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Panel on Measuring and Collecting Pay Information from U.S. Employers by Gender, Race, and National Origin Committee on National Statistics Division of Behavioral and Social Sciences and Education

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THE NATIONAL ACADEMIES PRESS  500 Fifth Street, NW  Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Govern- ing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineer- ing, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropri- ate balance. This study was supported by the U.S. Equal Employment Opportunity Commission and the National Science Foundation under a grant to the National Academy of Sciences. Support of the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation (award number SES-1024012). Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number-13:  978-0-309-26408-2 International Standard Book Number-10:  0-309-26408-1 Additional copies of this report are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. Copyright 2012 by the National Academy of Sciences. All rights reserved. Printed in the United States of America Suggested citation: National Research Council. (2012). Collecting Compensation Data from Employers. Panel on Measuring and Collecting Pay Information from U.S. Employers by Gender, Race, and National Origin. Committee on National Statistics, Division of Behavioral and Social Sciences and Education. Washington, DC: The National Academies Press.

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Acad- emy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engi­ neers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineer- ing programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is presi- dent of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Insti- tute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences ­ in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The C ­ ouncil is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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PANEL ON MEASURING AND COLLECTING PAY INFORMATION FROM U.S. EMPLOYERS BY GENDER, RACE, AND NATIONAL ORIGIN John M. Abowd (Chair), School of Industrial and Labor Relations, Cornell University H. Juanita (Nita) Beecher, Employment Law & Litigation Group, Mercer LLC Marc Bendick, Jr., Bendick and Egan Economic Consultants, Inc., Washington, DC Charles C. Brown, Department of Economics, University of Michigan Elizabeth Hirsh, Department of Sociology, University of British Columbia Mark R. Killingsworth, Department of Economics, Rutgers University Jonathan S. Leonard, Haas School of Business, University of California, Berkeley Janice F. Madden, Wharton School, University of Pennsylvania Aleksandra (Sesa) Slavkovic, Department of Statistics, Pennsylvania State University Finis R. Welch, Welch Consulting, Bryan, TX Valerie Rawlston Wilson, National Urban League Policy Institute, Washington, DC Thomas J. Plewes, Study Director Michael J. Siri, Program Associate v

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COMMITTEE ON NATIONAL STATISTICS 2011-2012 Lawrence Brown (Chair), Department of Statistics, Wharton School, University of Pennsylvania John M. Abowd, School of Industrial and Labor Relations, Cornell University Alicia Carriquiry, Department of Statistics, Iowa State University William DuMouchel, Oracle Health Sciences, Waltham, MA V. Joseph Hotz, Department of Economics, Duke University Michael Hout, Survey Research Center, University of California, Berkeley Karen Kafadar, Department of Statistics, Indiana University Sallie Keller, University of Waterloo, Ontario, Canada Lisa Lynch, Heller School for Social Policy and Management, Brandeis University Sally Morton, Graduate School of Public Health, University of Pittsburgh Joseph Newhouse, Division of Health Policy Research and Education, Harvard University Ruth Peterson, Criminal Justice Research Center, The Ohio State University Hal Stern, Department of Statistics, University of California, Irvine John H. Thompson, NORC at the University of Chicago Roger Tourangeau, Statistical Group, Westat, Rockville, MD Alan Zaslavsky, Department of Health Care Policy, Harvard Medical School Constance F. Citro, Director vi

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Contents Preface ix Summary 1 1 Background 7 Legislation, Authorities, and Responsibilities, 8 EEOC Data Collection and Reports, 11 White House Task Force Report and Panel Charge, 14 Pay Rate Information, 16 Earnings Information, 16 2 Alternative Sources of Wage Data 26 Data from EEO-4 Reports, 27 Administrative Data, 28 Equal Opportunity Survey Pilot, 34 U.S. State and Canadian Provincial Surveys, 37 Survey-Based Wage Information, 41 Summary, 45 3 Pay Concepts and Definitions 46 Role of Compensation, 47 Earnings Data Available in Firms, 48 Feasible Definitions of Earnings, 50 Conclusion, 58 vii

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viii CONTENTS 4 Survey Design and Statistical Methodology 59 Options for Data Collection, 60 Fitness for Use, 61 Minimization of Reporting Burden, 71 Human Resource and Payroll Systems, 74 5 Confidentiality, Disclosure, and Data Access 77 Statistical Protection of Tabular Data and Microdata, 78 Protecting Original Data, 80 Further Protection of Shared EEO Data, 84 6 Conclusions and Recommendations 86 Purpose of a New Data Collection, 86 Pilot Study, 87 Agency Capacity and Burden, 89 Measures for Collection of Pay Information, 89 Access to Pay Information in a Protected Environment, 90 References 93 Appendixes A EEO Report Forms 99 B Study of Employment Earnings for the Equal Employment 111 Opportunity Program: A Possible Role for Administrative Data from Three Tax Systems Nicholas Greenia C Proposed Pilot Tests of Compensation Data Collection 131 D Biographical Sketches of Panel Members and Staff 135

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Preface The U.S. Equal Employment Opportunity Commission (EEOC) collects detailed information on employment by gender and race/ethnicity by job groupings from all employers, except small employers. The agency does not collect earnings data from private employers. The only earnings data collected by EEOC are collected for employees of state and local govern- ments, excluding school systems and educational institutions, and these earnings data are limited to major gender and race/ethnic groups for eight salary ranges. As a byproduct of the agency’s enforcement programs, EEOC collects pay information during investigations of complaints and litigation, but it does not use the information collected in this manner to monitor pay trends in any structured way. The Paycheck Fairness Act of 2009 (H.R. 12), which did not pass dur- ing the 111th Congress,1 would have required EEOC to issue regulations to mandate data from employers to EEOC on pay by the race, gender, and national origin of employees. If the legislation had become law, EEOC would have confronted issues regarding currently available and potential data sources, methodological requirements, and appropriate statistical tech- niques for the measurement and collection of employer pay data. At the suggestion of a White House Task Force, the EEOC asked the National Research Council, through its Committee on National Statistics (CNSTAT), to convene this panel to review methods for measuring and 1  he legislation was reintroduced in both chambers in the 112th Congress. At this writing, T the House version remains in committee while the Senate version failed to clear a procedural vote (to bring it up for floor consideration) on June 5, 2012. ix

