On Tuesday 9th November 2021, Out Leadership CEO & Founder, Todd Sears appeared before the US House Subcommittee on Diversity and Inclusion to speak about the economic barriers that the LGBTQ+ community face. Below is the transcript of the questions he was asked by Committee Members.
If you’re interested in learning more about the Hearing itself, we included relevant links below.
Out Leadership’s Written Testimony
Rep. Ann Wagner (MO-2), Ranking Member, Republican: Mr. Sears, can you tell me why is access to credit important in achieving economic freedom and prosperity? Just in general before we set the table here.
Todd Sears:
Thank you for the question and thank you for your support of this work. I don’t think five minutes is going to give us nearly enough time to actually answer that question, unfortunately. As my colleagues have noted, access to capital in our country is the underpinning of literally everything that moves our economy. If LGBTQ+ people can’t have access to mortgages, we can’t own homes. If we end up paying more in APRs as my colleague Spencer mentioned, we are literally being taken advantage of by the system. So if we look at even the bill that’s under discussion, it’s about reporting. It’s about making sure LGBTQ+ people are listed in that definition of diversity so that we can measure access to credit and housing and actually how that does impact our economic outcomes.
Rep. Wager:
And Mr. Sears, how can our institutions build relationships to foster financial literacy, for instance?
Todd Sears:
Interestingly, they have been for many years. One of my favorite programs was at Merrill Lynch many years ago, called IPO (“Investing Pays Off”). That was started almost 25 years ago, on the idea that Charlie Merrill, who was the founder of Merrill Lynch, started when he would write widows of WWII veterans and offer advice for how they could invest in their pensions. And so the opportunity for these financial institutions to expand what they’ve been doing for many years, I think, is significant. And they actually are doing it. If you look at Investing Pays Off for Merrill, or 10,000 Small Businesses from Goldman Sachs, there are significant investments these companies are making.
But the challenge is that we don’t have the numbers. We don’t have the ability for these institutions to provide the access because we’re not counted as an LGBTQ+ community. If Goldman wants to expand their 10,000 Small Business to focus on LGBTQ+ small businesses, the National Gay and Lesbian Chamber of Commerce is the only place they can go for that data. The federal government does not have that data. So once we actually count, we can start to be a part of it.
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Rep. Wagner:
Mr. Sears, what steps can financial institutions take to support the underbanked communities? What are some of your thoughts in that arena?
Todd Sears:
Well, at the very least, looking at the policies. One of my colleagues mentioned that LGBTQ+ people are still excluded from so many policies. I would use HSBC Life as a great example. They rewrote the definition of insurable interests to expand that definition to include LGBTQ+ families, including in places like Asia, where gay couples still have no relationship recognition. And if you look at the policies through every single one of these financial institutions, there are significant opportunities to identify those exact same areas. If we’re not counted in how these companies approach, then they’re not going to be able to actually include us across the board.
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Rep. Madeleine Dean (PA-4), Democrat:
Building a small business is the dream of many Americans, and I’m particularly interested in what are the obstacles that LGBTQ+ small business owners and entrepreneurs face in engaging the financial system? Mr. Sears, I can start with you.
Todd Sears:
Thank you for that question, and thank you for the work you’re doing in Philadelphia. I know my good friend and colleague, Brian Sims, is doing a lot of great work in the state as well, so I want to thank you for that support.
Rep. Dean:
I know him from the Pennsylvania House.
Todd Sears:
He’s quite a tremendous leader in our community and your state. To your question, I would say several things. If you look at the number of, I’ll take it out of LGBTQ+ for a second… minorities in the United States start businesses at a rate of almost double that of the average population. And why is that? Because of discrimination that still exists in the corporate America structure, despite the fact that 92% of Fortune 500 companies have non-discrimination policies. We all live and work in states that actually don’t have that as a trickle-down. So even the trailing spouses of people who are protected by the Fortune 500, do not experience that same protection in the state in which they live. And so the reason for the small businesses, I think is number one, based on that.
Then when they get into the marketplace, and you get a look at the access to discrimination that still exists from religious-based discrimination all the way through to refusal of service laws that still allow people to deny service and to deny credit and access to people based on “sincerely held religious beliefs.” And that is something that we have not talked about on this committee yet, but I do think that the religious right to discriminate has to be addressed by this committee. It’s not directly related as a “financial services issue,” but it is the single largest reason LGBTQ+ people experience discrimination in our country. And it’s a false choice that we’ve created. Over half of LGBTQ+ Americans consider themselves religious. It is not pitting religion against LGBTQ+ people, but it has an impact on small businesses, it has an impact on discrimination, it has an impact on the laws Chairwoman Waters mentioned, and the transgender community. There were 131 anti-trans bills in 31 state legislatures in our United States in the last twelve months. They were driven by religious animus, marginalizing and demonizing the most vulnerable of our community, primarily because these young people want to play a sport. So the opportunity for us at the small business level all the way through to the Fortune 500, to eradicate this discrimination, I think, is significant.
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Rep. Sylvia Garcia (TX-29), Democrat:
Mr. Sears, a 2020 study by Equality Texas found that nondiscrimination protections would result in the addition of hundreds of thousands of new jobs and millions of new dollars added to the GDP in tax receipts. I think you kind of alluded to that, and I was really surprised when you said that LGBTQ+ workers will take a one-third pay cut to go to a friendlier state. Is the reverse true? With Texas passing a really horrible anti-trans bill this last session, can we expect people to leave the state because we’re now becoming more and more unfriendly?
Todd Sears:
The short answer is yes, absolutely. I’ve just spent this last week in California meeting with leaders in the tech community, and the Texas bill in particular (there are eight other states that have passed anti-trans bills, specifically around youth), those bills specifically came up in the tech community in terms of expansion into Texas. As we saw in North Carolina when HB2 passed, so many, whether it was PayPal or Salesforce, so many companies decided not to invest in North Carolina. Out Leadership actually convened an investor statement at that time, that was replicated in Texas actually. We had almost four billion dollars worth of assets that were invested in North Carolina and six billion dollars that were invested in Texas, of assets that said discriminatory policies in both North Carolina and Texas around trans people increased the risk in the marketplace and decreased the return on the assets invested in those states. So there is a direct return on investment for equality and there’s a direct economic consequence to discrimination.
So the short answer is yes, absolutely. Companies pay attention to this significantly, because their youth, especially Gen Y and Gen Z, won’t stand for it. They will not come to companies that are not LGBTQ+ inclusive, and if those companies are based in states which are LGBTQ+ unfriendly, which so many states increasingly are, it’s an economic problem.
Rep. Garcia:
So there’s a benefit, but there’s also, I don’t want to say a penalty, but I guess it is. So that’s why it’s so important to highlight these issues.