Association for Public Policy Analysis & Management

This paper investigates the sexual orientation wage inequality between homosexual and heterosexual male workers in the U.S. labor market. The research is limited to only male homosexual employees due to a quick review of current literature indicating that male homosexual employees face the most severe labor market discrimination amongst LGBT groups. The methodology used in this paper is that of Oaxaca-Blinder and unconditional quantile decompositions. These decomposition methods are advantageous in that it allows researchers to divide the total wage gap into an “explained part” and an “unexplained part”, which refer to wage gaps related to productivity differences versus discrimination respectively. According to Oaxaca-Blinder mean wage gap decomposition method, on the surface, it seems, homosexual employees no longer suffer from a wage penalty. Only looking at the mean wage gap decomposition overlooks the different treatment different income subgroup receives. Using the unconditional quantile decomposition method, I was able to examine the sexual orientation wage inequality in different income groups. When taking the entire wage distribution into account instead of the mean, a labor outcome discrepancy between low-income and high-income workers appear. For low-income homosexual workers, thanks to a higher educational level compared with their heterosexual peers, they tended to earn more. High-income homosexual workers on the other hand, were at a disadvantage, receiving less labor outcome than their heterosexual counterparts. Moreover, the decomposition results suggested that the extent of discrimination against homosexual male employees was more evident for employees in upper-income groups. These results lead to my conclusion that despite of a decreasing mean wage gap, homosexual employees are still faced with an invisible “glass ceiling” that hinders their further advancement in labor market.