The landmark Supreme Court decision in Obergefell v. Hodges that legalized same-sex marriage throughout the U.S. was hailed by many as an important step towards equal rights and criticized by others as the work of an activist court trying to push an agenda. We hear a great deal about the social aspects of the decision, as we should, but less about the economic aspects of the decision.
Are gay wedding cakes a key to economic recovery? Hardly, but the economic impacts cannot be ignored. Surveys have put the number in the billions.
A NerdWallet study estimated in 2014 that legalized same-sex marriage in all fifty states would boost the economy by $2.5 billion, while a separate study from the Williams Institute at the UCLA School of Law put the benefits at $2.6 billion over the next three years. The Williams Study goes on to predict $184.7 million in corresponding tax revenue and over 13,000 jobs created.
The wedding industry is estimated to be worth over $50 billion and employs over 800,000 people, according to IBISWorld. An extra $2 billion-plus spread over three years would be a useful shot in the arm for all aspects of the industry.
Where does all this money come from? If you have to ask the question, it has been a long time since you were married or paid for a wedding involving your children. According to The Knot, average wedding costs topped $31,323 in 2014, while CostofWedding.com says it is $26,244 — and those estimates don't include the cost of a honeymoon.
The SCOTUS ruling gives another 2-3% of the population the right to add to the wedding customer base. The 2-3% figure is based on the 2014 National Health Interview Survey from the Centers for Disease Control and Prevention (CDC); polls over the years have suggested considerably higher totals when estimating the LGBT population.
Effects will be regional, based on local LGBT populations, existing state legal structures, and other factors. The NerdWallet study does a nice job of breaking the effects down by state and interpreting local numbers on all the relevant variables. They estimate Texas providing the biggest change, with almost 8,400 same-sex weddings pouring nearly $218 million into the state's economy.
Tax, entitlement, and retirement implications are harder to predict. Just as the tax laws provide benefits and penalties to heterosexual married couples, those same issues will now affect same-sex couples as well.
Back in 2004, the Congressional Budget Office (CBO) attempted to quantify the effects of legalized same-sex marriage and concluded that spending would be reduced on Medicare/Medicaid and Supplemental Security Income benefits, while it would increase on federal employee's health benefits. The CBO calculated that the effect on taxes would be somewhat neutral in the first five years but would reduce total outlays by around $100 million-$200 million annually over the next five. The assumptions are surely different now with the Affordable Care Act and other legislative changes; perhaps CBO will produce a new study in the wake of the SCOTUS ruling.
In summary, it seems reasonable that same-sex marriage will provide some economic boost in certain areas, especially where the demand has been "pent up" with larger LGBT populations and restrictive laws (such as Texas). Over time, it will be interesting to see the other economic effects with respect to same-sex marriages, such as tax implications, changes in savings and investment habits in the LGBT community...and yes, the effects of divorce. After all, equality means taking the good with the bad.