Recession? What Recession?

Prevailing market wisdom says gays are less affected by economic downturns than heterosexuals. But how wise is that wisdom?

BY Alex Davidson

March 02 2009 1:00 AM ET

"With disposable-income items, you see a sustained level of advertising to LGBT individuals," says Justin Nelson, president and cofounder of the National Gay and Lesbian Chamber of Commerce in Washington, D.C. "While things have tapered off a bit, we are still buying our iPhones." But Nelson, whose organization works with 1.4 million LGBT businesses and entrepreneurs, adds that while gay consumers are being targeted for their spending habits, that does not mean that gay businesses are escaping the wrath of the recession. "A lot of gay-owned firms are hurting just like their heterosexual counterparts."

To survive, some gay and lesbian entrepreneurs-like Janice Mahlmann, who owns August eTech, an IT consulting business in Hamilton Square, N.J.-are banding together. Mahlmann joined forces with a nearby gay-owned marketing firm that was looking to expand its Web presence. "When times are tough, you want to work with people you're comfortable with, have security with, and really look out for you," she says. "We have a common connection in our sexuality. That creates a strong bond."

Mahlmann says the informal partnership, which involves the two companies offering each other's services to clients, has brought in a new income stream that's helping her to weather the recession. She's looking to expand it to a regular fifty-fifty profit-sharing relationship. "It's almost like having sales people you're not paying for," she says.

But the fact that Mahlmann has money in her pocket doesn't mean she trusts the companies who want her to buy their products. She fears that companies looking to make a buck during a downturn may opportunistically focus on gay consumers-but that once the slump ends, so might the attention.

"You can't come to us when times are bad and then turn your back on us when times are good," she says, referring to the often-erratic nature of inclusive advertising. "Unfortunately, that's what corporate America does."

Mahlmann isn't the only one who's skeptical that gays benefit from this "recession-resistant" idea. Economist M.V. Lee Badgett, the research director at the Williams Institute at the University of California, Los Angeles, and the director of the Center for Public Policy and Administration at the University of Massachusetts at Amherst, says gay people are actually more vulnerable to bias in down times, which ultimately leads to fewer job opportunities.

Tags: Business

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