Valuing the risk of workplace sexual harassment

Abstract

Using data on sexual harassment charges filed with the Equal Employment Opportunity Commission, I calculate the risk of sexual harassment by gender, industry, and age and establish that white females, but not nonwhite females, receive a compensating wage differential for exposure to a higher risk of sexual harassment. I use this risk premium to calculate the value of statistical harassment (VSH) in a manner analogous to the calculation of the value of statistical life (VSL). The VSH is around $7.6 million, about three-quarters of the size of the most-commonly cited levels of the VSL, and far above the maximum damages award for sexual harassment available under federal law. Boosting the maximum damages award to equal the VSH would create the appropriate economic incentives for organizations to deter sexual harassment.

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Fig. 1

Notes

  1. 1.

    A large number of prominent individuals have been identified in the media. A few visible examples of men who have been forced from their positions for sexual harassment since mid-2017 include Roger Ailes, Matt Lauer, Bill O’Reilly, Harvey Weinstein, and Steve Wynn.

  2. 2.

    See, e.g., Crouch (2001) and Siegel (2003) for valuable overviews of the evolution of the interpretation of sexual harassment as a form of sex discrimination.

  3. 3.

    “Sexual Harassment,” U.S. Equal Employment Opportunity Commission, last accessed February 19, 2018, https://www.eeoc.gov/laws/types/sexual_harassment.cfm [https://perma.cc/Q669-GQWZ].

  4. 4.

    “Prohibited Employment Policies/Practices,” U.S. Equal Employment Opportunity Commission, last accessed September 5, 2018, https://www.eeoc.gov/laws/practices/index.cfm [https://perma.cc/P9EH-MVEP].

  5. 5.

    An exception to the requirement to report sexual harassment to the employer would arise if the employee is being harassed by a supervisor, and there is no one else to whom to report the harassment.

  6. 6.

    The federal government is also covered under federal anti-discrimination laws, but the process for federal sector complaints is different than for complaints involving the private sector, state and local governments, and unions. For federal complaints, the individual is required to make a complaint with the federal agency alleged to have engaged in the discriminatory practice. The agency is responsible for investigating such complaints and makes a determination about whether discrimination has occurred. Individuals who disagree with the agency’s conclusion can then appeal to the EEOC. The EEOC’s determination of discrimination, if found, cannot be appealed.

  7. 7.

    The maximum total damages award for employers with 15 to 100 employees is $50,000; for those with 101 to 200 employees, $100,000; for 201 to 500 employees, $200,000. These limits have not been raised since 1991. The maximum damages award for cases filed in state courts may differ by state.

  8. 8.

    EEOC guidelines and the Supreme Court decisions in Faragher and Ellerth provide incentives for employers to have anti-harassment policies and reporting procedures and to provide training. There is, however, little evidence that training as currently provided has been effective (U.S. Equal Employment Opportunity Commission 2016).

  9. 9.

    See Hersch (2015) for an overview of the methodology used in surveys and for international evidence on the prevalence of sexual harassment.

  10. 10.

    A notable exception is the 2014 RAND Military Workplace Study, which was designed to focus on crimes under the Uniform Code of Military Justice and violations of equal opportunity laws and regulations, and to exclude events that do not meet the legal standards for sexual assault, sexual harassment, or gender discrimination (National Defense Research Institute 2014). The report notes that prior surveys of military personnel were designed to measure a climate of sexual misconduct instead of actual illegal behavior.

  11. 11.

    The General Social Survey included questions on sexual harassment in 1994, 1996, 2002, 2006, 2010, and 2014. In the 1994 and 1996 survey, the question was: “Sometimes at work people find themselves the object of sexual advances, propositions, or unwanted sexual discussions from co-workers or supervisors. The advances sometimes involve physical contact and sometimes just involve sexual conversations. Has this ever happened to you?” Starting in 2002, respondents were asked: “In the last 12 months, were you sexually harassed by anyone while you were on the job?” Note that the 1994 question defined sexual harassment but did not give a time limit. In contrast, the question starting in 2002 did not define sexual harassment but limited the time period for reporting to 12 months. For reference, in the 1996 survey, 32.5% of those responding to the question reported that they had ever been the object of sexual interactions at work. In the 2014 survey, 2.7% of those responding to this question reported that they had been sexually harassed on the job in the last 12 months. (These values are calculated using the GSS Data Explorer.)

