Even as the #MeToo movement shines a light on the pervasive problem of sexual harassment, there’s still little known about the economic costs associated with it.
How much do workers and companies lose from job turnover, for example? What about the value of ideas that could have been generated if people had stayed in certain industries?
Four Democratic senators are trying to answer these questions.
Sens. Kirsten Gillibrand, Patty Murray, Dianne Feinstein, and Elizabeth Warren are pressing the Government Accountability Office to help quantify the economic cost that companies incur as a result of sexual harassment — and not just the money for legal settlements of harassment allegations.
“While employers tend to focus on direct costs to a business, such as legal fees or settlement amounts, the true cost of sexual harassment includes indirect costs such as decreased productivity, increased turnover, and reputational harm,” they write in a letter to the GAO. “All of this is an impediment to employee performance and employers’ bottom-lines.”
As part of this effort, lawmakers are calling on the GAO to look at the broader economic effect of sexual harassment as well as its specific impact on the federal workforce. They’re also seeking more information about how the Equal Employment Opportunity Commission — a federal agency dedicated to addressing workplace discrimination — tracks data around sexual harassment cases.
Earlier this year, more than 20 Democratic senators asked the Department of Labor to conduct a similar study, a request it roundly denied, arguing that such a survey would be too complicated and expensive to complete. “Employers may have difficulty providing the data you are requesting, as such information may not always be reported by victims and the release of such information may be subject to privacy or other restrictions,” Bureau of Labor Statistics acting commissioner William Wiatrowski wrote in his response.
Data currently shows how harassment affects workers — but doesn’t really capture its economic impact
Plenty of statistics currently point to how workers are negatively affected by sexual harassment, though data capturing its economic cost is few and far between.
According to research from sociologists Heather McLaughlin, Christopher Uggen, and Amy Blackstone, women who have experienced harassment are 6.5 times more likely to leave their jobs than those who have not. Nearly 50 percent of women who have been harassed cite this as the reason they leave their current job or switch careers, per a Marketplace poll. Numerous researchers have found that dealing with sexual harassment negatively impacts workers’ psychological well-being and their job satisfaction — effects that could lead to absenteeism and lower productivity.
As Nilofer Merchant writes for the Harvard Business Review, these unseen costs can result in entrenched long-term disparities:
As people drop out, opt out, and tune out of their chosen fields, it affects the whole economy. It’s the missing female Harvey Weinstein who never got a chance to shape the full range of stories of our society. It’s the female Charlie Rose who never got a chance to earn the power and influence associated with that role. And moving away from the hypothetical, it’s the Susan Fowlers and Ellen Paos who didn’t get to build the companies or make the investments that offered the new solutions that society most desperately needs.
According to the World Economic Forum, some of the most recent data that attempts to look at the economic impact of sexual harassment comes from a 1988 study, which found that a standard Fortune 500 company would lose nearly $7 million on an annual basis because of turnover and productivity losses related to sexual harassment.
In a 2016 report, the EEOC said it had recovered more than $164 million for workers alleging harassment the previous year, though it emphasizes that these complaints were likely significantly underreported. And a 1994 US Merit Systems Protection Board study estimated that sexual harassment cost the federal government about $325 million over a two-year time period.
One reason to seek out more data is to make the argument that it’s not just legally and morally necessary for companies to aggressively fight sexual harassment. It’s good for business too. This argument is often used to advocate for other policies, such as increasing workforce diversity, in an effort to connect with business leaders who may be more driven by changes to the bottom line.
And such changes could pack a hefty punch, the Economist noted:
Even if one leaves aside all moral arguments — which one should not — failing to deal with harassment is usually bad for business. Firms that tolerate it will lose female talent to rivals that do not, and the market will punish them. The costs of decency are trivial; the rewards to shareholders are large.