LGBTQ+ community gaining economic influence
More than twice as many Americans identify as LGBTQ+ today than did in 2012, according to results from a Gallup poll released early this year. More recently, Wells Fargo issued a special economic report this month exploring the growing financial power and economic influence of the LGBTQ+ community and how inclusion drives economic development.
Per the Wells Fargo report, LGBTQ+-identifying individuals are both younger and more educated than the overall population. The percentage of millennials identifying as LGBTQ+ rose from less than 6% in 2012 to 10.5% in 2021, and the percentage of Gen Zers identifying as such rose from 10.5% in 2017 to nearly 21% last year.
According to the 2021 National Health Interview Survey, 27.4% of lesbian, gay or bisexual individuals have a bachelor’s degree, compared to 23.5% of the non-LGB population. Another 32% of LGB individuals have some college experience, and nearly 21% of lesbian, gay or bisexual individuals have earned at least one graduate-level degree, 5% higher than the comparable ratio for the non-LGB population.
“Because the population is young, they’re not at peak earnings yet, which tend to be [the] late 40s or early 50s. Because they’re more highly educated and younger, I would say their buying power is going to increase more rapidly than the overall population in more years to come,” said Wells Fargo Chief Economist Jay Bryson.
The report is the first study Wells Fargo has done on the economic influence of the LGBTQ+ population, and Bryson noted that right now the bank doesn’t have enough data to provide hard numbers on the community’s buying power, and that the data has limitations.
“We have a lot of data on white men or Latinx women, but with this community it’s not as robust, and maybe some of it has to do with that a lot of its self-identification. Even though socially our attitudes are more relaxed than 10 or 15 years ago, many people may still feel hesitant to identify. The time series isn’t as long as it would be for white men or Black women,” Bryson explained. “Secondly, within the community itself, there are different pockets of data. We have a section in the report that talks about educational attainment, but the info we have is people who identify as gay, lesbian, and bisexual. If you were to ask about the transgender population, I don’t have that data.”
Still, Bryson said capturing the buying power of these populations presents an opportunity for businesses of all kinds.
In 2016, Prudential Financial Inc. asked nearly 1,400 LGBTQ+ individuals and 500 heterosexual individuals about their financial circumstances. According to that survey, LGBTQ+ individuals spend 51% of their income on necessities, compared to 47% among the general population, leading to a difference in terms of savings.
“If you’re a Wells Fargo or Prudential, as these people become older and more affluent, you’d expect to see their savings needs go up. For financial institutions, there’s a huge message there. This is a market that they should be trying to tap,” Bryson said.
He expects the percentage LGBTQ+ individuals spend on necessities to go down as the population ages and becomes more affluent, giving them more discretionary spending ability.
“Whether it’s vacations, or the latest and greatest barbecue, or a new TV, businesses that cater toward those with discretionary spending, there’s a growth opportunity for these businesses as well,” he said.
According to National Gay & Lesbian Chamber of Commerce America’s LGBT Economy report released in 2016, the community has a buying power of $917 billion. What’s more, LGBT-owned businesses contribute $1.7 trillion to the U.S. economy annually and create more than 33,000 jobs.
“These numbers tell the real story,” said Bob Witeck, President of Witeck Communications, a certified LGBT business enterprise that served as the analyst for the report. “While our community’s $917 billion spending power highlights our market clout, the jobs, tax revenues and profits we create as employers and entrepreneurs define our full economic value to America. We are just beginning to scratch the surface of our potential.”
National LGBT Chamber of Commerce co-founders Justin Nelson and Chance Mitchell wrote in a blog post on the U.S. Chamber of Commerce website last year that more than 75% of LGBT adults and their friends, family, and relatives would switch to brands that are known to be LGBT friendly.
The findings align with those of San Francisco-based Community Marketing and Insights LGBTQ Community Survey, which found in 2018 that 76% of U.S. participants agreeing that companies supporting LGBTQ+ equality would get more of their business that year.
“Several years back, slapping a rainbow on a liquor bottle (or social media profile) one month a year was enough for a brand to consider themselves ‘gay-friendly,’” they wrote. “Now, more and more consumers are holding brands accountable by demanding that they stand behind the LGBT community year-round.”