For the last few months, gay media have been buzzing that the big PlanetOut merger venture is in trouble. Just a year-and-a-half ago, PNO became the first gay-owned stock traded on the NASDAQ. As its price soared to $10 a share, CEO Lowell Selvin announced glowingly that the merger would "move us out of the gay ghetto and into a whole new gay world." Meanwhile, gay media regale us with rosy advertising studies on the rise to power of the pink consumer.
Now that rosy glow is fading a bit, as PlanetOut showed a $6.9 million loss in the first quarter of this year, and the stock plummeted to less than $1 a share. The buzz got louder when Bill Gates announced that he was throwing $26 million into the PlanetOut pot. Yet ongoing news bytes tell of PNO staff cuts and closure of overseas offices.
While the pundits speculate on what went wrong at PlanetOut (mismanagement? hubris?), the pessimists predict a big black eye for the gay business world if PNO goes Chapter 11.
But nobody is talking much about a bigger, scarier problem. The fact is, many thousands of those pink consumers might be in big financial trouble themselves.
For decades, Americans have worried about our country's spiraling public debt, which reached a staggering $4.9 trillion in 2006. Just as scary is the private debt, meaning the total owed by millions of consumers. Since the launch of liberalized credit in the 1980s, private debt has skyrocketed to an equally staggering $3 trillion today. The old yardstick of the GLBT 10% suggests that we owe at least 10% of that $3 trillion.
TV advertising insists that most Americans plunge into debt in reckless pursuit of luxuries. In the GLBT world, the double-income-no-kids phenomenon created a "spend, spend, spend" climate among the A-list folks. But many of us are low- and middle-income. In recent years, with costs soaring ever higher and incomes stagnating, many people started using credit cards, refinancings, and home equity to cover basics—housing, health care, student loans, transportation, even food. Nationally, credit-card debt has almost tripled in the last five years.
During the last year, a national tipping point on private debt was felt like an L.A. earth tremor. Bank foreclosures on homes shot up 47%. Six out of 10 American households are falling behind on credit-card payments. Mortgage companies are closing, or going into mergers or layoffs, because of defaults. Banks are belatedly scrambling to throw lifelines to debtors, because sales are soft on foreclosed properties. Despite a new federal law that attempts to curb bankruptcies, filings are up by 422%, from slightly under 300,000 in 1980 to 1,500,000 today.
How many of those credit-card defaults, foreclosures, and million-and-a-half bankruptcy filings are happening to people in our own community? Hard figures are a little hard to come by. A recent U.K. study reveals that LGBT individuals have almost twice the credit-card debt of straight people. But in the U.S., judging by the recent explosion of LGBT debt-counseling Web sites and blogs (like Queercents) across the Web, a disproportionate percentage of those scary statistics are pink people mired deep in the red.
Why might our demographic's debt curve be higher than that of most straight people? Per Larson, an openly gay and widely published financial writer and consultant, comments:
Market research says we have higher average incomes than straights. The average straight American has but a few weeks or months of salary in the bank. … Market research reveals that our incomes are well above average because we equip ourselves with better skills to survive, because we're more mobile, because we've learned to live with risk, and because we simply don't invest in children and nonworking spouses. We not only earn more; potentially, we can keep more.
So, Larson asks, "Why is debt such a threat to our community?" On his Web site GayMoney.com, Larson discusses what he calls our Achilles heel.
Our key weakness, that which often holds us back from the advantages that can come from being lesbian or gay, lies in our money connection to society at large. … Some of us compensate for discrimination by building expensive fortresses, filled with furniture and things. Some of us try to pass for straight by literally buying into America's consumer society, seeking acceptance by buying society's status symbols. Some of us get carried away with the freedoms of our lifestyle, losing some of society's financial wisdoms in the process. Some of us are so focused on our youth that life becomes one giant revolving credit card.
If we want to understand the turmoil that might be going on with community-owned big business right now, and whether one high-profile gay-owned corporation may go into Chapter 11, we will have to hope that new market studies -- like the much-touted study forthcoming in July 2007 from Rivendell Marketing -- give us more real-life facts about the pink dollar. Out-of-control personal debt will surely affect the ability of each of us to sustain an independent and productive life outside of the closet.
As the country goes into high gear on Presidential election campaigning, and candidates argue over Iraq and universal healthcare, I see little evidence -- so far -- that the country's economic meltdown is going to be discussed. If the Democrats win back the White House and Congress, they will sooner or later be forced to recognize -- and to try and reverse -- the meltdown. The Dems are no stranger to this kind of challenge. After all, it was a Democrat -- Franklin D. Roosevelt -- who launched the historic Hundred Days of programs after his election, to deal with America's severe economic hardships during the Great Depression.
But the Democratic Party of the 1930s is not the Democratic Party of today. Do today's Democrats have the powerful humanitarian commitment and the political will to launch a post-millennial Hundred Days? Does today's "gay community" have the commitment and will to look honestly at its own economic realities? I wonder.
Copyright (c) 2007 by Patricia Nell Warren. All rights reserved. An earlier version of this commentary was previously published in Frontiers Magazine.