Underreporting of workplace sexual harassment increases amid worse U.S. labor market conditions and reduces economic security for workers


Hostility in the workplace, including discrimination and sexual harassment, is not only a violation of a workers’ rights but also a threat to their economic security. Research finds that sexual harassment disrupts career advancement and causes financial stress for those who experience it, hampering worker productivity and economic mobility.

Sexual harassment can cost organizations as well. One study finds that sexual harassment in the U.S. military increases the likelihood of staff turnover, even when controlling for factors such as job satisfaction otherwise and organizational commitment. Another study finds that elevated staff turnover costs businesses not only via lost talent and productivity, but also through increased expenditures on recruitment and training.

Sexual harassment, of course, is now prohibited in the United States. Workplace sexual harassment falls under the anti-discrimination protections enshrined in the Civil Rights Act of 1964 and the Equal Employment Opportunity Commission’s 1980 regulation clarifying harassment on the basis of sex as protected under the Civil Rights Act. Additionally, in recognition of the economic costs to individuals who experience sexual harassment, the Civil Rights Act of 1991 established the right to sue for damages related to sexual harassment in the workplace. Yet despite these protections, workplace sexual harassment is pervasive across the U.S. labor market, hindering workers’ overall economic opportunities and serving as an obstruction to broadly shared economic growth.

One of the challenges to effective enforcement of these laws—and thus effective protection against sexual harassment in the workplace—is the prevalence of underreporting by workers. Research shows that a primary reason for not reporting sexual harassment is fear of retaliation, such as being fired, having reduced work hours, or being assigned undesirable tasks. These fears can be exacerbated when workers’ outside employment options are worse—for instance, when there are few available alternative employers or when the unemployment rate is high.

A new working paper, “Why is Workplace Sexual Harassment Underreported? The Value of Outside Options amid the Threat of Retaliation,” investigates the link between external economic conditions and the risk of retaliation for reporting sexual harassment. The researchers—Gordon Dahl of the University of California, San Diego and Matthew Knepper of the University of Georgia—hypothesize that claims are more likely to be found to have merit when underreporting is more likely. In other words, when outside options are worse—for example, when unemployment is high—only the most egregious instances of sexual harassment, and thus those most likely to be found to have merit, will be reported. Other workers who may be experiencing hostile workplaces will “tough it out,” given the risks associated with retaliation for having made a claim—leading to cyclical underreporting.

This initial proposition is evident when comparing changes in the unemployment rate and in the Google search intensity of the phrase “sexual harassment in the workplace.” From 2004 through 2016, Dahl and Knepper find these two track each other, while sexual harassment claims filed with the Equal Employment Opportunity Commission stay relatively level through this period, declining near the end of the time window as state-level unemployment rates also decline. The authors find that a 1 percent increase in the unemployment rate is associated with a 0.5 percent to 0.7 percent increase in the likelihood that the EEOC will find a sexual harassment claim has merit. These findings imply that underreporting of sexual harassment increases as labor market conditions worsen.

To further dig into the circumstances that lead to underreporting, the researchers examine the gender composition of workplaces and of management positions, finding that a greater share of men in a workplace and a higher proportion of men as managers in an establishment leads to more selectivity in the reporting of sexual harassment. Previous research has likewise demonstrated that sexual harassment is more common in male-dominated occupations and industries. As the authors note, “in male-dominated environments, female employees become increasingly reluctant to report despite an increase in [case] volume”—a trend that is further exacerbated by higher unemployment rates.

Dahl and Knepper also look at how policies that influence outside options impact underreporting of sexual harassment. Following the Great Recession of 2007–2009, for example, North Carolina reduced the level and duration of its Unemployment Insurance program and restricted its eligibility requirements, essentially worsening outside options for workers who lost their jobs. After this change, sexual harassment reporting selectivity in the state increased by 7 percentage points, or a 30 percent increase over nearby southern states that did not make changes to their Unemployment Insurance benefits. Projecting from these findings, the authors estimate that a $1,000 reduction in the maximum benefits available reduces sexual harassment reporting by 4 percent.

This research demonstrates how income support programs interact with U.S. labor market opportunities, giving workers more economic security to leave hostile work environments and find jobs that are a better match. It is consistent with research that has found that longer benefits duration improves job matches, with an even greater impact on job-match quality for women workers, non-White workers, and workers with lower levels of education. This further adds to a body of research that shows how income supports, including anti-poverty programs, provide a more stable foundation for workers to move into better-paying jobs, rather than serving as a work disincentive.

Furthermore, in a labor market defined by pervasive monopsony—when workers are constrained in how they can search for and move into new jobs—workplace hostility and limited outside options also may exacerbate an employer’s ability to undercut wages. In a competitive labor market, workers will seek out the jobs that are the best fit for their talents and where they can earn a good living. But if workers make employment decisions to avoid hostility, or if their bargaining power within workplaces is limited for fear of retaliation, employers have more power to set pay below competitive levels at a loss to both workers and the entire economy.

The new working paper by Dahl and Knepper reinforces the existing literature that connects underreporting of sexual harassment and broader U.S. economic and labor market circumstances. The breadth of evidence makes clear that the cost of sexual harassment goes far beyond individual instances of illegal conduct and the impact they have on the affected workers. Hostility in the workplace also leads to a less dynamic U.S. labor market, less stability and security for workers, and lower wages, with lost opportunities for broadly shared growth.

February 10, 2022


Kate Bahn


Connect with us!

Explore the Equitable Growth network of experts around the country and get answers to today's most pressing questions!

Get in Touch