Strategy

Is your boss paying for it?

A new study explores whether you can pay an employee to be sexually harassed.

(Photo: Stephen Marks/Getty)

It always saddens to hear that a worker has been killed on the job. Of course, some workers have to do jobs that expose them to that risk. One reason workers are willing to take on risky jobs is because they are paid a compensating wage differential when the risk of death is high.

Many workers are exposed to unwanted sexual attention in their workplaces. Sexual harassment is of course illegal—and yet it is pervasive. Persistent sexual harassment should lower wages if it affects a worker’s productivity (for example, by increasing worker turnover). If this is the case, we would observe that workers in industries where sexual harassment is pervasive—mining sees the most complaints from women, and the second-most from men behind only the information sector—are paid lower wages.

But according to new research published in the May issue of The American Economic Review, workers in industries with high levels of sexual harassment are not paid less than workers in other industries, they are, in fact, paid more.

The theory here is that in the same way that workers who face injury or death are compensated for assuming risk, men and women who are exposed to high levels of sexual harassment are compensated for tolerating unwanted sexual attention.

The author of this study, Joni Hersch, finds that after controlling for other factors that determine wages, women employed in jobs with an average probability of being sexual harassed are paid a compensating differential of 25¢ per hour relative to women employed in jobs with no risk of sexual harassment. Men employed in jobs with an average probability of being sexual harassed are paid 50¢ per hour more than men employed in jobs with no risk of harassment.

Why is the male rate so much higher than for women? Men tend only to file harassment complaints when the offense is particularly egregious, so the severity of the offences boosts the compensating differential.

There is a lesson here for employers: independent of the law, there is an incentive to reduce workplace sexual harassment. Of course it’s the right thing to do; but it also keeps productivity up, and costs down.

Marina Adshade is a Dalhousie economics professor and author of the blog Dollars and Sex.