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Saturday, June 9, 2012

Equal Pay for Equal Work

Much has been written recently on ‘equal pay for equal work’, a principle and a law (1963) which prohibit employers from paying different salaries for the same work.  Congress specifically and deliberately avoided any language referring to ‘comparable work’.  The difference is important, and often gets lost in the rhetoric. 

On the surface the 1963 law is straightforward, fair, and simple – a woman who works a lathe in a machine shop should get paid no less than a man.  A female plumber must be paid the same as a male co-worker. 

However, there are many considerations which complicate the issue.  One of the most important is seniority.  Does the equal pay law mandate the same salary for a young machinist, newly-employed, as one with considerable seniority?  While the law says that this is fair, it intrudes with an employer’s valuation of the work done.  An employer is likely to assume that a new machinist, although coming to the job with comparable training and skills, has less value than an older one.  The chances of a finger getting sliced off should be fewer and the number of widgets lathed per hour should be higher for an older, more experienced worker. 

If the market is hot, and the demand for machinists is high, the salary disparity between older and younger workers will be less than it would be in leaner times.  The employer is willing to take a chance on younger workers because any loss in fingers or productivity will be less than the revenues gained.

The US Government is a good example of this phenomenon.  An independent contractor is paid not on what he/she is worth, but his/her salary history.  This means that two people of the same age but with fewer years of experience (e.g., one has taken two years off to care for an elderly parent) will be paid differently for the same job.

Right now the supply of young  women with Masters degrees in Public Health far exceeds the supply, and these women are willing to take low salaries just to get a job and have the opportunity of moving up to better positions within the company.  They are paid less than more experienced professionals, male or female, because management, as in the case of machinists and plumbers, values their productivity less and their risk more; and is adjusting salary to market forces. 

In short, two people with the same degrees, doing the same job with the same responsibilities are paid differently because their employers have valued them less.

The law has other problems.  What, for example, is the difference in valuation between, say, three years of work experience vs. three years getting a Masters degree from a mediocre school?  One employer will value the graduate school experience higher because he has a graduate degree and believes that it shows commitment to the field which will in turn decrease staff turnover.  Another employer thinks that todays Masters degrees in Public Health have been devalued because of the seemingly limitless supply of applicants, and prefers to higher candidates with field experience.  If the employer needs to fill to equal positions, he may add salary to the either the Masters graduate or to the experienced field worker. 

Under a strict equal pay for equal work law, the employer would have no such discretion.  The newly-minted MPH from Harvard would have no leg up over the public health nurse from Baltimore.

The CEO of a well-known private, non-profit company, a conscience-stricken holdout from The Sixties, decided that it was only fair to raise the salaries of all female professionals, regardless of experience, to the same level as men.  While the women were delighted, many men and women were startled by the use of overhead funds to distort the market.  The women themselves never complained, for they had – according to government rules – negotiated the best deal possible given their experience and educational levels.

At the same time this same CEO spent considerable overhead money to go out into the marketplace and recruit a top-notch PR professional, a woman who had worked for the White House.  She knew government, the public sector, had worked with Congress, and would be very valuable to the firm.  Paying her what she was worth in the private sector, would leapfrog her over the other professionals in the Communications Department.  There was some grumbling, but most men and women applauded her hiring.

The 1963 law also does not deal directly with promotions – the classic way of showing increased employee valuation.  If Mme. X started at the same salary as Mlle. Y, but because of excellent performance evaluations has rapidly increased her salary, she is still doing the same work, but is getting paid more for it.  Where is the problem here?

In short, although the equal pay for equal work law is good in principle, there are too many reasonable considerations to make its application unreasonable; and when looked at closely, it is forcing an unnecessary distortion of the marketplace.  While there are certainly cases where blatant discrimination occurs – two identically-qualified plumbers applying for exactly the same job, and the woman is offered less than the man – there are many more grey areas of salary differentiation.   Should the law be reinforced by today’s Congress?  Perhaps, if it focused on this blatant discrimination, and did not unduly interfere with the normal bargaining between employer and employee.

