On Comparable Worth, Pay Equity and the Paycheck Fairness Act

The quick trip that pending pay legislation, particularly the Paycheck Fairness Act, made to the floor of the House this week has renewed discussion of the concept of comparable worth.  Comparable worth provisions were among the most controversial aspects of the Paycheck Fairness Act in its previous rendition(s); they appear to have been (mostly? maybe entirely?) removed from the current bill, which is expected to be passed before the end of this week.  Of course, we have yet to see what exact form the bill will take when it comes up in the Senate.

By reader request, the purpose of this post is to provide some background on comparable worth. 

From my perspective (which is a practical, not a legal one), comparable worth reflects one of two different viewpoints on how to approach and resolve gender-based pay disparities:

First, there is the idea of pay equality, which I would define as the notion that men and women must be paid the same if they are found to be performing the same job in the same organization.

Secondly, there is the idea of pay equity or comparable worth, which I would define as the notion that men and women must be paid the same if they are found to be performing jobs of comparable value in the same organization.  Comparable value is typically determined by a factor-based job evaluation process which disregards or dilutes the consideration of a job's value in the marketplace for talent.  (Go here and here for more on factor-based job evaluation.)

See the difference?

We here in Minnesota have had opportunity for an early look at the potential workings and consequences of a federal comparable worth law, because we already have such a law in place at the state level.  Our State Employee Pay Equity Act, however, applies only to public sector employees, although efforts have been underway for years to extend its provisions out into the private sector.  Some time back, when the whole comparable worth argument was getting kicked up in anticipation of the earlier PFA, I posted an interview here with Dr. Ellen Benjamin, a compensation consultant and colleague of mine, who has virtually unparalleled experience with compliance under our pay equity law. Click back to her interview and see what she has to say about the probable impact of extending such a law nationally into the private sector.

With respect to the current legislation, following is the portion of the earlier HR 1338 Paycheck Fairness Act that I believe to contain the comparable worth provisions:

SEC. 7. TECHNICAL ASSISTANCE AND EMPLOYER RECOGNITION PROGRAM.
(a) GUIDELINES.—
(1) IN GENERAL.—The Secretary of Labor shall develop guidelines to enable employers to evaluate job categories based on objective criteria such as educational requirements, skill requirements, independence, working conditions, and responsibility, including decisionmaking responsibility and de facto supervisory responsibility. 
(2) USE.—The guidelines developed under paragraph (1) shall be designed to enable employers voluntarily to compare wages paid for different jobs to determine if the pay scales involved adequately and fairly reflect the educational requirements, skill requirements, independence, working conditions, and responsibility for each such job with the goal of eliminating unfair pay disparities between occupations traditionally dominated by men or women.
(3) PUBLICATION.—The guidelines shall be developed under paragraph (1) and published in the
Federal Register not later than 180 days after the date of enactment of this Act. 

And yes, I take note of the word "voluntarily" with respect to the use of the DOL job evaluation guidelines, but I wonder how voluntary they would truly be, for example, for private firms with (or seeking) government contracts or whose pay practices were audited or challenged in any way.  At any rate, these provisions appear to be absent from the version of the bill being considered by the House this week.

However.  There remains in the current bill, however, a section titled "REINSTATEMENT OF PAY EQUITY PROGRAMS AND PAY EQUITY DATA COLLECTION.  It is noted in this section that the "employees of the Office (of Federal Contract Compliance Programs) shall use the full range of investigatory tools at the Office’s disposal, including pay grade methodology". 

The section goes on later to state that the Office "for purposes of its investigative, compliance and enforcement activities, shall define ‘similarly situated employees’ in a way that is consistent with and not more stringent than the definition provided in item 1 of subsection A of section 10–III of the Equal Employment Opportunity Commission Compliance Manual (2000)". In defining "similarly situated employees", this Compliance Manual states that the similarity of jobs is determined "by ascertaining whether the jobs generally involve similar tasks, require similar skill, effort, and responsibility, working conditions, and are similarly complex or difficult." 

Sure still sounds a lot like comparable worth to me.  Readers with law degrees and/or more experience in deconstructing legal language, please feel free to weigh in.  I'd love some assistance in better understanding the implications of this section.

My sources tell me that Senator Clinton may be introducing her version of a paycheck fairness bill to the Senate soon.  It will be important to watch the degree to which comparable worth language features in that legislation.

