Sunday, March 6, 2011

The Most Fabulous Way to Stimulate the Economy

What would you say if I told you that New York State lawmakers could amend a certain legal regulation in a way that would stimulate additional consumer spending, foster more sales opportunities for small businesses and create thousands of new jobs? What if I told you that this policy would not add a dime to the deficit; in fact, all of the sales tax on the resultant commerce, additional income tax revenue and processing fees for these new contracts would actually help state and local governments balance their budgets? According to any credible economic analysis, this policy would only foster business growth so benign that it is almost inconceivable that it could lead to negative externalities in health, the environment, culture or anything at all.

What is this miracle policy of which I speak? What could possibly put some spring into the step of this dreary, moribund economy? Well, when people think of ways for the government to prime the pump, they usually imagine burly construction workers re-paving the highway. But we should also think of the police officer who got to keep his job thanks to the Recovery Act, the sailor who is bravely serving his country in the US Navy, and also the cowboy, the Native American and the motorcycling leather daddy…

This economic miracle policy I’m talking about, of course, is legalizing same-sex marriage. Nowadays even those with money to spare are so afraid of the market that they are just sitting on it in the bank; but if there’s ever a time to splurge, wouldn’t it be when your daughter has fallen madly in love with the perfect woman and you want to give her the wedding of her dreams? ...and if your son wanted to marry someone else’s son, wouldn’t you do the same? Some people have been waiting to be able to do this their entire lives.

In this time of economic crisis let’s forget for a moment about the Equal Protection Clause of the Fourteenth Amendment or the sexual ethics expounded by the Book of Leviticus and think about marriage solely in terms of dollars and cents. The average wedding in New York State costs around $32,000 – but in New York City where all goods and services are more expensive the figure is nearer to $37,000. However, the average wedding ceremony between two men or two women in New York State will most likely cost significantly less – circa $27,000 – largely due to the facts that 1) same-sex couples are less likely to receive support from their parents to pay for their weddings; and 2) same sex couples are more likely than opposite-sex couples to opt for no-frills City Hall marriages.

But even with the most conservative estimate that accepts continued social discrimination as a given, each and every additional marriage will nonetheless serve as a micro-level stimulus package. If the New York state legislature were to act this spring to modernize our discriminatory marriage laws, then the summer and autumn of 2011 could be punctuated by tens of thousands of additional weddings and a wave of additional commerce from Montauk to Buffalo.

At the very least, marriage equality would trim the budget deficit by adding revenues. For all of those couples who simply want to get it over with and get a City Hall marriage, in New York City it will cost them $35 for a marriage license payable to the Office of the City Clerk. Everyone who lives outside the five boroughs who wants to have a marriage certificate will have to make a credit card deduction, money order or write a $30 check payable to the New York State Department of Public Health, they will also have to pay for a $7.25 vendor processing fee, $15 for priority mail postage, and if they opt for next-day shipping the married couple would pay for an additional UPS fee of $12. With every marriage license issued, New York State would receive a bit more revenue to help mitigate our $10 billion budget shortfall.

Though it would be fair to say that a fair number of New York’s gays and lesbians and bisexuals and transsexuals would probably go for something more extravagant than a mere City Hall wedding… Seriously, if you’ve ever attended a Long Island bat mitzvah, just imagine how opulent Long Island gay marriages will be! Legalizing same-sex marriage will open the floodgates to the greatest, gayest shopping spree that New York has ever seen!


For starters, marriage usually starts with a proposal – and an engagement ring usually costs around $3,125. Jewelers will be so inundated with orders that there would be increased demand for every precious gem on the market – as well as the labor of goldsmiths, silversmiths and diamond cutters. Though the Hasidic diamond dealers of 47th Street might be amongst the most vociferous opponents of marriage equality, they would be amongst the greatest financial beneficiaries!

Then with time most of these same-sex fiancées are going to buy wedding bands and the jewelry industry would surge again (according to The Wedding Report, the average American wedding entails $3,631 of spending on jewelry for the day of the marriage ceremony).

