Comparable Worth New Directions for Research (1985) / Chapter Skim
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The Economics of Comparable Worth: Analytical, Empirical, and Policy Questions
The Economics of Comparable Worth: Analytical, Empirical, and Policy Questions
Pages 86-115
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From page 86... ...
The second section discusses the basic features of discriminatory labor markets, Hereby describing the context within which proposed comparable worth policies would operate. The third section presents an economic analysis ofthe basic concepts underlying comparable worth, including in particular the notion that unequal pay for jobs of comparable worth is discriminatory.
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From page 87... ...
For example, commercial job evaluation finns often benchmark wages for key jobs on the basis of labor market surveys and use procedures such as regression analysis of existing salary structures to determine the weights that the marketplace itself gives to the different factors considered (see Abowd, 1984; Schwab, 19801. In contrast, some analysts of comparable worth (e.g., Treiman and Hartmann, 1981:81-82)
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From page 88... ...
, it would not establish a uniform national wage for secretaries (or tool mechanics) and would not necessarily require even that any other employer pay identical wages to tool mechanics and secretaries.
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From page 89... ...
I begin by describing the nature of discriminatory labor markets, by examining the context in which comparable worth strategies would operate. I then present an economic analysis of the conceptual foundations of comparable worth and of its likely economic effects.
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From page 90... ...
. Thus, there are now both pay differentials and sex differentials: 1.
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From page 91... ...
In evaluating these propositions it is important to clear away some of the confusion that plagues many discussions of discrimination. First, although it is often believed that discrimination is profitable for employers, discrimination will in fact reduce profits in the kind of labor market considered here.
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From page 92... ...
. With these caveats in mind, now consider the four characteristics of discriminatory labor markets presented above.
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From page 93... ...
First, contrary to what many of its proponents assume, there is nothing inherently discriminator in unequal pay for jobs of "comparable worth," and there is no reason why a nondiscriminatory labor market would necessarily entail equal pay for jobs of "comparable worth." Second, although proponents of comparable worth are correct in implicating employer discrimination as an important demand-side factor responsible for male-female pay differentials, they typically pay insufficient attention to the role of employee choices, which is an important supply-side factor that also contributes to such pay differentials . Should Comparable Worth Necessarily Mean Equal Pay?
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From page 94... ...
Hence, there is no reason to suppose that jobs that are comparable in the eyes of a given individual orjob evaluation firm would in fact pay the same wage even in a sex-neutral labor market. The proponents and opponents of comparable worth have spent much time pondering whether it is possible to compare apples and oranges; the debate on this question, however, misses the essential point.
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From page 95... ...
Other things being equal, that would mean that the latterjob would pay less than the former.7 As this example indicates, even in a labor market in which sex is irrelevant, wages are determined by market supplies and demands rather than by comparability which may have little or nothing to do with wage deterrnination. The reason is that supplies and demands summarize the tastes and preferences of all individuals, whereas comparability merely indicates the tastes and preferences of one individual or of a single entity (e.g., a job evaluation firm)
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From page 96... ...
In that case, a priori (or bias-free) job evaluations of the kind envisaged by advocates of comparable worth will indeed provide a useful guide to wage differentials among jobs.
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From page 97... ...
In particular, although there is no reason why comparable jobs would pay the same wages if sex were irrelevant to labor market outcomes, there is also no reason why a sexneutral labor market would exhibit the negative empirical association, noted at the outset, between overall average pay and the proportion female in different jobs. Indeed, if the labor market were truly sex-neutral, then, even though one would not expect to find equal pay for jobs deemed to be of comparable worth, one would expect to find the same male-female employment ratio in all jobs, other things (skills and so forth)
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From page 98... ...
Like a strict policy of requiring equal pay for jobs of comparable worth, COO-1 is open to serious question. Contrary to what many proponents of comparable worth appear to assume, the wage structure that would prevail if sex were irrelevant to all labor market activity is not necessarily the same as the wage structure that would prevail in the absence of employer discrimination.
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From page 99... ...
Perhaps most important, factors such as these suggest that choices made prior to labor market entry, as distinct from employer discrimination, can have an important effect on sex differences in labor market outcomes. For example, Polachek (1978)
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From page 100... ...
This is ignored by both a strict comparable worm policy (which would require equal pay for jobs of comparable worth) and COO-1 (which would require only that workers be paid what they would receive if sex as such were irrelevant to labor market outcomes, even if that meant wage differentials among jobs deemed to be of comparable worth)
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From page 101... ...
