How sexual harassment might make the gender pay gap even worse

One economist found that women received a pay bump in fields with higher rates of harassment. But “danger pay” isn’t the whole story.

Sexual harassment in offices, newsroom, movie studios, and the halls of Congress has exploded in the media consciousness in 2017, but it’s most certainly not new — or rare. In the last decade, researchers have examined how often sexual harassment happens (frequently) and how effective tools are aimed at preventing it (not very). But relatively little research exists on how sexual harassment in the workplace affects salaries. But one study suggests that there is a connection between the two.

Joni Hersch, an economist and professor of law and economics at Vanderbilt University, published a study on women’s pay and sexual harassment in 2011. She found that women employed in workplaces where sexual harassment is common earn a bit more than they would in jobs with a lower risk.

Elise Gould, senior economist at the Economic Policy Institute, assessed Hersch’s findings and disagrees with the conclusion that women earn “danger pay.” However, she makes a complementary argument: Women not willing to put up with harassment are being pushed out into lower-paying jobs.

Even though the economists disagree on the existence of danger pay, they both conclude that the risk of or experience of harassment leads some women to take jobs that pay them less than what they might otherwise make. The counterintuitive idea that women make may more for being harassed suggests that walking away comes with a price.

As more and more women have stepped forward to call out abuse by powerful men, the big question is no longer “does this really happen?” After hundreds of stories and dozens of investigations, the answer is clear: “absolutely.” Now, it’s time to tackle another question: What is sexual harassment doing to us, and what does it mean? It’s time to talk about the complex question of harassment and pay.

Rampant sexual harassment might boost salaries.

Hersch examined EEOC data to calculate the risks of sexual harassment for different industries and wrote a paper entitled “Compensating Differentials for Sexual Harassment” for the American Economic Review in 2011. She found that across all industries, people in jobs with a higher risk of sexual harassment earn a premium — in other words, slightly higher wages, roughly 25 cents per hour for women and 50 cents for men — relative to people in jobs with a lower risk of sexual harassment. This pay disparity is larger than the current wage gap, measured by the American Association of University Women (AAUW) at 20 cents.

Her argument is based on the economic concept of “compensating wage differentials.” In short, jobs with more risks or more unpleasant working conditions pay more than jobs with fewer risks and better working conditions.

In an interview, Hersch told me, “Certain industries — mining for instance — have more fatalities than, say, working in a bank. And, part of the pay that workers in mining earn is in recognition that they’re at risk of fatality or injury on the job.”

“Even though they’re not specifically getting injured,” she continued, “the fact that there’s ongoing risk means that the only way to attract workers to these industries is if you pay more than comparable work [adjusted for skills and education] that would not expose you to that risk of injury or fatality.”

Take mining for example: In West Virginia in 2010, the average starting salary for a miner was roughly $60,000. Compare that to the average salary of a cashier working in West Virginia: just under $12,000.

To Hersch, the pay premium for women in industries with high rates of sexual harassment should be thought of as “danger pay.” “Workers hate being exposed to the risk of sexual harassment,” she said, “in the same way that they hate being exposed to the risk of workplace fatality or serious physical injury, and require ‘hazard pay’ to work in jobs with such heinous working conditions.”

She said that in many industries, the expense of paying women a premium isn’t enough for businesses to monitor and stop harassment in the first place. For one, sexual harassment is largely underreported — though up to 75 percent of women surveyed in one study had experienced sexual harassment in the workplace, just 29 percent reported it. No wonder, when complaints of sexual harassment at work often lead to retaliation, not justice. Until sexual harassment claims are reported accurately, Hersch says, the pay premium won’t be high enough for businesses to decide that it would be more economical to stop harassment.

Sexual harassment causes a pay cut if you don’t want to put up with it

I asked Elise Gould, senior economist at the Economic Policy Institute, to take a look at Hersch’s findings. Gould studies wages and economic activity, and authored a report in 2016, “‘Women’s work’ and the gender pay gap,” focused on how discrimination and societal gender norms affected women’s employment decisions.

While some conservatives have argued that the wage gap — the average difference between men’s and women’s wages — is driven by women deciding to focus on child-rearing or take a job in a satisfying (if less well paid) field, Gould argued that some women weren’t choosing to leave higher-paid fields, they were getting pushed out — by job pressures, societal expectations, and hostile work environments.

Gould said her main concern with Hersch’s findings is the inability to differentiate between compensating wage differentials — people get paid more to work jobs with bad conditions — and other explanations, such as that higher-paid jobs have better means by which women can fight back against sexual harassment.

In short, because the vast majority of cases of sexual harassment are never reported in the first place, it’s difficult to discern what impact sexual harassment claims made to the EEOC have on wages, and in Gould’s view, harder still to ascertain if wages in fields with high rates of sexual harassment are examples of compensating wage differentials.

“What could be going on is that in industries where wages are higher,” she said in an interview, was that “employees are generally treated better and face less retaliation for filing a complaint. So when there is sexual harassment in an industry, it is more likely to be reported (and in the study’s data) in a higher-paid industry rather than in a lower-paid industry.”

But Hersch disagrees, telling me that women in higher-paying jobs might work for companies with formal sexual harassment policies, where claims are dealt with in-house — and not by the EEOC. In contrast, women working in low-paying fields — like the hospitality or service industry, for example — might take their complaint straight to an external authority. “So we may actually see more charges filed by women in lower paying jobs,” she said, adding that “they also have less to lose if their employer retaliates.”

Gould and Hersch may disagree on compensating wage differentials, but Gould does agree that women who leave jobs or get pushed out of positions by sexual harassment likely make less money. On that, there’s little debate.

We’re still learning about the relationship between sexual harassment in the workplace and women’s salaries.

The research on sexual harassment in the workplace is largely new — and much of the analysis of harassment’s impact on pay is still being done. We don’t know, for example, how many women enter into a STEM (science, technology, engineering, and mathematics) field but end up in a lower-paying job outside of that field — not by choice, but because of sexual harassment. We also don’t know how many cases of sexual harassment are going unreported by companies that have policies to keep such reports under wraps.

But if the perspectives of Hersch and Gould tell us that the toll sexual harassment takes on women in the workplace is a complicated one, there’s a lot more research to be done on how harassment affects our economy, our career paths, and ourselves.