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Transgender people face significant economic challenges

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In 2013, Aimee Stephens, an employee at Harris Funeral Homes in Michigan, sent a letter to inform her employers of her decision to receive gender confirmation surgery and start presenting as a woman. Shortly after sending this letter, she was fired. Stephens took the case to court with the help of the Equal Employment Opportunity Commission. The landmark case, R.G. & G.R. Harris Funeral Homes Inc. v. EEOC, eventually reached the US Supreme Court, where the court ruled in favor of Stephens. 

Labor market discrimination, such that Stephens faced, is just one of many reasons why we expect economic outcomes to differ between transgender people, whose gender identity differs from what was assigned to them at birth, and cisgender people, whose gender identity is congruent with sex assigned at birth. Transgender people also have higher rates of homelessness, psychological distress, education disruptions, and risky behaviors, all of which contribute to worse economic outcomes. 

Precisely measuring the difference between transgender and cisgender people’s labor market outcomes is challenging due to a lack of data that accurately represents the distribution of gender identities and economic outcomes nationally. In 2021, the Census Bureau made a historic decision to remedy this shortage. They asked two questions in the Household Pulse Survey to record the survey respondents’ current gender (choices were female, male, transgender, and none of these) separately from the sex assigned at birth (choices were female and male). This approach allowed us to provide the first comparison of the economic outcomes of transgender and cisgender people using a nationally representative sample.

In the Household Pulse, 1.6% of respondents responded that their gender identity differs from what was assigned to them at birth. We refer to this group as “non-cisgender.” Among those assigned female at birth (AFAB), we find that AFAB non-cisgender individuals are 3.2 percentage points less likely to be employed than comparable cisgender women. Among those assigned male at birth (AMAB), non-cisgender individuals are 6.6 percentage points less likely to be employed than comparable cisgender men. 

When we narrow our focus to transgender women (AMAB individuals who identify as female as opposed to identifying as transgender or ‘None of these’), the employment gap widens to 15.1 percentage points. Moreover, transgender women earn a significantly lower income and more often face poverty and food insecurity than cisgender men. Among AFAB individuals, those who answered that they do not identify with male, female, or transgender—individuals most likely to identify as non-binary or with other gender identities—face the largest economic disadvantage. Finally, Black gender minorities are economically worse off than non-cisgender people of other races and ethnicities, consistent with the anecdotal evidence that Black transgender people face the highest risk regarding their personal safety and economic well-being.

Despite the landmark ruling in the Harris Funeral Homes case, our analysis, based on data gathered one year after the Supreme Court’s decision, shows a sizable disparity in economic outcomes for transgender women and some AFAB non-cisgender people. The US Census Bureau and governmental and non-governmental agencies in other countries might include survey questions on sex assigned at birth and current gender identity to help expand knowledge on gaps on other relevant outcomes, why these gaps emerge, and how they are changing over time.

© Christopher S. Carpenter, Maxine J. Lee, and Laura Nettuno

Christopher S. Carpenter is E. Bronson Ingram Chair and University Distinguished Professor of Economics and a Research Fellow at IZA.
Maxine J. Lee is Assistant Professor of Economics at San Francisco State University.
Laura Nettuno is a PhD student in economics at Vanderbilt University.

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