Comparable Worth

The commonly accepted definition of comparable worth is that dissimilar jobs that are of equal worth to the organization (e.g., nurses and truck drivers) should be paid the same wage. The term comparable worth must be distinguished from related terms, such as equal pay for equal work. The latter term is associated with the U.S. law known as the Equal Pay Act of 1963, which requires that men and women doing essentially the same job should be paid the same unless the differences are attributable to factors such as merit, seniority, or other job-related criteria. The Equal Pay Act of 1963, then, requires that the plaintiff perform the same job as the comparison group. Comparable worth is sometimes referred to as pay equity. The underlying premise of comparable worth is that persistent discrimination against predominantly female jobs results in women earning consistently lower wages than men. Only by comparing different jobs in terms of their worth to the organization—and adjusting the pay of jobs held predominantly by women when necessary—can fairness be achieved.

Comparable worth advocates typically assume that market wages, as determined by salary surveys, reflect sex bias because the skills and job requirements associated with women’s work (e.g., verbal skills, small motor dexterity) are inherently undervalued by the labor market. As an alternative, comparable worth proponents advocate the use of job evaluations to determine the value of an organization’s jobs.

Legal Status of Comparable Worth

Despite the appeal of the comparable worth notion, laws to regulate this concept have made minimal progress in the United States. The most significant lawsuit to invoke the comparable worth premise was AFSCME v. State of Washington, which was decided by the U.S. Court of Appeals for the Ninth Circuit in 1985. The plaintiffs in this case argued that the state failed to put into practice the implications of its own job evaluation study, which indicated that predominantly female jobs were undervalued. The court sided with the state of Washington, arguing that the state was merely relying on the market rate (i.e., paying what other organizations were paying for these jobs). This market argument proved to be a fatal blow to the comparable worth principle.

Since that decision, neither the courts nor the U.S. Congress have accepted the comparable worth concept. Approximately 20 states, however, have enacted comparable worth laws requiring some form of pay equity for state employees. Canada has passed pay laws that are similar to laws in the United States. The province of Ontario, one of 12 provinces in Canada, passed the most pro-employee pay law, which became effective in January 1988. That law, referred to as the Pay Equity Act, requires companies with 100 or more employees to conduct a job evaluation to determine whether there is gender discrimination in pay across different jobs.

Conducting a Comparable Worth Study

A typical comparable worth study comprises two steps. In the first half of the study, a job evaluation is con-ducted for the relevant jobs to determine their major tasks, responsibilities, and working conditions. Next, a job evaluation tool must be chosen (i.e., an off-the-shelf version) or created, and the pertinent jobs must be evaluated. Each job is assigned a quantitative value reflecting its worth to the organization. In the second half of the study, salary information is gathered from other organizations in the labor market. This salary information and the results of the job evaluation are then used to develop a mathematical formula. Job evaluation points from predominantly female jobs are entered into the formula to determine what the pay would be in the absence of discrimination.

Job evaluation, however, may be susceptible to gender bias, the very problem it is intended to ameliorate. Specifically, there may be bias in terms of the information collected about jobs, the choice of factors used to evaluate jobs (i.e., compensable factors), how those factors are defined and anchored, and how those factors are weighted. Research shows that the current salary and organizational level of a job may indirectly contribute to gender bias in a job evaluation. Despite the potential bias against predominantly female jobs even when conducting a job evaluation, comparable worth studies generally find that these jobs pay less than predominantly male jobs of the same worth.

Criticisms of Comparable Worth

Critics have raised several objections to the comparable worth principle. One objection is that the implementation of comparable worth will significantly increase payroll costs; however, a recent study of eight states indicated that increasing the wages of predominantly female jobs increased payroll costs only 1% to 4%, with most increases around 3.5%.

Another criticism is that the value or worth of a particular job is in the eye of the beholder. Indeed, research indicates that different job evaluation procedures may yield different conclusions about whether comparable worth is present; even the way in which compensable factors are weighted may affect the conclusions one draws about the degree to which comparable worth is present.

A third criticism of the comparable worth concept is that pay should be treated as a free market with as little government intervention as possible. That is, the basic principle of supply and demand should determine appropriate wages—employees are free to apply for a different job if they do not like the pay that is associated with a particular position. This argument asserts that companies should be allowed to set whatever wage they believe is appropriate for a specific job (although the Equal Pay Act of 1963 prohibits pay discrimination for men and women doing the same job) and that workers should be able to choose whatever jobs they wish (the Civil Rights Act of 1964 prohibits sex discrimination in hiring and promotions).

A fourth criticism of comparable worth is that other factors, such as unionization rates and labor market shortages, may play a role in setting salaries but are not reflected in job evaluations. Critics argue these factors are important determinants of pay and must also be considered in setting pay.

Clearly, the comparable worth notion is a complicated one. Although industrial and organizational psychology can make important contributions here, whether one accepts or opposes this concept ultimately depends on one’s values and beliefs about the world of work.

References:

  1. Chamallas, M. (2001). The market excuse. University of Chicago Law Review, 68, 579-612.
  2. Michael, R. T., Hartmann, H. I., & O’Farrell, B. (1989). Pay equity: Empirical inquiries. Washington, DC: National Academy Press.
  3. Mount, M. K., & Ellis, R. (1987). Investigation of bias in job evaluation ratings of comparable worth study participants. Personnel Psychology, 40, 85-98.
  4. Rudin, J. P., & Byrd, K. (2003). U.S. pay equity legislation: Sheep in wolves’ clothing. Employee Responsibilities and Rights Journal, 15, 183-190.

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