Thursday, November 1, 2012


The Business Case for Marriage Equality

John P. Riederer

Metropolitan State University

Author Note

The author is not affiliated with any corporation taking a position on the Minnesota Marriage

Amendment. The author is a member of Mt. Zion Temple and AFSCME Council 5, organizations that are

officially opposed to the amendment.

Correspondence concerning this article should be sent to John P. Riederer, Graduate

Student, College of Management, Metropolitan State University, 1501 Hennepin Avenue,

Minneapolis, MN 55403. E-mail:

Copyright © 2012 John P. Riederer



This manuscript is a product of critical science research, triggered by the 2012 Minnesota

Marriage Amendment question. Intended as an overview, this paper provides a summary of the major

arguments for businesses to take a public stance on marriage equality for same sex couples. Publicly

advocating for the recognition of same sex marriages creates advantages in employee recruiting and

retention, and generates consumer loyalty and positive publicity. Same sex marriage also spurs

economic activity with a net revenue gain.

Keywords: marriage equality, same sex marriage, LGBT, Minnesota marriage amendment

Copyright © 2012 John P. Riederer


On November 6, 2012, the voters of Minnesota will be asked “Shall the Minnesota Constitution

be amended to provide that only a union of one man and one woman shall be valid or recognized as a

marriage in Minnesota?” (MN Legislative Reference Library, 2012). This amendment question is part

of a national movement to determine the legal rights of lesbian, gay, bisexual and transgender (LGBT)

citizens in the United States. Voters in 31 states have restricted the right to marry to opposite sex

couples, either through constitutional amendment or statute (MN Legislative Reference Library, 2012).

The issue has become politically divisive both locally and nationally.

In the lead up to the vote in Minnesota, many of the state’s largest corporations, non-profit

organizations, faith communities and municipalities have taken public stances on the amendment.

Many of the state’s largest corporations have taken a public stance opposing the effort to restrict

marriage (Helgeson, 2012). Despite calls from amendment supporters to stay neutral, General Mills,

Target, St. Jude Medical, Thompson Reuters, and the majority of Fortune 500 companies based in

Minnesota have publicly opposed the amendment. In addition, over 200 Minnesota businesses have

joined MN United for All Families, a coalition of political, non-profit, faith, professional and government

organizations opposing the amendment (MN United for All Families, 2012).

There is an absence of peer reviewed research on the business case for publicly supporting

marriage equality. Research on domestic partner benefits, anti-discrimination policies, GLBT workplace

satisfaction, benefit tax laws and ballot initiatives was pieced together to answer the question, “what

is the business case for supporting marriage equality?” It is part of a broader question, “what are

the business advantages of being LBGT friendly?” which future research should seek to answer. This

research will hopefully influence employers to take a public political stance on similar issues in the



Copyright © 2012 John P. Riederer


Research by Gates (2011) indicates that 3.8% of the United States population identify as

LGBT. This implies a there is a population of 9 million LGBT Americans, a number roughly equal to

the population of New Jersey. Other research suggests that LGBT employees constitute between 4%

and 17% of the workforce, a larger proportion than many minority groups (Ragins & Cornwell, 2001).

These employees are not protected from workplace discrimination by federal equal opportunity laws

(Johnston & Malina, 2008). According to the Human Rights Campaign Foundation [HRC](2011), it is legal

in 29 states to fire an employee for being gay, lesbian or bisexual. In 34 states, it is legal to terminate an

employee because they are transgender.

The 1996 Defense of Marriage Act (DOMA) defines marriage as a legal union exclusively

between a man and woman. This denies same-sex couples the legal protections and rights that

married opposite sex couples receive (Allen, 2006). DOMA also means that other states and the

federal government do not recognize same sex marriages performed in states where the practice is

legal (Cordes 2012). In 1996, the General Accounting Office (GAO) reported 1,049 different federal-

based benefits given to married people, which are denied to same sex couples, even if individual states

recognize their marriage. A same sex couple cannot file joint tax returns, or claim one member as a

dependent on federal tax returns (Knight & Comer-HaGans, 2012).

Recruiting and Retention of Employees

A business located in a state that recognizes same-sex marriage has a competitive advantage

in employee recruiting and retention, when competing on a national level. Recruiting and retaining

high quality employees is costly for corporations. Even companies that have inclusive policies, are

openly LGBT-friendly, and offer equivalent benefits can be at a disadvantage if they are located in a

state with laws unfriendly to the LGBT community (Kaplan, Wiley & Maertz, 2011). It is therefore in an

organization’s best interest to advocate for LGBT inclusive laws.

