Transgender People Still Face a Sizeable Wage and Employment Gap in the U.S.—How Companies Can Help

Employees are often encouraged to bring their "whole selves" to work — yet for transgender people, expressing their true, authentic identities in the workplace can have devastating consequences: rejection, discrimination, harassment and social isolation, just to name a few. 

Despite growing public awareness of the challenges transgender individuals face, this group is still subjected to a significant wage and employment gap across all industries. 

According to a November 2021 report from McKinsey & Co., transgender adults are twice as likely as cisgender adults to be unemployed, and cisgender employees make about 32% more money each year than their transgender colleagues, even when the latter have similar or higher education levels. 

The report also found that more than half of transgender employees are not comfortable being out at work, and feel pressured to suppress their gender identity because it doesn't conform with long-held norms regarding gender expression. 

Such barriers can damage transgender individuals' job satisfaction, career growth, retention rates, lifetime earnings and emotional well-being. 

"There has been a ton of progress in prioritizing corporate diversity, equity and inclusion efforts over the last several decades, but that hasn't necessarily translated into actual improvements for the transgender experience in the U.S.," David Baboolall, one of the authors of the McKinsey report, tells CNBC Make It. 

Baboolall identifies as a biracial, queer, transgender person working in corporate America — and all too frequently, they add, the transgender experience "doesn't even register on employers' radars when they're working on LGBTQ+ inclusivity initiatives." 

What's driving the wage gap

Transgender people are about 2.4 times more likely to work in the food or retail industries, the McKinsey report found, in which the average annual wage hovers between $25,000 and $30,000. 

Safety ranked as the most important factor in transgender people's decision to pursue a job or not, trailed by not seeing others who looked like them in the workplace and finding support for transgender or gender-nonconforming people. 

As a result, transgender job-seekers might feel like they have limited options when deciding which industries to pursue, and gravitate to sectors where there are more transgender employees, the report noted. 

Throughout the hiring process, too, transgender candidates continue to encounter anti-transgender discrimination and bias, the McKinsey report notes, further limiting their employment options.

"A disproportionate number of transgender people work in the service sector because a lot of us face employment discrimination and don't get hired into traditional office or white-collar jobs," Rodrigo Heng-Lehtinen, the executive director of the National Center for Transgender Equality, says. "That pushes us into jobs as servers, bartenders or baristas that don't get paid as much, have shorter hours and, overall, don't have the security or stability a white-collar office job might offer." 

The same social norms that often lock transgender people out of higher-paying opportunities can also hurt their long-term career prospects. 

As Heng-Lehtinen points out, "When you don't have those points of commonalities with the people you work with, especially with your boss, you're way less likely to have that kind of access to prove yourself and, consequently, get promoted." 

How companies can create more trans-inclusive environments

Becca Green remembers the afternoon she came out as transgender at work in vivid detail: It was New Year's Day in 2019, the first day she and her co-workers returned to the office after the winter holidays, and about six months after she started hormone therapy for her gender transition. 

At the time, she was working for a media company in Salt Lake City — and when she announced her transition, Green says her co-workers were excited and ready to celebrate with her. "I definitely got more open acceptance than most trans people get," she adds. 

One of her managers connected Green with someone in the company's HR department who had helped a transgender employee in a previous job, to make sure that she had the right support and guidance throughout her transition. "I benefitted pretty tremendously from that," Green says. 

Still, Green recognizes that most transgender workers aren't as lucky. "One of the most common questions other trans people ask me is, 'Where can I find a supportive workplace?'" she says. "They just want a workplace where they can use the bathroom safely and be treated like a human." 

Green has since left her job at the media company and is now a copywriter — and during her job search, she notes, it always made her feel safer applying to companies that included "gender identity" in their discrimination policies, or had explicit messaging that they supported transgender people. It's a small step that she hopes more companies will consider taking to be more welcoming to transgender talent. 

Companies should also look at their hiring and benefits policies to see where they're falling short of being trans-inclusive and take steps to get there, Baboolall points out, whether it's by asking candidates their pronouns, offering gender neutral bathrooms in their offices or attending recruitment events hosted by transgender advocacy organizations.

Another change companies should consider is updating their employee databases to distinguish between someone's legal name and their preferred one, so a transgender employee isn't mistakenly referred to by their "deadname," or the one they were given at birth that doesn't align with their gender, Heng-Lehtinen says.

He points to the Supreme Court's historic decision in June 2020, which stated that the 1964 Civil Rights Act protects gay, lesbian and transgender employees from discrimination based on sex, as "an important step forward" toward creating more equitable workplaces for all.

Advancing equity and full inclusion for transgender individuals is an ongoing process — but Heng-Lehtinen is hopeful that companies are beginning to see "diversity and inclusion" as more than buzzwords, including when it comes to the LGBTQ+ community.

"More employers are realizing that diversity is a strength, that it can help productivity, creativity, efficiency and more," he says. "I'm absolutely optimistic that things will keep improving, it just takes time." 

Check out:

5 U.S. employment laws every person entering the job market should know

The 10 highest-rated companies for LGBTQ+ workers, according to Glassdoor

A transgender CEO on coming out at age 49: 'The biggest transphobia' was 'my own'

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