Many people has also advocated for equal pay for comparable worth, based on the idealistic and wholly unworkable premise that a teacher, for example, should be paid exactly the salary of telephone lineman/woman.  Both are indispensable to the community.  The problem comes, of course, with this very subjective comparison of worth.  While most people would agree that teaching the nation’s young people is important and essential, few would be able to list ten comparable professions.

The second problem has to do with the nature of the job and the candidates it attracts. It is no surprise that women dominate the profession, especially in the lower grades.  The school day and the school year are short, thus giving women – traditionally the primary caretaker of their own children – a more flexible employment than many other occupations.  These women have traditionally relied on their husbands for the bulk of their income, so having a three-quarter-time job was perfectly acceptable.  Times have changed, the teaching profession is no longer as attractive as it was to more independent-minded women, and there are many more private alternatives – all which have changed the marketplace.  However, the principle remains the same – the nature of the job and the type of applicant have driven salaries down.

The third problem is collective bargaining.  Some unions – like the Teachers Union – have been able to obstruct the educational process in their demands for seniority-based pay; but many others, like the Teamsters Union in its heyday, had far more muscle and clout to demand higher wages and benefits.   So even if one were to conclude that a trucker hauling lettuce from California to DC had equal value to the community as a teacher, he would always be paid higher wages because of the union.

‘Equal pay for equal work’ is based on the principle of fairness, and at its simplest and most basic, it is effective in weeding out blatantly discriminatory practices.  It has been in that regard an important complement to laws forbidding racial discrimination.  Trade unions were simply forced to hire equally qualified black workers, thus breaking a decades-old white-only hiring policy.  Equal pay laws will similarly stop employers from enforcing their men-only policies. 

However, American society has changed.  Fewer and fewer companies discriminate so obviously.  Not only have the laws been enforced, but social norms have changed.  Blacks and women are commonplace in the workforce, and there is less need for government to protect and promote their rights.  This leaves the more complicated issue of salary differentiation which is and should remain a feature of employment.

The statistic often cited by advocates for more stringent equal pay legislation is that women, on the average, earn 77 percent that of men.  To arrive at this statistic, one has to throw all jobs into a hopper and average the salaries.  While there is no doubt that this is true, it is important to determine why this is.  First of all those professions dominated by women – teaching and health care – have always been low-wage jobs, and in the case of health care, the wages are being driven down by immigrants who are an increasing proportion of the workforce.  Second, in the case of education, women are still happy enough with the terms of employment (and the generous benefits afforded them by teachers unions) that salary has not yet been an issue; and more importantly supply exceeds demand.

Another consideration is that professional equality in many professions takes time. The number of women in law and medical school is finally equal, and in some cases women outnumber men, and they have become far more competitive in terms of salary.  This salary edge, however, has in the past been blunted by career choices.  Pediatricians are still predominantly women who have accepted lower salaries because of the more regular and predictable hours.  The landscape is quickly changing, and as more women opt for more demanding and competitive specializations, their salaries will rise.

Low-income wages have been driven down by illegal immigration, and in more traditional Latin American cultures, men will always have the say about who is first employed.  Most textile sweatshops are almost exclusively female, and there is very little community support to raise wages.

Some economists, such as Milton Friedman, have suggested that equal pay laws are anti-feminist and patronizing, particularly in today’s modernizing social economy.  Why should women come under the protective patriarchal wing of the government, when they have rightly asserted their individual worth, power, and influence.  Do women still need to be protected?  No, says Friedman.  Variation in salary levels will, on the contrary, enable women and men to find a way into a company and then to rise in position and salary based on their choices and competence. 

In conclusion, equal pay for equal work is a reasonable goal, but should not be the affair of government.  There are too many legitimate executive choices and decisions which are part and parcel of the workplace and should be subjected only to the law of the marketplace.  Equal pay for comparable worth is a zany, idealistic notion which will never get any further than it has – swirling in the eddying backwaters of ‘progressive’ thought.

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