For anything more elaborate, they are going to hire a wedding planner for $1,940…

Wedding announcements, invitations, reply cards and thank-you notes on personalized stationary will cost $1,117…

Your average marrying couple will spend $345 on hair styling, facials, makeup and spa treatment…

The best man or bridesmaid will throw down an average of $2,189 on the bachelor/bachelorette party…

The grooms will spend about $1,858 on their tuxedos…

Or the brides will spend $1,858 on their dresses…


…or the brides will spend $1,858 on their tuxedoes…

…or the grooms will spend about $1,858 on their dresses…

The sartorial possibilities are endless, and any permutation of bow-ties, tiaras, corsets and cummerbunds that the marrying couples, best men, bridesmaids and guests would buy would nevertheless serve as the greatest one-time boon to the high-end fashion industry that New York has ever seen!

Marrying couples typically spend around $2,036 on the ceremony itself; i.e. renting the location, hiring an officiate, paying for an aisle runner, a pillow box and a ketubah, etc…

They will spend an average of $1,276 on flowers and décor…

The big ticket item, however, is almost invariably the wedding reception – which costs an average of $11,863. Can you even imagine how many more job openings would be created for caterers, chefs, waitresses, busboys and bartenders?

More demand would be created for bakers as well, as the brides or grooms spend $469 on each wedding cake…

…$1,244 on limousine and chauffeurs…

… and of course a honeymoon, which usually rings up to a total of $5,027 (though chances are the bulk of this money would stimulate the economy of Puerto Rico or the Virgin Islands – not New York)

Subsequent growth in consumer spending would not be confined to the brides and grooms and their families. According to the Association of Bridal Consultants, married couples receive an average of 75 gifts and that the average amount of money spent on each wedding gift is $113. So for every time that a pair of men or a pair of women marry in New York, they will spur their guests to go out and spend approximately $8,475 on gifts that might have otherwise just sat in the bank and accumulated infinitesimal interest.

Out of town wedding guests are going to stay in New York hotels, and even if they are going to stay with friends for the weekend they are probably going to go out with their hosts to a restaurant on Friday night or at least stop at the liquor store and buy them a bottle of wine. No matter how you crunch the numbers, marriage equality is going to encourage people – and especially people from out of state – to go out and spend more of their money on New York goods and services.

Of course, we do not know exactly how many same-sex couples there are living together in New York because the 2010 Census which is still being tabulated was only the first census since Massachusetts’ landmark Goodridge decision in 2004, and this data only counts same-sex couples who are already legally married – thus providing an incomplete picture of how many same-sex couples there are who would be married if New York amended its family law code. So in the absence of more sound Census methodology the best we can do is refer to scientific estimates; according to a study by the Williams Institute, as of 2005 there were approximately 50,854 gay and lesbian couples living together in New York State.

However, that does not mean that legalizing same-sex marriage in New York State would necessarily result in exactly 50,854 weddings. Approximately 43 percent of those couples – 21,867 of them – have already married somewhere else. Since 2005 the population of same-sex couples has certainly risen. And there are of course a good number of couples who would prefer to marry in some other jurisdiction, to simply apply for a domestic partnership, or to not marry at all. The Office of the New York City Comptroller estimates that – based on the experience of Massachusetts – roughly 51 percent of the remaining nubile 28,987 couples would marry over the first three years after marriage equality has been achieved; in other words, around 14,783 New York resident couples would marry. After that initial surge, the rate of same-sex marriages would probably taper off significantly and eventually achieve something close to parity with the rate of opposite-sex marriages. According to the NYC Comptroller, resident weddings would generate almost $110 million in additional consumer spending over those first three years…

…and that’s only taking into consideration New York State residents; based on the experience of other states, the big money maker would be in out-of-state residents who would come from all across the country and all around the world to have their weddings in tolerant and accepting New York. The NYC Comptroller’s Office estimates that in the first three years of marriage equality, more than 56,000 couples would travel from out of state to marry in New York. Keep in mind that New York State law requires a minimum of 24 hours between the issuance of a marriage license and the performance of a wedding ceremony, so out-of-state residents would either have to make two day trips or (much more likely) stay overnight. Even the estimated 6,845 couples from mostly New Jersey, Pennsylvania and Connecticut who simply drive across the border for two day trips would bring in an additional $1 million. But those who come all the way from Florida, Texas, Japan or South Korea for destination weddings would spend almost $60 million, their guests would spend another $77 million on transportation, lodging, etc.

When you put it all together; New York residents, cross-border commuters and out of state same-sex marriage tourists would generate an additional $247 million in additional economic activity over the next three years – $175 million in New York City alone. We can only speculate as to how much long-term job creation this boom would generate; most likely, most of the additional business would probably be picked up by already-existing florists, bakers, DJs, etc. Though based on the experience of other states, the legalization of same-sex marriage would probably create a few thousand additional jobs mainly in the labor-intensive hospitality and catering businesses. But the sheer amount of consumer spending and job growth alone does not tell the whole story; for a more clear view of marriage equality’s effect on the public treasury we have to crunch those numbers a bit further.