When job comparability provides little or no useful information about the wage structure that would prevail in a labor market in which sex is entirely irrelevant, there is no merit in requiring equal pay for jobs of comparable worth. Moreover, when job preferences are sex-related, there is little merit in a modified comparable worth policy that would, in effect, set wages without reference to such sex differences in job preferences.
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From page 102... ...
In addition, the pay adjustments required under the ideal COO-2 policy would almost certainly not require equality of pay rates among jobs judged to be comparable in terms of a formal job evaluation. Nevertheless, COO-2 would directly confront one of the most important consequences of employer discrimination: low pay for women.
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From page 103... ...
A policy of requiring wage increases for predominantly female, low-paying jobs would provide immediate benefits for such women who, in this view, have little to gain from conventional antidiscrimination measures (see Blumrosen, 1979:491~92; Clauss, 1981:81, 91-92; Treiman and Hartmann, 1981:66-671. Unfortunately, requiring wage increases for predominantly female lowpaying jobs is likely to have serious, albeit unintended, adverse side effects, not merely for women as a whole but for older cohorts of women workers in particular.
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From page 104... ...
in job A will lose. The notion that raising wages in low-paid, predominantly female jobs will help older cohorts of women who are locked into those jobs is at best half true: such a policy will certainly benefit some of these women but, by reducing the total demand for such jobs, will necessarily harm the rest of them.
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From page 105... ...
. 14 Again, then, the comparable worth policy raises wages in the low-wage, predominantly female jobs and narrows the pay gap between low-wage and high-wage jobs .
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From page 106... ...
These potential loopholes notwithstanding, Aust~lia's comparable worth policy apparently had a substantial effect on the aggregate female: male earnings ratio: that ratio (for full-time nonmanagerial adult workers in the private sector) rose from .607 in 1971 to .766 in 1977 (Gregory and Duncan, 1981:4091.
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From page 107... ...
. As noted in the text, those results indicate that, other things being equal, the comparable worth policy reduced women's relative employment growth and raised women's unemployment rate.
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From page 108... ...
As shown above, comparable worth solves the problem of the artificially wide gap between low-wage, predominantly female jobs and high-wage, predominantly male jobs only to create other problems, including, in particular, reduced opportunities for women in both low-wage and high-wage jobs. In contrast, conventional antidiscrimination measures compel discriminatory employers to provide greater opportunities for women workers (by making it costly for such employers to deny equal pay or equal access to women with the same skills and qualifications as men)
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From page 109... ...
In sum, conventional antidiscrimination measures will ultimately move the labor market to nondiscriminatory employment and wage levels for women whether or not comparable worth is adopted. However, introducing comparable worth will provide many women with nondiscriminatory wage levels much more quickly than would be the case if comparable worth is not added to conventional antidiscrimination measures.
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From page 110... ...
That is particularly ironic because, once the adverse employment effects of comparable worth take place, a redoubling of conventional antidiscrimination efforts will be necessary to counteract them. Antitrust Laws and the Problem of Employer Cartels As noted earlier, conventional antidiscrimination measures can be expected to raise pay in low-wage, predominantly female jobs (as well as providing higher pay in given jobs through equal pay provisions and permitting qualified women to leave low-wage jobs for high-wage jobs)
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From page 111... ...
To the extent that labor markets are indeed cartelized and I should emphasize that this is something about which, in general, there is very little hard evidence then forcing wage increases in such markets need not have any adverse impact on employment. However, none of this has anything to do with whether the jobs in question are comparable to predominantly male jobs, be they pharmacist, tree trimmer, or parking lot attendant.
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From page 112... ...
—an economist well known for her advocacy of effective antidiscrimination measures—has criticized the Equal Pay Act on precisely these grounds, arguing that the act was intended to help men compete with lower-paid women. While advocating comparable worth, Barrett has also warned that requiring pay increases for lowpaid, predominantly female jobs pursuant to comparable worth will impose losses on firms and that "we can't expect firms to swallow those losses; that's crazy" (1984:32)
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From page 113... ...
1982 The federal attack on labor market discrimination: The mouse that roared? Research in Moor Economics 5:33-68.
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From page 114... ...
Gregory, R., and R Duncan 1981 The relevance of segmented labor market theories: The Australian experience of the achievement of equal pay for women.
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From page 115... ...
Yale Law Journal 1981 Equal pay, comparable work, and job evaluation. Yale Law Journal 90: 657-680.
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