XI. Pay Discrimination and Dissimilar Jobs
In 1981, the Supreme Court, in Gunther v. County of Washington, determined
that pay differences for dissimilar jobs may reflect discrimination.
oThe Court stated that a Title VII pay case was not bound by the definitions in the
Equal Pay Act.
oWhile the Court did not say that Washington County had discriminated, it did say
that a claim of wage discrimination could also be brought under Title VII for
situations where the jobs were not the same.
oUnfortunately, the Court did not say what might constitute evidence of pay
discrimination in dissimilar jobs. The case was returned to a lower court for
additional evidence of discrimination and was eventually settled out of court.
A. Evidence of Discrimination: Use of Market Data
The courts continue to uphold use of market data to justify pay
differences for different jobs.
Spaulding v. University of Washington developed the argument in
greatest detail.
oIn this case, the predominantly female faculty members of the Department
of Nursing claimed that they were illegally paid less than faculty in other
departments.
oThey presented a model of faculty pay comparisons in “comparable”
departments that controlled for the effects of level of education, job tenure,
and other factors. They asserted that any pay difference not accounted for
in their model was discrimination.
oHowever, courts have been dubious of the statistical approach, indicating
it is better to define discrimination directly, rather than concluding it is
“whatever is left.”
oAccording to the judge’s decision, “market prices are inherently
job-related.”
But the courts have been dubious of this statistical approach.
B. Evidence of Discrimination: Jobs of Comparable Worth
A second approach to determining pay discrimination on jobs of
dissimilar content hinges on finding a standard by which to compare the value
of jobs. The standard must do two things.
oIt must permit jobs with dissimilar content to be declared equal or “in
some sense comparable.”
oIt must permit pay differences for dissimilar jobs that are not comparable.
Job evaluation has become that standard.
If an employer’s own job evaluation study shows that jobs of dissimilar
content are of equal value to the employer (equal total job evaluation points),
then isn’t failure to pay them equally proof of intent to discriminate? That was
the issue considered in AFSCME v. State of Washington, where the state
commissioned a study of the concept of comparable worth and its projected
effect on the state’s pay system.
oThe study concluded that by basing wages on the external market, the state
was paying women approximately 20 percent less than it was paying men
in jobs deemed of comparable value to the state.
oThe state took no action on this finding, alleging it could not afford to
adjust wages, so the American Federation of State, County, and Municipal
Employees (AFSCME) sued the state.
oThe union alleged that since the state was aware of the adverse effect of its
present policy, failure to change the policy constituted discrimination.
oBut an appeals court ruled that the state was not obligated to correct the
disparity.
oEven though the state had commissioned the study, it had not agreed to
implement the study’s results.
oTherefore, the employer had not, in the court’s view, admitted that the jobs
were equal or established a pay system that purported to pay on the basis
of comparable worth rather than markets.
oRather than appeal, the parties settled out of court.
C. The Mechanics
Establishing a comparable-worth plan typically involves the following
four basic steps:
oAdopt a single “gender neutral” point job evaluation plan for all jobs
within a unit.
oAll jobs with equal job evaluation results should be paid the same.
oIdentify the percentages of male and female employees in each job group.
A Job group is defined as a group of positions with similar duties and
responsibilities that require similar qualifications, are filled by similar
recruiting procedures, and are paid under the same pay schedule.
Typically, a female-dominated job group is defined as having 60 percent
or more female incumbents; a male-dominated job group has 70 percent or
more male incumbents.
oThe wage-to-job evaluation point ratio should be based on the wages paid
for male-dominated jobs since there are presumed to be the best estimate
of nondiscriminatory wages.
These steps are based on the state of Minnesota’s law that mandates
comparable worth for all public-sector employees.
To understand the mechanics more clearly, consider Exhibit 17.10.
A mandated job evaluation, especially a single point plan that specifies a
hierarchy of all jobs, seems counter to the direction in which most
organizations are moving today.
People who advocate a point job evaluation as a vehicle for comparable
worth credit the technique with more explanatory power than it possesses.
D. Union Developments
The amount of union support for comparable worth appears to be related
to its effects on the union’s membership.
AFSCME and the Communication Workers of America (CWA) actively
support comparable worth and have negotiated comparable-worth based pay
increases, lobbied for legislation, filed legal suits, and attempted to educate
their members and the public about comparable worth.