To be fair and in conclusion, the Paycheck Fairness Act does call for a number of efforts - beyond potentially messing with the structure and design of private sector pay practices and lifting the caps on penalties - in the pursuit of gender pay equity.  These efforts include the establishment of a grant program for negotiation skills training for girls and women and the establishment of a national award for pay equity in the workplace.  As a woman who genuinely does want to see gender pay disparities eliminated, however, I think those drafting this legislation have completely overlooked what seems to me an obvious and critical intervention in this regard.  More on that in an upcoming post.

 

Comments

[Paul Hebert]

One of the things (and I'm not an expert on the comparable worth gig) that seems to missing here is that some jobs are more valuable at different times regardless of their "comparability" to other jobs and some jobs are riskier to the job holder and therefore has a premium put on it since there is risk.

Sales is a good start - it may have the same criteria in education, time, experience etc. as a non-sales job - but it also has more risk and therefore has a higher pay scale. Also, what if I don't need sales for a while due to some weird market thing - but I have a real need for another job function - do I still need to pay the sales person more because it is comparable with that other job?

I'm not getting the "comparable" thing - I get the equity thing - people doing the same job should get (within a range based on performance) same pay - but this seems like a formula for huge bureaucracy that will be required to vet every job to make sure it fits the "comparable" definition.

Am I off base here?

[Ann Bares]

No, Paul, you are in fact very much on base. You hit the nail on the head, as far as I am concerned, with the statement "some jobs are more valuable at different times regardless of their 'comparability' to other jobs". Right now, employers are free to respond to this by offering higher pay to those jobs where supply is short and need is high. Comparable worth provisions would limit employers' ability to respond to market pressures in this way, particularly if the short-supply-high-need jobs are dominated by males.

Most of us who are expressing concern about comparable worth have no issue - as you say - with the equality thing. Women doing the same job as men should be (factoring in performance, experience and other bona fide differences) paid the same. The issue is that mandating comparable worth oversteps this in significant and problematic ways.

Thanks for weighing in!

[Michael Haberman, SPHR]

Great information Ann. Thank you. Comparable worth originally was a much broader issue as you see in this dictionary definition.

"A theory holding that compensation for job classifications filled chiefly by women should be the same as for those classifications filled chiefly by men if the jobs, albeit dissimilar, are regarded as having equal value. According to this theory, workers' salaries should be calculated on a scale of socioeconomic value that transcends traditional supply and demand."

The original comparable worth arguments were based on the following:
Firefighters were exclusively male. Nurses were almost all female. Firefighters were paid more than nurses. Must be bias since (in this argument) nurses were of equal value to society as were firefighters. Thus there was an attempt at a constitutional amendment to install comparable worth in the US. It failed. And what happen? Women started getting into firefighting (and yes it was an uphill battle) and started getting out of nursing. With the supply of nurses going down and the demand staying the same or going up what happened? The price aka wages/salary went up, to a point then that in many geographies it exceeded firefighters. Then women started getting back into nursing and it flucuated again. So the market corrected the imbalance.

I personally think we are better off not trying to legislate this issue. Should we try to guard against and correct biases? Absolutely. However, I know in my profession of HR there are many women who make far more money than I do and that is based upon the market they are in, the education and experience they have, the size company they work for ,etc. So the market can correct itself. It is not the government's role to say to a company that the female HR manager is as valuable to the company as the male sales rep and thus should be paid the same. Its role is to insure that the female sales rep and the male sales rep are paid the same given performance, education, and experience. And I think the laws we have are suitable for that task.

[Ann Bares]

Mike:

Thanks for sharing all of this and for weighing in. Agreed that we must all take accountability for guarding against and correcting biases. Also agreed that comparable worth - and its inevitable overspray - is not the solution!

[E James (Jim) Brennan]