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x PREFACE collecting pay information by gender, race, and national origin from U.S. employers for the purpose of administering Section 709 of the Civil Rights Act of 1964, as amended. The panel was asked to consider suitable data collection instruments, procedures for reducing reporting burdens on em- ployers, and confidentiality, disclosure, and data access issues. In conducting this review, the panel held two workshops to gather information from data users and experts in survey methodology, wage and compensation concepts, and other methods for measuring and collecting pay information by gender, race, and national origin from U.S. employ- ers. We particularly benefitted from papers and presentations provided by leadership and staff of EEOC, the Office of Federal Contract Compliance Programs (OFCCP) of the U.S. Department of Labor, and the U.S. Depart- ment of Justice. A paper on administrative sources of pay data was com- missioned and is an appendix to this report. The panel is grateful for the active participation of Sharon Alexander, Office of the Chair, EEOC, and Ronald Edwards, director, Program Re- search and Surveys Division, Office of Research, Information and Planning, EEOC, for their unhesitant cooperation with the panel during its work. Special thanks go also to Bliss Cartwright and Lucius Brown, who assisted in developing this study and in overseeing its progress on behalf of EEOC. A large group of experts from government agencies, academia, and representing various other user organizations freely gave of their time to prepare presentations for the workshops and enter into a dialogue with the panel as it gathered information for this report. The first workshop opened with statements by Stuart Ishimaru, commis- sioner, EEOC; Jocelyn Samuels, senior counselor to the assistant attorney ­ general for civil rights, U.S. Department of Justice (DOJ); and Claudia G ­ ordon, special assistant to the director of the OFCCP. Ron Edwards of EEOC and Pamela Coukos, senior program advisor, OFCCP, brought the panel up to date on currently available sources of equal employment op- portunity and wage data. State and provincial programs that now collect earnings data by gender, race, and national origin were described by Martha Burk, formerly the senior adviser for women’s issues to the governor of New Mexico, Faith Zwemke, director of the Pay Equity Office of Minnesota; ­ and, in the second workshop, Stephanie McCleave, director of the Ontario, Canada Pay Equity Office. The general counsel of the EEOC, P. David L ­ opez, and three EEOC field office officials—Anna Park, regional attorney, and Rosa Viramontes, deputy regional attorney, of the Los Angeles District ­ Office, along with Marla Stern-Knowlton, director of the San Diego Local ­ Office—summarized the current enforcement and litigation uses of the EEO-1 data currently gathered by the agency. Bliss Cartwright of the EEOC Program Research and Surveys Division gave a presentation on ­ ational n office uses of the EEO-1 data. Overviews of compensation concepts and

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PREFACE xi definitions were provided by Kevin Hallock, Cornell University, and Philip Doyle, assistant commissioner for compensation levels and trends, Bureau of Labor Statistics, Department of Labor. In the second workshop, the panel heard from representatives of ven- dors who provided payroll and software products. Karen Minicozzi dis- cussed the enterprise software offerings of Workday, Inc., Liz Balconi, consultant, and Michele Whitehead, manager of human resource services, Berkshire Associates, discussed the software that this firm uses to assist companies with understanding their equal opportunity profiles. A consul- tant to the panel, Nicholas Greenia, formerly of the Internal Revenue Ser- vice, gave a presentation on the availability of administrative data to yield earnings data useful for antidiscrimination purposes. A panel consisting of Ronald Edwards, EEOC; Gilberto Garcia, chief, Branch of Enforcement and Appeals, OFCCP; and Sharyn Tejani, special litigation counsel, DOJ, discussed issues of data confidentiality and data sharing. The panel is grateful for the excellent work of the staff of CNSTAT for their support in developing and organizing the workshops and prepar- ing this report. Tom Plewes, study director for the panel, ably supported the work of the panel. Michael Siri provided administrative support to the panel. We are especially thankful for the personal participation of Constance F. Citro, CNSTAT director, in the conduct of the workshops and in the preparation of this report. This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with proce- dures approved by the Report Review Committee of the National Research Council. The purpose of this independent review is to provide candid and critical comments that assist the institution in making its reports as sound as possible, and to ensure that the reports meet institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. The panel thanks the following individuals for their review of the report: Frank Dobbin, Department of Sociology, Harvard University; Jon A. Geier, Employment Law Department, Paul Hastings, LLC; Kevin F. Hallock, Institute for Compensation Studies, Cornell University; Alan F. Karr, Director’s Office, National Institute of Statistical Sciences; Barbara F. Reskin, Department of Sociology, University of Washington; and John H. Thompson, NORC at the University of Chicago. Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of the report was overseen by Robert Michael, professor, Harris School, University of Chicago, and Michael Goodchild,

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xii PREFACE professor emeritus, University of California, Santa Barbara. Appointed by the National Research Council, they were responsible for making certain that the independent examination of this report was carried out in ac- cordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of the report rests entirely with the authoring panel and the National Research Council. John M. Abowd, Chair Panel on Measuring and Collecting Pay Information from U.S. Employers by Gender, Race, and National Origin