The public sector faces little competition for its services and is
frequently better able to absorb a wage increase, since public employees are in
a better position to pressure lawmakers than are taxpayers.
oTradeoffs between higher wages and fewer jobs make unions in industries
facing stiff international competition reluctant to aggressively support
comparable worth.
The beauty of “equity adjustments,” from a union’s perspective, is that
because they are a separate budget item, they do not appear to come at the
expense of overall pay increases for all union members.
Collective bargaining has produced more comparable-worth pay
increases than any other approach.
XII. Earnings Gaps
Exhibit 17.11 shows that, across all races combined, women’s median annual
earnings compared to men’s has changed from about 60 percent to 78 percent from
1980 to 2013.
Exhibit 17.13 shows that Asian men’s earnings compared to white men’s varied
between 89 and 100 percent during 1988 to 2013.
Exhibit 17.13 compares earnings of Asian, Black, and Hispanic women to white
women.
Hispanics are consistently at the bottom, for both men and women.
Asian women earn more than white women (Exhibit 17.13), perhaps in part
because a larger percentage of Asian women have a bachelor’s degree or higher.
Some of the more important sources of these gaps, shown in Exhibit 17.14,
include the following:
oWork/occupation differences
oWork-related behavior
oLabor market conditions
oFirm/industry differences
oUnion differences
oDiscrimination
A. Sources of the Earnings Gaps
Considerable research has examined the factors shown in Exhibit 17.14,
which are the central sources of the wage differences between men and
women and the racial/ethnic groups.
oThe reading of the recent research is that the primary sources contributing
to the gender gap differ from the primary sources for the race/ethnic gaps.
oIt appears that differences in the work/occupation and differences in
work-related behaviors are central to understanding the remaining gender
wage gaps.
In contrast, differences in qualifications, especially educational levels
and work-related experience as well as differences in occupations, are
important sources of the gaps for both blacks and Hispanics compared to
white men.
B. Differences in Occupations and Qualifications
There is evidence that women of all ethnic groups are more likely than
men to seek part-time and flexible work arrangements and that they are more
likely than men to interrupt their careers due to family responsibilities.
oThere is also evidence that gender differences in occupational choices
continue to exist. For every 100 women who earn bachelor’s degrees
today, 73 men do.
oIn the early 1970s, 53 percent of women workers were in administrative
support (including clerical) and service occupations, compared to only 15
percent of men.
oToday, the number of women in managerial jobs are at parity with men.
Despite progress, one notable concern remains: lack of representation of
women in executive and director level positions in organizations, sometimes
referred to as the “Glass Ceiling” effect. Exhibit 17.15 shows how the
representation of women declines at higher levels of organizations.
Evidence of increased levels of occupational attainment does not
automatically mean that the wage gap will close.
oA study of women in science and engineering finds that even though they
have already cleared the hurdles of misguided high school guidance
counselors and/or lack of peer support or role models, women scientists
and engineers are almost twice as likely to leave these occupations as are
males.
oFor a variety of reasons, a relatively small wage gap among younger
cohorts (i.e., recent college graduates) tends to increase as the cohort ages.
oPerhaps women continue to be more likely to drop out of the labor force at
some point for family reasons, or perhaps the barriers to continued
advancement become more substantial (the Glass Ceiling concept) at
higher levels in the job hierarchy.
One reviewer of all this research conjectures that some of the observed
differences in wages paid in different occupations may be stuck due to inertia
or “original sin.”
oWage differences among occupations were determined decades ago.
oWhile a variety of reasons account for these original wage differences, an
important one is the belief about gender roles and “women’s work” that
prevailed at the time.
oThese pay differences have persisted and influence today’s occupational
wage structures even though attitudes have changed.
Level of schooling and work-related experience appear to be primary
sources of the pay gaps among both black and Hispanic men and women.
oAlmost half of Hispanic men have not completed high school and only 9
percent are college graduates.
oGenerally, the longer Hispanic immigrants stay in the U.S., the better they
do educationally and financially.
oBlack men’s high school dropout rates match those of Hispanic men. In
contrast, more than half of Asian men are college graduates or hold higher
degrees.