Copyright © 2012 John P. Riederer


Being publicly supportive LGBT issues is also important when recruiting employees who are not

LGBT. Many heterosexual adults prefer to work in LGBT-inclusive and diverse workplaces. In 2010, 52%

of heterosexual adults surveyed said it was very or extremely important that they work for a company

offering equal health benefits to all employees. Over 25% of heterosexual adults surveyed said it was

extremely or very important that they work for an employer known to recruit employees of diverse

backgrounds. One in four heterosexual adults said it was very or extremely important that they work

for a company that supports organizations that represent the diversity of the workforce and customers

(Harris Interactive, 2010). Anecdotal evidence suggests that the diversity and inclusion are more

important for younger and more educated adults. These are exactly the type of employees that many

organizations see as critical to recruit.

The 2009 Out & Equal survey asked a weighted sample of 2,775 adults (2,334 self-identified

as heterosexual and 362 self-identified as LGBT) a series of attitude and belief questions regarding

laws, workplace policies, culture and behavior. The section related to the differences in state policies

with regards to employment decisions began with a statement about same sex marriage being legal

in 6 states and the District of Columbia. Respondents were asked to agree or disagree with a series of

statements, after the prefacing statement, “Let’s assume you live in one of those states (regardless of

where you live now or your current marital status.).”

The first statement read, “Other factors being equal, I would prefer a job with an employer in

a state where same sex marriages are recognized over an employer in a state that does not recognize

same sex marriages.” Of the respondents, 79% who identified as Gay/Lesbian agreed. Only 8% of the

general population and 4% of the Gay/Lesbian responses were negative (Out & Equal, 2009).

Retaining highly qualified, skilled employees is important to employers. Many corporations

have locations in multiple states and a mobile workforce. In these organizations, employees may be

transferred involuntarily to meet the company’s needs, or voluntarily for a promotion. In the same

Copyright © 2012 John P. Riederer


series of questions, the 2009 Out & Equal survey stated, “I would consider changing jobs if my employer

required me to transfer to a state where same sex marriages were not recognized.” This was followed by

the statement, “I would consider declining a job promotion if it required me to transfer to a state where

same sex marriages were not recognized.”

The first statement had 36% of GLBT respondents agree. The second statement had 32%

of GLBT respondents in agreement. In responses to both statements, lesbian women showed the

importance of marriage recognition to that subgroup, with 45% in agreement with the first question

(only 16% disagreed), and 49% in agreement with the second (only 17% disagreed).

There is a limited amount of real world data on this matter as well. In 2009, Gates studied the

effects of Massachusetts’ 2005 recognition of marriage equality. A statewide survey of same sex couples

found that 8% had at least one partner move to the state, with 51% indicating that marriage equality

and LGBT rights were a factor, and 20% stating this was the only factor in their move. Massachusetts

went from a net loss of 602 individuals in same sex couples in the two years prior to same sex marriage

recognition, to a net gain of 119. What is important about the net gain of these people, is that a

significant portion of them represent the “creative class”; the young, mobile and highly educated

individuals, “who are vital to economic development in a post-industrial economy” (Gates, 2009).

Gates found that creative class individuals in same-sex couples were 2.5 times more likely to move to

Massachusetts following marriage equality than before (2009).

Economic Impacts

Businesses in some industries will benefit directly if their states allow marriage equality.

Marriages often result in expensive weddings, with out of town guests staying in hotels, dining out,

renting vehicles and other activities that often generate special tax revenue for state and municipal

governments. A survey of legally married same sex couples in Massachusetts and the Netherlands

found that 68% had at least 21 guests in attendance at their weddings (Lee Badgett, 2011). The

Copyright © 2012 John P. Riederer


increased spending benefits not only the businesses providing goods and services, but all citizens and

corporations based in the state. The additional tax revenue generated should reduce the burden on

resident taxpayers funding state services and infrastructure improvements.

States that recognize same sex marriage see increases in spending related to weddings, for

resident couples, as well as those choosing destination weddings. Many same sex couples have chosen

to hold in states that recognize their right to marry, even if they reside in a state that does not. Of

the 2,020 same sex couples married in Iowa in the first year the state achieved marriage equality, just

815 were residents (Kastanis, Lee Badgett, & Herman, 2011). By granting marriage equality, Iowa has

become a wedding destination.

A 2012 study of the economic impact that same sex marriage would have on Australia

conservatively estimated that it would boost the national economy $161 million USD in three years, and

found plausible estimates of a $742 million impact, when travel and spending related to weddings and

destination weddings was included. The average amount spent for a wedding was projected at $9,050

(USD) (Lee Badgett & Smith, 2012).

