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The Gender Wage Gap and Pay Equity: Is Comparable Worth the Next Step?

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Abstract:

Women’s participation in the labor market has undergone considerable change in the last few decades, with more than half of all women and of all married women now in the workforce. In addition, starting in the 1980s, the labor market qualifications of employed women increased compared to those of employed men. And, since the 1960s, both legislation and regulations have prohibited discrimination against women in employment and compensation. Although women’s pay relative to men’s has increased over time so that today women earn more than 76 cents for every dollar earned by men, the persistence of the wage gap despite these changes has prompted concern in some quarters about the equity or fairness of the market’s wage-setting process (hence the terms “pay equity” and “fair pay”).

Studies have estimated that perhaps one-half of the observed wage gap can be justified by productivity differences between the sexes (e.g., work experience and educational attainment). If women had the same human capital attributes as men, they might earn perhaps 80% as much as men. Some believe that the remaining, unexplained portion of the wage gap represents discrimination; others, an inability to accurately measure and include all factors that affect gender differences in pay.

“Comparable worth” supporters contend that corrective action is needed because discrimination relegates most women to different jobs than men and pays workers in female-dominated jobs relatively low wages. A comparable worth policy would extend the current mandate of equal pay for equal work to equal pay for equivalent work within a firm. Through such means as an unbiased job evaluation, an employer would determine those jobs that had equal total scores for such job attributes as skill, effort, responsibility, and working conditions. The employer would then raise the wages of female-dominated jobs deemed underpaid by the evaluation (i.e., jobs having wages below other jobs with the same total scores). In this manner, workers would no longer incur a wage penalty for employment in traditionally female jobs. Under a comparable worth policy, however, the size of a worker’s paycheck would be unrelated to supply/demand conditions in the labor market. Although some jobs might be highly rated in a job evaluation, they may not warrant a pay increase if there is an abundant supply of workers to perform them. In other words, legitimate (nondiscriminatory) pay differentials can exist between jobs equally rated by an evaluation. Critics regard the substitution of job evaluations for market conditions to determine relative wages as a critical flaw of comparable worth: by eliminating wage differentials between “equivalent” male- and female-dominated jobs, it would increase unemployment of women in the short run as well as remove the strongest motivation for women to overcome discrimination in the long run.

Comparable worth’s detractors further argue that job evaluation is a very complex and subjective procedure, and they question the policy’s effectiveness at raising women’s relative wages given compromises about implementation and the potential for employer evasion. (This report will be updated.)