The sad state of sexual harassment underreporting

Since the rise of the #MeToo movement in 2018, it feels as if sexual harassment claims have become far more prevalent. But unfortunately, as a study by Gordon Dahl and Matthew Knepper shows, sexual harassment at the workplace has always been rampant, it just doesn’t get reported that often.

To give you a feel for it, consider these statistics. Between 2000 and 2015, sexual harassment charges brought against an employer in the United States are 50% more likely to be judged meritorious than non-harassment claims and are almost twice as likely to involve employer retaliation (63.4% of sexual harassment complaints include employer retaliation vs. 30.7% for non-harassment claims). These numbers are no proof, though, because it could be that courts are simply more likely to pay credence to a sexual harassment claim than a non-harassment claim.

But consider this natural experiment. In July 2013, North Carolina severely restricted its unemployment benefits. While practically all US states left unemployment benefits unchanged, the dire financial situation of North Carolina forced the state legislature to cut the maximum weekly benefit by one-third from $535 to $350 while reducing the maximum number of weeks of unemployment benefits was reduced from 26 weeks to 20 weeks. The result was a de facto 50% cut in unemployment benefits to unemployed workers in the state. The chart below shows what happened to sexual harassment claims in North Carolina vs. neighbouring states. Surely nobody believes that once unemployment benefits were cut, sexual harassment declined as well. Instead, female employees faced a much more drastic economic choice. Speak up and face retaliation (i.e. losing your job and becoming unemployed) or shut up and put up. And the more precarious the economic situation overall is (because the economy is in a recession and finding a new job is harder, or because unemployment benefits are too small to live on), the more likely it becomes that women (and 84% of sexual harassment claims are made by women) will just shut up and bite their time until they get a chance to leave the company and move somewhere else.

In fact, the study by Dahl and Knepper shows that companies with more men in the workforce and companies with more male managers tend to have more cases of sexual harassment. And with more sexual harassment claims come higher legal costs and – more importantly – a higher turnover of women once the labour market improves. And that in turn leads to a loss of institutional knowledge and increased costs for companies to hire and train new employees. Sexual harassment is not just a reputational risk, but also a true cost factor for a company, and creating a more diverse workplace is the best means of reducing these costs and risks.

Sexual harassment cases in North Carolina after unemployment insurance reform

Source: Dahl and Knepper (2021)