All the research and discussion about sources of the earnings does not
mean there are not any discriminatory pay practices; it does mean that
important sources of the pay gaps reside in other productivity-related factors
such as level and quality of education, work-life/career tradeoffs, and
occupational choices.
C. Differences in Industries and Firms
Other factors that affect earnings differences between men and women
and among race/ethnic groups are the industries and the firms in which they
are employed.
A study of middle-aged lawyers revealed large differences between men
and women lawyers in the types of firms that employed them.
oMen were much more likely than women to be in private practice and to
be at large firms (over 50 lawyers). They were much less likely than
women to be in the lower-paying nonprofit sector.
oClearly, these differences are related to pay: the most highly paid legal
positions are in private-practice law firms; the larger the law firm, the
greater the average rate of pay.
Differences in the firm’s compensation policies within a specific
industry is another factor that accounts for some of the earnings gap. The
unknown here is whether within an industry some firms are more likely to
attract women or minorities than other firms because of these pay-mix
differences and whether this has any effect on earnings gaps.
Within a firm, differences in policies for different jobs may even exist.
For example, many firms tie pay for secretaries to the pay for the manager to
whom the secretary is assigned.
The size of a firm is systematically related to differences in wages.
oFemale employment is more heavily concentrated in small firms.
oWages of men in large firms are 54 percent higher than wages of men in
small firms. The gap was 37 percent for women in small versus large
firms.
oHispanic men are concentrated in construction and service firms.
oStudies report that employees in some jobs can get a pay increase of about
20 percent simply by switching industries in the same geographic area
while performing basically similar jobs.
To the extent that these differences in job setting are the result of an
individual’s preference or disposition, they are not evidence of discrimination.
To the extent that these differences are the result of industry and firm
practices that steer women and minorities into certain occupations and
industries or lower-paying parts of a profession, they may reflect
discrimination.
D. Presence of Discrimination
Many factors affect pay and that discrimination can be one of them.
Disagreement remains over what constitutes evidence of discrimination.
Although the earnings gap is the most frequently cited example, closer
inspection reveals the weaknesses in this statistic.
A standard statistical approach for determining whether discrimination
explains part of the gap is to try to relate pay differences to the factors like
occupation, type of work, experience, education, etc.
oThe procedure typically regresses some measure of earnings on those
factors thought to legitimately influence earnings.
oIf the average wage of men with a given set of values for these factors is
significantly different from the average wage of women with equal factors,
then the residual portion of the gap is considered discrimination.
oUnfortunately, in a sample limited to white males, such an approach
explained only 60 to 70 percent of their earnings.
oSo statistical studies, by themselves, are not sufficient evidence of
discrimination.
Even if legitimate factors fully explain gender, ethnic, and racial group
pay differences, discrimination still could have occurred.
oThe factors shown in Exhibit 17.14 themselves may be tainted by
discrimination.
For example, construction laborers in California are mainly
Hispanic males.
A slowing of the housing market will disproportionately affect
them.
oSo, measurable factors may underestimate the effects of past
discrimination
Statistical analysis needs to be treated as part of a pattern of evidence
and needs to reflect the wage behaviors of specific firms.
F. Gaps are Global
The gender wage gap is fairly universal. However, in a number of
countries, the size of the gap is smaller than in the United States.
oOne analysis concludes that the difference can be found in narrower pay
structures in European countries.
In many countries, rates negotiated by federations of employers, unions,
and government agencies rather than individual companies and employees
mean a narrower range of pay rates for each job, as well as smaller differences
between jobs.
More centralized wage decision making permits a pay gap to be closed
by political/institutional fiat.
Multinational companies operating in different nations face wide
differences in how wages are influenced by varying social policies and
regulations.
XIII.Compliance: A Proactive Approach
Compliance with laws and regulations can be a constraint and/or an opportunity
for a compensation manager.
A proactive compensation manager can influence the nature of regulations and
their interpretation.
A compensation manager can:
oJoin professional associations to stay informed on emerging issues and to act in
concert to inform and influence public and legislative opinion.
oConstantly review compensation practices and their results. The compensation
manager should consult with legal counsel in doing so, as attorney-client privilege
and protection of work product are important issues to understand prior to
conducting analyses on an organization’s compliance.
The fair treatment of all employees is the goal of a good pay system, and that is
the same goal of legislation.