When economists calculate the value of public policy they use the tool of cost-benefit analysis; and even the most liberal proponent of civil rights must concede that there are economic costs to granting marriage rights to gays and lesbians. Namely, firms that offer spousal and family benefits to their employees would be compelled to extend health care benefits to the spouses of their newly-married employees. The study by the Comptroller’s Office estimates that all of the same-sex married couples with one member working for a firm in New York State would cost their employers an additional $63 million in health insurance costs. However, this causes little reason to fear that businesses would flee to other states with discriminatory marriage laws in order to save on human resources; that $63 million in health benefits would be spread fairly evenly across more than 500,000 firms, unless a given business employs a disproportionate amount of nubile homosexuals then their burden would be comparatively negligible, and most small businesses would not be affected at all. In fact, most Fortune 500 companies located in New York – including Bank of America, Goldman Sachs, Morgan Stanley, American Express, Chase, MetLife, Citigroup, Bloomberg LP, Time Warner, Barnes & Noble, Eastman Kodak, to name a few – already offer health benefits to the same-sex domestic partners of their employees.

From the perspective of public finance, marriage equality would not generate any additional health care costs because New York State and City agencies are already required to offer health care benefits to the same-sex domestic partners of public employees. If anything, the public sector would actually save on means-tested programs because many newlywed couples’ combined income or assets would bring them above the income and asset thresholds for many social welfare programs; e.g. the Temporary Assistance for Needy Families and Safety Net Assistance programs, child care subsidies, earned income tax credits, etc. For a good number of people the legal act of marriage per se serves as a catalyst for movement from the class of welfare recipients to taxpaying contributors to the public treasury.

Following that same line of reasoning, marriage equality would in fact lead to a windfall in public revenues. Marriage licensing application fees – 50,458 applications for $35 in New York City and 32,012 applications for $40 elsewhere in New York State – would total $3 million in additional revenue. Sales taxes on all of the aforementioned wedding expenditures would add $4.3 million to City revenues and another $5.5 million to the State. With all the out of state destination weddings expected to be held in the five boroughs (i.e. Manhattan) the City would also collect an additional $767,000 in Hotel Occupancy Tax revenue. If the New York legislature changed the tax code so that same-sex married couples could file their tax returns jointly, so many couples would incur the so-called “marriage penalty” by moving to a higher income tax bracket that New York State would collect $2.1 million in additional income taxes. So it would be fair to assume that New York City would be able to balance its budget with $5.1 million and New York State would be able to plug its gaping deficit with $10.6 million in additional revenues over the next three years. Perhaps if homeownership rises for married same-sex couples, the government might even take in more revenue from property taxes and related real estate transaction-related taxes (though this is purely speculative); if this is the case, New York’s gaping deficit could be trimmed even further.

For a state to maintain discriminatory marriage laws is to practice fiscal insanity – they’re leaving money on the table. Though what we’re currently doing in New York is even more self-defeating; in 2004, then-Attorney General Eliot Spitzer responded to the flurry of gay marriages in Massachusetts, San Francisco and New Paltz by issuing a memorandum stating that New York – though we do not issue marriage licenses to same-sex couples – would give full faith and credit to the same-sex marriages issued by other jurisdictions. From the perspective of social justice, this might be a pragmatic step in the right direction, but from the perspective of economics it’s the worst policy imaginable as it assumes all of the costs but reaps very few of the benefits. Suppose there is a lesbian couple from Schenectady composed of a pharmacy worker and her unemployed wife and they decide to get married in Northampton; they might add to the health insurance costs borne by New York businesses, but all of the economic activity and tax revenue generated by their wedding would be enjoyed by the Commonwealth of Massachusetts. In other words, New York is exporting our gay marriage jobs to Massachusetts, Connecticut, Vermont, New Hampshire, Iowa, the District of Columbia, all ten provinces and three territories of Canada, Mexico City, Argentina, Spain, Portugal, the Netherlands, Belgium, Iceland, Norway, Sweden and South Africa.

