Do abortion-related benefits help American firms recruit?

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SIX MONTHS ago Tommy Tuberville, a football-coach-turned-senator from Alabama, embarked on a crusade against the Pentagon. Mr Tuberville, a member of the Senate’s armed-services committee, which approves military appointments, has blocked more than 300 senior-level promotions since February. Officials warn that the hold-up is compromising American security. His qualm? A federal policy that pays for servicewomen based in conservative states to travel elsewhere to get an abortion.

The debate playing out in Congress is also happening in the C-suites of American companies. After the Supreme Court scrapped Roe v Wade last year, making states the new arbiters of abortion policy, some employers offered new benefits to women who want abortions. Amazon, Google, Lyft and Starbucks, along with many other firms, said they would pay for employees’ abortion-related travel. CEOs portrayed their abortion-friendly policies as public-spirited, but many no doubt are also hoping that they will help retain and recruit talented workers. A new working paper published by the Institute of Labour Economics (IZA), a German think-tank, presents intriguing early evidence on whether that bet is paying off.

The researchers identified 76 firms that offered cash to enable employees to travel out of state to get one or more abortions. Those firms are willing to give an employee a total of $4,500 on average, equivalent to around 5% of the average salary. The researchers found that recruitment ads from firms that touted the benefit that were posted on Indeed, a popular online job-board, received 8% more clicks than did ads from similar companies that had not changed their policy. That is not a small effect: it is equivalent to the amount of increased interest a vacancy would get from raising the posted wage by 12%. The rise in interest was biggest in Democratic-leaning states, and for advertisements for jobs in female-dominated professions in states with abortion bans.

But the travel offer appears to have a big downside for firms. Job satisfaction at companies that introduced it fell by 8%, as measured by ratings on Glassdoor, a review website. Workers in male-dominated jobs were particularly unenthusiastic. Reviews containing the word “woke” rose by 325%. Workers who chose not to reveal their locations, perhaps out of fear of retaliation, were most likely to report steep declines in their job satisfaction.

It may be that the bad online reviews reflect the opinions of just a vocal minority of workers. But companies were worried enough to take action to allay the concerns that some potential employees might have. The researchers found that, after making the travel-benefit offer, the 76 companies raised their salary offers in job ads by 4.2% more than those that did not. At firms where employee morale fell by the most, advertised salaries increased by even more. Taking into account other labour-market conditions (such as industry-wide worker shortages and rising company profits), the study found that it was specifically the announcement of the abortion benefits that sparked the increase.

It is unclear whether abortion-related benefits will bring a net financial gain or loss to firms. Attracting a larger candidate pool, and so making it easier to hire better people, may offset the costs of offering new benefits and raising salaries. But unhappy workers, whether many or few, cause problems for their bosses. After all, it seems to take only one man from Alabama to cause mayhem in the upper echelons of America’s armed forces.■