Closer to home, a study conservatively estimated that taxes in state of Washington generated

by same sex weddings would offset the increase in state tax deductions, with a net gain of over $18.4

million in tax revenues. (Kastanis, Badgett & Herman, 2012) The first year of marriage equality in Iowa

gave an estimated $12 to $13 million boost to the state and local economies, with gains of $850,000

to $930,000 in state and local sales tax revenues (Kastanis et. al, 2011). In 2004, it was projected

that national marriage equality would generate $16.8 billion in expenditures. The wedding industry

generates at least $70 billion annually. On average, same sex couples in the United States spend 25%

more than opposite sex couples on their weddings (Konnoth, Lee Badgett, & Sears, 2011).

Simplification of Employee Benefits

Copyright © 2012 John P. Riederer


In an effort to be fair to all employees and attract to LBGT job candidates, employers have been

increasingly providing LBGT employees with domestic partner benefits. Domestic partner benefits (DPB)

are usually health insurance, but often include “soft benefits,” such as bereavement leave, employee

assistance programs, relocation assistance, supplemental insurance and FMLA-type leave (HRC, 2011,

p. 26). In 1982, The Village Voice was the first employer to offer DPB (Raeburn, 2004, p. 48). Large

companies began offering them in the 1990’s, despite the practice being highly controversial. These

innovators included Microsoft, Disney, and IBM (Cordes, 2012).

By 2006, 51% of the Fortune 500 companies offered benefit parity for LBGT employees’

partners (Shepherd, 2006). Chuang, Church & Ophir (2011) attribute this to the normative mechanism

of press coverage of benefits. For many job seekers, “the inclusion of DPB has become a litmus test for

determining high-quality employers” (Cordes, 2012). In addition, at least three states and the District of

Columbia require employers to provide equivalent benefits for domestic partners (Solomon & Tiemann,

2009). The 2012 Corporate Equality Index found 89% of employers rated (representing the majority of

the Fortune 500) offered health benefits to same sex domestic partners. This represents a 20% jump in

the last decade (Human Rights Campaign Foundation, 2011).

Employers are often surprised at the low enrollment and low cost of providing DPB. The city

of Columbus, Ohio estimated that 0.009% of employees enrolled for DPB when offered. Similarly, The

Ohio State University estimated enrollment of 0.006% of employees. Enrollments are low because most

domestic partners already have coverage through their own employers. Costs for DPB coverage are

lower than anticipated, because those eligible tend to be younger and healthier. In particular, same sex

couples have a low incidence of pregnancy (Cordes, 2012).

There are several challenges that employers face when offering DPB. The first is that there is no

definition of “Domestic Partner” in federal or most states’ laws, and the patchwork of local ordinances

means “there are no uniform criteria for identifying domestic partner relationships (Knight Comer-

Copyright © 2012 John P. Riederer


HaGans, 2012). Most often, employers are left to define a domestic partnership. Criteria usually include

cohabitation, financial and social interdependence, and standards similar to state marriage laws, with

the exception of sex (e.g. both parties are of age and mental capacity to voluntarily give consent, neither

is already married, nor are they of close blood relation)(Kulow, 2001). Many employers have resorted

to sworn affidavits to prove eligibility. Having to inquire so deeply into the intimate personal lives of

employees is a situation many HRM professionals dread (Solomon & Tiemann 2009).

Another challenge to DPB is federal tax laws. Because of DOMA, even legally married same sex

couples are not allowed to file federal tax returns jointly, claim a spouse as a dependent, or receive

benefits through a partner’s employer tax-free (Abrigo, 2007). “Federal law requires employers to

impute the fair market value of health care coverage provided to an employee’s domestic partner as

income to the employee that is subject to federal income tax.” This “two-tiered tax system” means

employees receiving DPB, in opposite or same sex relationships that are not recognized as marriage, pay

on average $1,069 annually. That represents $178 million in lost payroll taxes for unmarried couples. In

addition, employers pay $57 million in additional taxes each year, because of this unequal treatment of

DPB (Lee Badgett, 2007).

States have adopted conflicting tax laws regarding DPB. Some states have their own version

of DOMA, imputing fair market value of DPB as income for state taxes. Nine states and the District of

Columbia have passed laws exempting DPB from state taxes (Solomon & Tiemann , 2009). In response

to federal taxation of DPB, a small number of employers have begun “grossing up” the salaries of

employees receiving those benefits, to offset the additional taxes incurred.(CITATION)

Complying with differing federal, state and municipal laws regarding DPB is a headache for

employers, especially in situations where employees commute or do business across state lines. In

November 2011, 70 major U.S. corporations and an assortment of law firms, professional organizations

and municipalities, including Microsoft, Nike, and the city of New York, filed an Amicus brief advocating

Copyright © 2012 John P. Riederer


for the repeal of DOMA. Among their major arguments was the cost of calculating fair market value for

DPB and calculating it as taxable income (Tu, 2011).

