Prop 8 Repeal Could Give California Economic Bump

Gay marriage can boost spending, jobs, and revenue--even if the payoff isn't forever.

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Same-sex couples in California may soon resume picking out cakes and ice sculptures. And the state may also soon see a small economic bump.

Today a federal appeals court deemed California's Proposition 8 unconstitutional. The 2008 state constitutional amendment had banned same-sex couples from getting married in the Golden State, which had previously allowed same-sex marriage. The ruling could open the door to tens of thousands of new marriages, meaning more spending, more tourism, and, according to one organization's analysis, new jobs and state revenue.

[Opinion: Prop 8 ruling a disaster for the GOP.]

Census data shows that there are nearly 100,000 same-sex couples in California, around 28,000 of whom already identified as spouses as of 2010. Another 24,000 are likely to marry in the next three years, according to figures from the Williams Institute at UCLA Law School. Those 24,000 weddings could generate $290 million in spending over the next three years and add 2,600 jobs to the California economy. In addition, these figures take into account only same-sex couples within the state, and do not reflect the couples who would come in from other places to get married and could significantly increase the economic benefit.

Same-sex marriage could also help out a troubled state budget. A 2008 Williams Institute study estimated that the taxes and marriage license fees from extending marriage to same-sex couples would boost state and local revenues by $63.8 million over a three-year span.

Whether or not those are sizable bumps in revenue and spending, of course, depend on one's point of view. California's unemployment rate is 11.1 percent. Its GDP grew by only 1.8 percent from 2009 to 2010, putting it in the bottom 20 states in terms of economic growth. And it faces a budget shortfall of $8.4 billion for fiscal year 2013, according to the Center on Budget and Policy Priorities. In short, it appears that any jobs, revenue, or economic growth would be welcome in a troubled California.

However, the positive economic effects of same-sex marriage would be small within California's massive economy. For example, 14.2 million people are employed on nonfarm payrolls in California. An additional 2,600 jobs would be a bump of around 0.02 percent. An extra $100 million in annual spending is equal to less than 0.01 percent of the state's GDP. And even if same-sex marriage did bring in $21 million in revenues per year, as the Williams Institute had predicted in 2008, that would represent less than 0.3 percent of the state's fiscal year 2013 budget shortfall. However, the Williams Institute also at the time predicted $680 million in additional wedding-related spending. Revenues now would likely be even lower than the 2008 predictions.

While the potential gains are modest, they could be present for years to come, as thousands of new weddings spurred more spending. However, the window of opportunity for getting the biggest economic bump possible out of same-sex marriage may have passed for most states.

[See a collection of political cartoons on gay marriage.]

"There are definitely economic effects for states that open marriage [to same-sex couples] first, because there are some people who want to travel," says Jennifer Pizer, legal director of the Williams Institute. She points to Iowa, where same-sex marriage was legalized in 2009, as an example. Of the nearly 2,100 same-sex marriages performed in the first year that same-sex marriage was legal in Iowa, 60 percent were from out of state. "Many people would not have thought of Iowa 10 years ago as a wedding destination," she says.

Proponents and opponents of same-sex marriage tend to care far more about moral and legal arguments than economic data. The dollars and cents figures may only be a minor addendum to the debate, but they could mean much more to those who get jobs or additional income from a more open definition of marriage.

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