Telling Employees to ‘Just Expense It’ Shouldn’t Cut It Anymore

Who knows when business travel will ever resume at pre-pandemic levels, especially considering the spread of the delta variant.

Right now, there are bigger corporate fish to fry than scheduling that next in-person all-team meeting. For example, companies now want us to believe they are focused on retooling how they attract, hire and retain talent a year after calls for racial equality erupted across the U.S.

A commitment to more diverse hiring practices certainly appears to be progress. The hard part, however, is actually executing on those promises.

Plus, companies should also look inwardly and gauge whether their current policies are getting in the way of having a workforce that looks like today’s America.

One current way of doing business in particular is making its own contribution to structural discrimination in the office, argues one Fortune writer.

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We’ve all heard that term “just expense it.” It sounds harmless enough: If you need something to do your job better, then it’s only in the employee’s and employer’s best interest to buy that subscription or product. So, what could possibly go wrong?

If you ask Stacy-Marie Ishmael of Fortune, quite a bit. Maybe the problem is not that occasional ream of paper. But if an employee is expected to take a work trip and put those costs on his or her personal credit card (or a corporate card for which that same employee is still personally liable), that is a huge sum for an employee to cough up and then wait a month or so for reimbursement.

“While we might not think of expense policies as tools of structural discrimination, the reality is that these are often written (and enforced!) by people whose relationship with credit is based on maximizing their points and getting that good lounge access,” Ishmael wrote in Fortune’s Race Ahead newsletter. “Just as unpaid internships reward people who can afford to work for free, requiring employees to carry balances and wait for reimbursement places an undue burden on people who can’t afford to extend a personal loan to their employer.”

What’s the message for employers, and more specifically, the human resources and accounting folks that often write and execute these policies?

Ishmael points to a 2019 bulletin from the Federal Reserve that looks at family wealth across U.S. society. At that time, the average white family had assets totaling almost $190,000 on average, compared to just over $24,000 for Black families. For younger Americans, the gap is even more stark: Young white families held assets that averaged over $25,000, while young Hispanic families’ assets totaled a tad over $11,000. The average amount of assets owned by young Black families: $600.

The Federal Reserve study also found that young Black professionals on average carried 20 percent more student loan debt than their white counterparts.

So, why does this matter come expense report time? While Lending Tree data found that less than 20 percent of white applicants had their applications for credit cards rejected, 44 percent of Black Americans’ applications were turned down.

The barriers continue as workers get older and seek home ownership: A 2018 Washington Post report found a similar racial and ethnic discrepancy on home mortgage and refinancing loan applications. If one can’t secure a decent credit record, then forget about buying that home in the future.

Not that having access to one’s own credit card solves the problem. The same company that has a 30-day reimbursement policy often won’t pay any interest charged to an employees’ credit card if they were not able to pay that work trip expense off in time.

One Forbes writer concluded last year that due to expense policies, during 2018 employees had provided the companies for which they worked $1.6 billion a month in interest-free loans. That’s a weight not equally shared by all employees. Promises of air miles or grocery points are hard to swallow if that burden is falling especially hard on a company’s younger employees or staff who happen to be people of color.

The bottom line is that when it comes to matters of race and equity, companies should look inwardly before embarking on a public campaign to make their companies more diverse and inclusive.

Image credit: Andy Beales/Unsplash