Market Value

A final reason that corporations choose to publicly support marriage equality and other LGBT

issues is the effect that it has on market value. Public support of LGBT causes generates publicity,

especially in LGBT-targeted media. In 2010, the buying power of American LBGT adults was estimated

at $743 Billion. A 2011 survey by Harris Interactive found that 71% of LGBT adults had brand loyalty that

trumped price increases, to companies they perceived as supporting LGBT causes (Harris Interactive,


Companies may be concerned with backlash and boycotts from anti-gay activists. In particular,

Christian groups such as Focus on the Family and the American Family Foundation, have called for

boycotts when companies offered DPB to LGBT employees, sponsored “gay” events, promoted LGBT

causes, or included same sex couples in their advertisements (Greene, France, & Kiley, 2005). Research

has shown that these boycotts do not negatively impact the revenue of parent companies (Henneman,

2006). In fact, bowing to the demands of such groups can result in greater consumer and employee

backlash. Microsoft discovered this when they withdrew support of a Washington state’s HB1515 bill

(to extend antidiscrimination laws to include “alternate sexual orientations”) after threatened boycotts

and protests led by a regionally influential Christian leader. Many LGBT employees felt betrayed and

several resigned in protest. The company quickly readopted its public stance on the issue (Greene, et.

al., 2005) Henneman (2006) concludes that “right-wing Christian leaders don’t seem to wield much clout

in today’s marketplace.”

For many consumers, as well as business partners, a firm’s participation and score in the

Human Rights Campaign’s Corporate Equality Index (CEI) is an important consideration. “Even among

nonparticipants, the CEI has helped create market norms where LGBT workplace equality is essential to

Copyright © 2012 John P. Riederer


staying relevant among competitors” (HRC, 2011, p. 6). The Human Rights Campaign includes positive

engagement of the external LGBT community as an important factor in its CEI ratings (15 points out of

100). Official or public anti-LGBT statements or incidents result in a 25 point deduction (HRC, 2011, p. 2).

A 2010 study by Wang and Schwarz tested hypotheses relating a company’s stock performance

with ratings on the CEI. While unable to statistically prove their hypothesis that positive stock

performance had positive association with CEI score, they soundly disproved their negative hypothesis.

An improvement in a firm’s CEI score had no correlation with poor stock performance (Wang & Schwarz,

2010). In short, supporting LGBT causes doesn’t hurt a corporation’s bottom line.


In November 1992, 55.3% of Colorado voters approved a ballot initiative named Amendment

2. This amendment to the state constitution stripped lesbian, gay or bisexual persons of any existing

municipal protections as a minority, and prohibited future laws against discrimination on the basis of

sexual orientation. Amendment 2 unleashed “the largest civil rights boycott in U.S. history.” Consumers

nationwide chose not to travel to or purchase products made in Colorado. Major conventions cancelled

bookings and diverted them to more inclusive states. Several companies nixed plans to relocate or move

major operations to the state, including a publishing company that would have brought its $100 million

headquarters and 6,000 high-paying jobs into the state (Sen & Hill, 2006).

Amendment 2 was declared unconstitutional by the Colorado Supreme Court in December

1994, ending the boycott. Estimates of the damage range from $40 million to $120 million for the 13-

month period. This does not count the long-term damage of being labeled a “Hate State” nationally.

Even companies that openly opposed Amendment 2 incurred damage. “Economic sanctions stemming

from an unfavorable minority civil rights climate legislation… are unlikely to distinguish between those

businesses that have antidiscrimination policies in place and those that do not” (Sen & Hill, 2006).

Copyright © 2012 John P. Riederer


Many of America’s largest corporations choose to take a public stance on LGBT equality.

Minnesota companies who oppose the state constitutional amendment, to narrowly define marriage to

opposite sex couples, do so for as many reasons as there are LGBT employees in their ranks. Marriage

equality is good for recruiting and retaining an educated, skilled workforce of both straight and LGBT

employees. It stimulates the economy of a state, encouraging spending that provides state and local

tax revenues. Granting same sex couples the right to marry and repealing DOMA will make doing

business easier, in terms of payroll and benefit calculations. Supporting marriage equality generates

positive association and brand loyalty among an influential and financially significant subsection of the

population. Finally, being associated with a state that creates an LGBT discriminatory climate is bad for


On November 6, 2012, Minnesota voters will choose to pass or reject a change to their state

constitution that restricts civil rights decisions in the future. Whether the amendment passes or fails,

it will not be the last issue relating to marriage equality in Minnesota or the nation. State statute that

forbids recognition of same sex unions will remain in place, until the law is repealed in favor of marriage

equality. Corporations will continue to have an influential role in society. It is to their advantage to

support marriage equality.

Copyright © 2012 John P. Riederer



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Copyright © 2012 John P. Riederer