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Business, law experts weigh in on effects of legalizing same-sex marriage

While same-sex marriage has been a contentious topic of discussion for many years now, the discussion has primarily been dominated by religion, morality and law.

same-sex marriage panel
Moderator Brad Sears (from left), Kim Congdon and Gary Gates take a question from the audience. Photos by Todd Cheney, UCLA Photography.
But panelists who gathered at the Anderson School of Management’s Korn Convocation Hall on April 22 took a very different approach and looked at same-sex marriage from another angle: the legal and business impact of extending marriage, civil unions and domestic partnerships to same-sex couples.

“We’ve really come a long way when the noise around those discussions has quieted down enough so that a discussion about the economic impact of extending the right to same-sex couples becomes a very important part of the conversation,” said Brad Sears, executive director of UCLA’s Williams Institute on Sexual Orientation Law and Public Policy.

Sears served as moderator for the panel of experts, drawn mostly from the Anderson School of Management and from the UCLA School of Law.

Gary Gates, a distinguished senior research fellow in the Williams Institute and author of “The Gay and Lesbian Atlas,” provided an overview of the demographics of same-sex couples. In the United States, approximately 9 million people identify themselves as lesbian, gay or bisexual. There are 780,000 same-sex couples in the country, and one-fourth of these couples are raising an estimated 380,000 children.

Gates and his colleagues have found that, given a choice, same-sex couples prefer marriage over either a civil union or domestic partnership. In states that offered same-sex couples marriage, more than a third of same-sex couples married within the first year of availability.

“There is a clear indication that, regardless of the package of rights, same-sex couples seem to have a strong preference for marriage,” Gates said, “perhaps because for them, it is more essentially about rights.”

And while there are definitely costs associated with legalizing marriage for same-sex couples, there are also benefits, noted Lee Badgett, director of the Center for Public Policy and Administration at the University of Massachusetts–Amherst and a visiting professor/research director of the Williams Institute.

Lee Badget discusses the economic pros and cons of legalizing same-sex marriage.
Lee Badgett discusses the economic pros and cons of legalizing same-sex marriage.
“The big prize for a lot of families … is the fact that they get health insurance,” Badgett said. “But actually, the extra costs that will come from marriage and domestic partnerships are going to be fairly small overall.”

A study conducted by Badgett and Gates showed that health-insurance costs for these couples would be spread out over millions of companies, meaning that 96% of these companies would never even see any new spouses sign up. There would, however, be extra costs associated with the fact that these benefits are considered taxable income to employees and part of the payroll for employers.

On the positive side, Badgett pointed out, same-sex marriage is good for the wedding business. “Even if gay couples spend only about a quarter of the typical spending, and half of the same-sex couples marry, that’s $2 billion right there that would not have happened otherwise,” she said. There is also the “wedding tourism” business that benefits states offering same-sex marriage: Vermont, Massachusetts, Iowa and Connecticut.

Participants also found other benefits to tout. Margaret Shih, associate professor of human resources and organizational behavior in the Anderson School, stressed that tolerance in the business environment contributes to attracting better, talented and more creative human capital.

Unlike other minority candidates, LGBT job applicants can’t just look around and identify people like themselves, she said. “What may happen is that you may rely more strongly on policies and practices to determine what the organization’s climate is like,” Shih said. “A lot of the policies that organizations can adopt can send strong signals for attracting and retaining individuals from the LGBT community, and that will help recruit and keep the best employees out there.”

What are the implications for businesses if the California Supreme Court upholds Proposition 8?

Dean Hansell, a partner with Dewey & LeBoeuf LLP, whose clients include Google and Levi Strauss, said businesses that extended benefits to married same-sex couples would be placed in a fairly awkward situation.

“First, they would have to rewrite some of their benefits plans,” Hansell said. “They then might be in a position of having to recalculate the taxes and the benefits of the 18,000 couples (in California) that were in same-sex marriages at the time. And because of improperly extending these benefits and not declaring them as taxable income, under the state Unemployment Tax Act, certain penalties and interest would accrue.

“Would the employee have to pay it, or the employer? Odds are, in most cases, it would be the employer who has to pay it,” Hansell said. “But either way, it’s a very uncomfortable situation.”

The final speaker was Kim Congdon, regional vice president of human resources for Time Warner Cable, which was named one of the 2009 Diversity Inc. Top 50 Companies for Diversity. Many large companies provide same-sex domestic partner benefits, Congdon said, as does her company. But what makes Time Warner different is that they offer opposite-sex domestic partner benefits as well.

Time Warner’s employee policy “is not to separate people,” Congdon said. “We offer benefits because we want people to come to work. … Obviously, it’s to attract and retain the best talent. Why would we not want to do that for a segment of the population?”

Time Warner’s cost for covering its employees is higher than most, Congdon acknowledged — about $6,000 per year compared to the national average of $4,000. But reaching out to its employees and to the community “is germane to who we are as a company,” she said.

“The important thing is, if we don’t make the community stronger, we can’t get customers,” she added, earning a chuckle from the audience. “We’re in the business of having customers, so by strengthening the community, you get that.”
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