As the outside expert employed by MN State to train the At-Interest Arbitration Judges on Comparable Worth Job Evaluation, I can confirm that MN's internal equity law was very unique, only barely feasible within that sole bureaucratic enterprise and completly inappropriate for any other organization. I'm an advocate of real Comparable Worth (pay without regard to protected class status) and thus keenly resent misrepresentations of the issue by opponents who pay no attention to what advocates request but substitute obviously ridiculous straw-man scary proposals for the reality. CW does NOT require ignoring the market; it simply says you should not allow the perpetuation of biased systems: pay black women like white men, for example. The elimination of illegal pay bias can be facilitated by job evaluation but does not require it. Most important, the base principles of CW require organization-specific solutions that render a "universal pay plan" absolutely impossible; because every employer validly has a unique value system and operates in a unique competitive market. Only the opponents of "comparable worth pay equity" argue that there is one market-defined magic correct number for every job. But politicians don't understand pay or job evaluation and thus offer ...cough, cough... impractical and ridiculous proposals from both sides of the issue. To wit: the Feds cannot achieve the goals detailed under provision 7 (a) above because they can only use O*NET job family information (i.e. "accountants") and lack any data at all on the actual content of real work jobs (like forensic accountant or tax accountant or cost accountant). Besides the NAS Treiman/Hartman report in the early 1980s (?), the best most detailed objective technical analysis was "Description of Selected Nonfederal Job Evaluation Systems", GAO/GGD-85-57, July 31, 1985, available from either GAO or the Gov Printing Office. It covered both public and private pay equity initiatives, including a number of Comparable Worth play plans I designed for major corporations using proven nondiscriminatory market rates. There was also a report of proceedings on "Women, Work and Wages" published by Labour Canada after a goverment-required conference for crown corporations in Ottawa back when Canada wrote comparable worth into its bill of rights. Also see the NCPE's "Job Evaluation - A Tool for Pay Equity," which confirms that each employer should have its own unique (but unbiased) market-based pay system. It's a big topic and not a simple one. But as long as our profession continues to bury its head in the sand and insist that there is no problem, the politicians will take the initiative we fail to grasp. If we refuse to create sensible workable economical solutions, the politicians will do THEIR thing, which is none those... in all respects.

[Ann Bares]

Jim:

Thanks for weighing in and for sharing the additional resource info. I appreciate the push-back you provide on this issue, as it helps me to see the overall picture from another perspective.

You say that you are an advocate of "real" comparable worth. I'm not sure what that means. Is "real" comparable worth the notion of equal pay for jobs that are not equal but are deemed - through some valuation process - to be comparable? Does it mean that if a valuation process decrees that engineers and architects are comparable, and if 80% of engineers are men and 80% of architects are women, and that there is a market undersupply of engineers and a market oversupply of architects, that you believe we must afford them equal pay? It that's it, then I guess we must agree to disagree (or, in short, I am not an advocate of "real" comparable worth). If that's not it, perhaps you can enlighten me.

I've never heard any comp person, including those who oppose comparable worth legislation, argue that there is a market defined magic correct number for any job (certainly I don't mean to suggest that). We both k now that market pricing is a subjective process, as is factor based job evaluation. But market pricing, as imperfect a process as it can be, is still an important component of valuing a job in a way that enables you to hold your own in the competitive market for talent.

My 25+ years of designing, deconstructing, auditing and attempting to improve factor based job evaluation programs gives me a good idea of how well I think they are positioned to respond to unique and ever evolving market pressures. Your experience - different than mine - may give you a different perspective.

As always, we are in agreement on a number of things. I heartily concur that the impetus is on us to address the obvious problem of gender pay disparities -- and if we don't get some traction on it, we have few to blame beyond ourselves when Washington steps in and decides to take care of things in its own inept and heavy-handed way.

[E James (Jim) Brennan]

By "real CW", I mean a focus on the nondiscriminatory nature of the internal value systems and competitive pay practices of the specific enterprise. Your HR practices and pay-setting rules should be blind as to the protected class status of the employee. For example, it should preclude the typical case where you can make the guy a jr. VP by tweaking one extemely minor element of a woman's administrative assistant job description and slapping a different title on it. Or, if you do that, you pay his job only a few percent more than her job, proportional to the internal/external job value differences. Status quo usually provides <15% differential for the male-dominated job, because it's always been that way.

Job evaluation is most popular at firms where pay greatly exceeds the general market, so they can always pay over the market-clearing rate for benchmark jobs and still internally-value unique jobs. When engineers are being laid off as excess workers, their job doesn't lose market value and employed survivors still get big increases; when secretaries or nurses are in short supply, we don't pay more but instead replace the function. All this is relative, of course.

[Derek]

Wonderful article. Spot on as always... Would you consider posting articles and/or blogging on my site: www.hrresource.com?

[Ann Bares]

Jim:

I think few of us would disagree with focusing on making internal value systems and competitive pay practices of a specific enterprise nondiscriminatory. The question for me is whether the kind of comparable worth provisions that have been seen in this pay legislation in past versions (and could very well still pop up into the Senate version - have not yet seen it) go well beyond that to a point that they work to inhibit an enterprise (and our collective enterprises) from responding to market pressures and supply/demand issues.

Derek:

Thanks for the note and the request. We'll talk....