, in 2004 and 2007,
prohibiting LGBT employment discrimination, but the measures were limited to state
workers.
In 2012, the Michigan Department of Civil Rights received a grant from the Tides Foundation
to create a report on LGBT discrimination under Michigan law and it’s economic impact. Over
the course of that year, the MDCR conducted public forums, surveys, and archival research to
examine the economic impact of Michigan’s current policy.
Currently, 21 states including Washington DC have non-discrimination statutes.
As of February, 2014, 32 municipalities in Michigan have passed local statutes prohibiting
LGBT discrimination in the workplace.
MDCR’s Conclusions
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The economic impact of MI’s current policy is overwhelmingly negative, according to the
MDCR’s report. Particularly, LGBT and/or gender identity/expression discrimination in the
workplace and in regard to housing have notably negatively impacted the following:
Employee productivity of both LGBT and heterosexual workers (when an employer is openly
discriminant).
Employee turnover (and it’s related costs).
Out-migration of Michigan workers and population growth.
Consumer demand for goods and services made by discriminating companies.
The tourism industry.
State Revenue
Public-Assistance Programs.
Labor and the Labor Market
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The MDCR’s report found that Michigan’s current policy of allowing LGBT discrimination in
the workplace has had a negative impact on the productivity of both homosexual and
heterosexual employees who work under openly discriminant employers.
In jobs where employees fear discrimination, there is reduced job satisfaction, reduced
productivity, increased absenteeism and increased frequency of mental and physical health
issues (Hewlett, & Sumberg, 2011; Robinson & Dechant, 1997).
“In work environments where discrimination is prevalent, employees exhibit the following:
Lower job satisfaction and commitment
Lower productivity
Heightened absenteeism
Higher rates of mental health problems
Higher rates of physical health problems”
Source: Hewlett & Sumberg, 2011; Robinson &Dechant, 1997
“Businesses with inclusive non-discrimination policies are better able to attract top talent.
Analysis of corporate non-discrimination statements from Fortune 500 companies suggests
that the main rationale that motivates companies to adopt such policies is that they help
recruit and retain a talented workforce and thus gain a competitive advantage (Sears &
Mallory, 2011).” – MDCR’s Report
Labor Continued
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““The health of Michigan – of our social fabric and our economy—depends on ensuring that
Michigan is a place that attracts and retains creative, productive people, and provides a healthy
living environment for them once here.” –A. Wilson, testimony from Ann Arbor 76
The report also states that a policy of discrimination has a negative impact on employee turnover.
This negatively impacts a business’s bottom line; according to Robinson and Dechant (1997),
whenever an employee leaves a company, turnover expenses can be anywhere from $5-10,000 for
hourly workers and $75-211,000 for salaried workers making $100,000 a year.
“Testimonials offered to the Department show not only that people were forced to leave their jobs,
but also that others willingly decided to leave discriminatory work environments – both making
employers accrue turnover-related expenses. For example, in written testimony, at least three
employees decided to leave a small company after a lesbian colleague was fired for attending a
company picnic with her partner and their son. The three other employees indicated that they left
because “the atmosphere completely changed, no one trusted the management…and [they] didn’t
want to continue working with people who had treated [their] friend so callously and who could be
so homophobic.” This sentiment corresponds with research suggesting that gay and lesbian
professionals and managers leave their employers for reasons related to workplace fairness at a
rate twice as high as heterosexuals (Level Playing Field Institute, 2007). Inability to retain LGBT
employees and their allies results in retention-related costs, particularly for businesses where
multiple people leave at similar points in time.” – MDCR Report
Consumer Demand and Tourism
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According to the report, in 2012, the national LGBT consumer market was approximately
$743 billion.
2012 research by Morrison and McCormick concluded that homosexuals and LGBT allies
often spend their dollars to support LGBT-friendly businesses. (Out of a sample of 1,000 LGBT
Michiganders, approximately two thirds of those surveyed confirmed this)
Research shows that this is comparable to the national situation.
Regarding tourism, the report states, “In the past few years, Michigan has been marketing
itself as a travel and tourism destination as part of an effort to revitalize the state’s struggling
tourism industry (Holcomb, 2008; Michigan Economic Development Corporation, 2012). In
much the same way that business practices and policies may influence LGBT consumers, both
specific state policies and the general perception of whether a state is ‘gay friendly’ can
impact vacationers’ destination choices. People vacationing for fun and relaxation may want
to go somewhere “more accepting, more welcoming.” Studies of lesbian and gay tourism
show that places renowned for being LGBT-friendly (e.g., Chicago, New York, San Francisco)
are those favored by LGBT travelers (Community Inc., 2010). In the testimonials, LGBT
travelers not only reported choosing to vacation outside of Michigan, but also ending their
Michigan-based vacations early when perceiving that they had suffered discrimination.
Public Finance
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The negative impact of decreased worker productivity, high employee turnover, and
decreased consumer demand all have negative effects on Michigan business’ bottom lines.
Thus, the study states that there is a marked negative impact on tax revenue stemming from
such a policy of discrimination.
Furthermore, unemployment caused by workplace discrimination, puts pressure on the
state’s public assistance programs – which are already not funded as much as they could be
with a state policy prohibiting LGBT discrimination in workplace and in regards to public
accomodation.
“Workers who lose employment participate in public assistance programs often paid for by
the state. When employees lose income and insurance coverage, they often must rely on
state assistance programs to replace their income and insurance. LGBT persons in Michigan
are particularly likely to turn to state assistance because they cannot rely on domestic
partnership benefits that public employers in other states would provide to unmarried
partners, but Michigan law prohibits” – MDCR report
“According to the 2000 Census, same-sex couples are significantly more likely than
heterosexual married couples to receive public and emergency cash assistance” (Albeda et
al., 2009).
Public Finance Continued
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According to the National Survey of Family Growth, lesbian females are more likely than
straight females to receive public assistance and food stamps.
It is difficult to quanitify the effect of LGBT discrimination on public assistance programs, but
one study has made an attempt. A study by Herman in 2011stated that Massachusetts
spends around $3 million a year on Medicare and Medicaid expenditures due to employment
discrimination based on LGBT status.
“It also found that it costs Massachusetts millions of dollars each year in public assistance
expenditures and lost tax revenues. Herman’s (2011) estimates focused only on state
expenditures incurred as a direct result of employment actions and did not account for less
direct economic impacts like discharged employees’ decreased spending power due to
income loss which would also impact sales tax revenues and businesses’ profits/taxes.”
Sources
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https://www.michigan.gov/mdcr/0,4613,7-138--293875--,00.html
https://www.michigan.gov/documents/mdcr/MDCR_Report_on_LGBT_Inclusion_409727_7.
pdf
http://www.mlive.com/news/index.ssf/2013/01/michigan_department_of_civil_r.html
http://michiganradio.org/post/why-it-legal-discriminate-against-lgbt-people-michigan-part-1