  12. 12.

    The reports by the U.S. Merit Systems Protection Board (1995, 2017) summarize the findings of the “Sexual Harassment in the Federal Workplace” surveys.

  13. 13.

    For instance, one lawsuit filed by the EEOC involved an employee who had been harassed by her manager due to her Mexican national origin and her gender and then fired for reporting the discrimination. Such a case would be filed under Title VII, on the basis of sex, national origin, and retaliation, and with issues of sexual harassment, harassment, and discharge. See “Central Valley Auto Repair Company Sued by EEOC for Discrimination, Sexual Harassment, and Retaliation,” U.S. Equal Employment Opportunity Commission, press release, October 21, 2010, https://www.eeoc.gov/eeoc/newsroom/release/10-21-10a.cfm [https://perma.cc/MNX4-EVTQ].

  14. 14.

    Industry identifiers are created using the 6-digit North American Industry Classification System (NAICS) code.

  15. 15.

    This follows the methodology to construct fatality rates by industry, age, and gender in Viscusi and Hersch (2008).

  16. 16.

    Industry is not a required field on the EEOC claims records. Industry code is missing in about 28% of the claims prior to 2006, but jumped to 56% in 2008. Because I calculate the risk measure by industry, those claims with missing industry code are not included in the calculation of the risk of sexual harassment. As discussed in Hersch (2011), whether industry code is missing seems to be largely random.

  17. 17.

    Self-employed workers are excluded because they would generally not be able to claim sexual harassment against an employer.

  18. 18.

    Table 2 reports these statistics only for industries with at least 100 charges filed by women in the five-year period, although the rates for all two-digit industries are used in the wage equation estimation.

  19. 19.

    Sexual harassment rates for major industry by gender but not by age are reported in Table 1 of Hersch (2011).

  20. 20.

    See “Census of Fatal Occupational Injuries Summary, 2016,” U.S. Department of Labor, press release, December 19, 2017, https://www.bls.gov/news.release/cfoi.nr0.htm [https://perma.cc/U28W-XJQQ].

  21. 21.

    As coverage of Steve Wynn’s pattern of sexually harassing employees made clear, the high pay at Wynn casinos relative to alternative jobs in Las Vegas served to reduce turnover and attract employees despite widespread risk of sexual harassment. See Alexandra Berzon, Chris Kirkham, Elizabeth Bernstein, and Kate O’Keeffe, “Dozens of People Recount Pattern of Sexual Misconduct by Las Vegas Mogul Steve Wynn,” Wall Street Journal, January 27, 2018, https://www.wsj.com/articles/dozens-of-people-recount-pattern-of-sexual-misconduct-by-las-vegas-mogul-steve-wynn-1516985953.

  22. 22.

    Potential experience is included in the regressions because actual work experience is not reported in the CPS. Because the analysis is restricted to female workers, there is no implication for male-female comparisons.

  23. 23.

    See, for example, equation 10 in Gentry and Viscusi (2016) and equation 3 in Viscusi and Masterman (2017).

  24. 24.

    Michael M. Grynbaum and John Koblin, “Fox Settles with Gretchen Carlson over Roger Ailes Sex Harassment Claims,” New York Times, September 6, 2016, https://www.nytimes.com/2016/09/07/business/media/fox-news-roger-ailes-gretchen-carlson-sexual-harassment-lawsuit-settlement.html.

  25. 25.

    Valeriya Safronova, “Paul Marciano Will Leave Guess after Sexual Harassment Settlements,” New York Times, June 12, 2018, https://www.nytimes.com/2018/06/12/style/guess-harassment-resignation.html.

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Acknowledgements

The author thanks Kathryn Anderson, Vivia Chen, Sarah Dalton, Danielle Drory, Rebecca Greenfield, Erin Meyers, Christina Stoddard, W. Kip Viscusi, and Amy Wolf for valuable comments.

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Correspondence to Joni Hersch.

Appendix 1

Appendix 1

Table 4 Descriptive statistics

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Hersch, J. Valuing the risk of workplace sexual harassment. J Risk Uncertain 57, 111–131 (2018). https://doi.org/10.1007/s11166-018-9288-0

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Keywords

  • Sexual harassment
  • Job risks
  • Compensating differentials
  • Gender discrimination
  • Value of statistical life
  • Deterrence
  • #MeToo

JEL Classifications

  • J3
  • J7
  • K4