As the Supreme Court on Tuesday hears arguments on whether same-sex couples share the right to marry, it’s worth taking a closer look at how much U.S. businesses gain from having more diverse and inclusive workplaces.
PwC joined hundreds of other employers and organizations in a legal brief to explain the business side of the issue, and the brief made some important points.
For example, two University of Michigan professors published a telling study in 2013 finding that approximately 300 companies that instituted benefits for same-sex domestic partnerships between 1990 and 2006 showed about a 10% average stock price increase over companies that did not adopt such policies.
One reason might be that diverse workforces help capture new clients.
Businesses can benefit from diversity if they recruit and retain diverse talent, but state laws banning same-sex marriages hinder companies’ ability to do just that.
Indeed, same-sex couples living in non-recognition states must not only wed elsewhere to obtain federal benefits, but are denied access to state benefits and rights given to married couples of different sexes. Moreover, these state laws compel companies in those states to treat employees with same-sex partners differently.
The implications are wide; marriage inequality costs companies precious resources better invested elsewhere. All told, marriage inequality is estimated to cost the private sector $1.3 billion in 2015. That’s $3.5 million per day.
As the CFO of PwC, I see how laws that prohibit same-sex marriage cost my company money. For example, those who are in same-sex marriages and live in non-recognition states are often taxed on the value of healthcare benefits we provide to their spouses, while employees in different-sex marriages in the same state are not. In order to prevent the former from suffering financially, PwC pays them more to compensate for that difference. That means the firm incurs meaningful costs in time and money to ensure our similarly situated employees are treated fairly.
Another example of cost is administrative. My home state of Georgia is one of the remaining states that fail to license same-sex marriages or recognize same-sex marriages licensed in other states. Consequently, we must identify from among our married employees in Georgia those married to same-sex spouses. We then have to treat those employees as unmarried for state taxation purposes and married for federal taxation purposes. And, of course, we need to track where our same-sex married employees live and change their tax treatment if they move to or from recognition states. Sound burdensome? It is. Sound costly? It is.
Finally and most importantly, state bans on same-sex marriages are contrary to our core values of diversity and inclusion. As the legal brief PwC joined explains, “[t]he need to accommodate state laws hostile to same-sex marriage prevents employers from treating similarly situated employees identically, our stated policies notwithstanding. Our employees are our most valuable assets – and yet the law treats many of them as second-class citizens.”
Carol Sawdye is Chief Financial Officer of PricewaterhouseCoopers.