Civil unions – another modest half-step towards social justice – are even more limited in their economic stimulus potential. In New Jersey, Illinois, Rhode Island, Delaware and Hawaii where the state issues civil union licenses to same-sex couples, businesses pay ever so slightly more in health insurance costs. But the wedding planners, hoteliers, caterers, florists and diamond cutters of these states have experienced only minimal business growth because hardly anyone throws down $37,000 to celebrate their daughter’s civil union – filing for domestic partnership feels as special as a trip to the DMV.

Likewise, it seems that the only way for a state to reach the maximum fiscal benefit is to establish complete and utter marriage equality under law. When the Comptroller’s Office did its cost-benefit analysis of legalizing same-sex marriages, they calculated that the government of New York State would come out of the red by collecting roughly $8 million in more taxes and saving $100 million on welfare programs, while the City would collect an additional $7 million in taxes and fees and have only negligible fluctuations in spending on anything at all. And though the health insurance costs and the benefits of additional sales will for the most part be paid by different firms, the private sector as a whole would grow on a net basis by $184 million throughout New York State with $142 million of that economic growth in the City.

Marriage equality should also make the New York economy more competitive in the long run by keeping our state among the forefront of social progress. Let’s say that the Acme Widget Company of Des Moines is planning on expanding to the East Coast and has to decide between two potential sites for their new bureau; one in Albany and the other in Hartford. The board of directors might reason that, ceteris paribus, it would be in their best interests to open the new bureau in Hartford because a lot of gay people would prefer to live in a state where they can raise a family, and Connecticut’s inclusive marriage laws might help them to attract a more competitive pool of employees. The most well-dressed, highly productive members of the labor force want to live and work in a state where the law treats them as first-class citizens – why wouldn’t we do everything we can to make them want to live and do business in New York?

The fact of the matter is that gay families are great for the economy; they’re hip, they’re ahead of so many market trends, they are more likely to have two incomes and less likely to have children – and when they do have kids, it kind of has to be the result of a thoroughly-planned, well-thought decision. Families headed by same-sex couples are more likely to pay taxes for schools and less likely to have kids to send to them - but when they do, wouldn't you imagine they would be the most meticulous parents?

To put it more blunty, it is in the direct financial interest of every state, county and municipal government with revenues dependent upon property taxes to attract families with two moms and two dads, because when gay people move into a neighborhood the value of real estate rises. If you’ve ever been to Hudson, New York, you would see before your eyes how an influx of gay antiques dealers, innkeepers and restaurateurs took a rusting, depressed Upstate town and gave it a makeover into a relatively-booming Mecca for weekenders and gentlewomen farmers!


So when the the New York State Senate takes up the same-sex marriage bill, do they really want to take this opportunity to uphold our state's long proud history of welcoming immigrants of all cultures, stripes and hues, upholding the rights of refugees who fled violence and repression... and, by the way, effortlessly improve the state's fiscal standing?

Or will they reject it out of some combination of bigotry, malice or cowardice?
After almost every state in the region has steadily progressed towards marriage equality, do they want New York to be the state that balked under pressure from the Paladino Republicans and the "Christian values" wing of the Dixiecrats? What Grinch of a statesman wakes up, puts on a suite and tie, and stands up before the body public to say "Actually, I object to these tens of thousands of New Yorkers from wedding"? If lawmakers in Albany won't welcome their sisters and brothers in the very state that invented Liberation, they’re going to settle down in Massachusetts or Connecticut and take their money with them.


Unfortunately, the numbers don’t evince that legalizing same-sex marriage could be the silver bullet which singlehandedly digs this state us out of this deep recession; to do that, we might have to end the war in Afghanistan, curb the cost of health care by establishing a public option, invest $800 billion into modernizing our energy infrastructure, shift the tax burden from the wages of the working class to the estates, trusts and dividends of the super-rich, found a market for carbon permits, abolish mandatory minimum sentencing and legalize marijuana…

Nevertheless, even if legalizing same-sex marriage would only promise to increase the New York state private sector by roughly $184 million in additional commerce, cut the state deficit by $108 million and create roughly 2,000 additional full-time jobs, that sounds to me like a substantial first step towards economic recovery. Legalizing same-sex marriage might not be more than a modest reform, it might not be the superlatively most comprehensive strategy to vitalize business growth – but you must admit that it would certainly be the most fabulous way to stimulate the economy.

3 comments:

Cameron said...

Zach, you really are extravaganzeous. When can the fair state of Colorado expect a visit from his Zacness?

Jordan said...

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