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Does Discrimination Depress Women’s Pay

April 24, 2007
Related Topics: Compensation Design and Communication, Discrimination and EEOC Compliance, Wages and Hours, Latest News
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A new study by a women’s advocacy organization shows that college-educated women earn less than their male counterparts soon after graduation—and 10 years later, too.

When the findings were presented at a House hearing on Tuesday, April 24, however, an expert disputed the results, arguing that many different factors can affect salary levels.

The hearing date was no accident. April 24 has been dubbed Equal Pay Day, the date on which women’s earnings are said to catch up to the amount men earned by December 31 of the previous year.

The House Education and Labor Committee met to discuss a bill introduced by Rep. Rosa DeLauro, D-Connecticut, that would strengthen federal equal pay laws.

But it was the study, "Behind the Pay Gap," released the day before the hearing by the American Association of University Women Educational Foundation, that generated the most heat. AAUW found that one year after college graduation, women earn 80 percent of what college-educated men earn. After 10 years, the proportion sinks to 69 percent.

Catherine Hill, AAUW research director, said that after eliminating factors known to affect earnings, such as occupation, industry, hours worked, educational attainment and experience, a 5 percent difference between men’s and women’s salaries still existed, and grew to 12 percent after 10 years.

“That suggests that something else is going on,” Hill said. Discrimination, in her view, causes the pay discrepancy.

Diana Furchtgott-Roth, a senior fellow at the Hudson Institute, said that the results of the AAUW study are distorted because they didn’t account for accumulated hours of lifetime work and used occupational categories that were too broad.

“Generally, the more explanatory variables that are included in the econometric regression analysis, the more of the wage gap that can be explained, and the less is the residual portion attributable to discrimination,” Furchtgott-Roth said.

DeLauro asserts that bias against women is diminishing their earnings. Her bill would allow women to sue for punitive damages in addition to compensatory damages already provided under the Equal Pay Act. It also would prohibit employers from retaliating against employees who disseminate salary information to their colleagues.

“The issue of pay equity goes to the heart of what matters to working women,” DeLauro said. “It is about ensuring that women who work hard and productively and carry a full range of family responsibilities are paid at a rate they are entitled. Pay equity is not a women’s issue. It is a family issue.”

The highest-ranking Republican on the House labor committee questioned the reliability of pay studies and urged that Democrats approach the issue carefully and first “do no harm.”

“As we consider significant and substantial changes to federal law, I hope we keep it in mind and recognize the very clear, very strong anti-gender discrimination laws we already have on the books,” said Rep. Howard “Buck” McKeon, R-California.

One way to move closer to pay parity is to enact legislation that would provide paid time off for employees to take care of family matters, according to Heather Boushey, senior economist at the Center for Economic and Policy Research.

“To close the gap, policymakers must look to change the workplace so it is more hospitable to women and mothers,” she said.

A member of the House committee who is a former HR professional said another way to address pay differences is to ensure that certain jobs don’t pay less just because they are done predominantly by women.

“It’s too easy to say these are women’s jobs and these are men’s jobs and they aren’t valued the same,” said Rep. Lynn Woolsey, D-California.

All members of the committee seemed to agree that Dedra Farmer’s situation was one of pay discrimination. While working in the Tire Lube Express division of Wal-Mart, she found that women in hourly positions were being paid less than men holding the same jobs with shorter tenure at the store. Farmer testified before the committee.

In 2002, after complaining about the pay disparity, she was fired. Farmer joined the class action suit against Wal-Mart that is pending in federal court in San Francisco. The case involves about 1.6 million workers.

“That is one reason—or perhaps 1.6 million reasons—I have reintroduced the Paycheck Fairness Act,” DeLauro said. “The marketplace alone will not correct this injustice—that is why we need a legislative solution.”

But Furchtgott-Roth said DeLauro’s bill “would have Washington interfere with employers’ ability to set wages.”

“Rather than help women, [it] would hurt them by increasing the costs of hiring,” she said. “Employers would be likely to choose male over female candidates to avoid litigation.”

Mark Schoeff Jr.

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