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What's My Line Worth

Anita U. Hattiangadi, guest columnist for Work Views, says the concept that women are paid less than men isn't so simple. At right, click to read a small sampling of reader responses.

March 17, 2000
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Related Topics: Compensation Design and Communication
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The gender pay gap is a hot issue these days, with women s groups, unions, and even the Clinton administration decrying the gap as a reflection of "the demeaning practice of wage discrimination in our workplaces."

Unfortunately, the gap amounts to nothing more than voodoo statistics -- a carefully constructed "factoid" designed to incite women. Unions have made no attempt to hide this goal: They report income "losses" due to the gap not only in dollar terms, but also in terms of forgone years of day care, weeks of vacation in Jamaica, and servings of macaroni and cheese.

A closer look at what the gender pay gap really measures exposes its shortcomings. The gap is based on the ratio of full-time women's and men's median annual earnings, period. The difference between this ratio and parity (currently around 26 percent) is then taken as a measure of workplace discrimination.

But think about this gap in a slightly different context -- would a measured pay gap between 25- and 45-year-olds suggest discrimination? How about a pay gap between Yankees coach Joe Torre and the coach of your child s little-league baseball team?

Blaming discrimination for pay differences is wrong in all of these cases for the same reason -- the gap doesn't account for reasonable economic factors influencing pay. Things like hours of work, experience and tenure, educational specialization, and industry and occupation do (and should) affect earnings.

For example, the gender-pay gap compares full-time men and women, but full-time women actually work fewer hours on average than full-time men. In fact, half of all full-time men work over 40 hours a week while only about one-third of full-time women do. Correcting for this difference alone reduces the gap to 19 percent. When all such differences are accounted for, the gap shrinks considerably, by some estimates to zero.

Would a measured pay gap between 25- and 45-year-olds suggest discrimination?

Critics cry foul even in the face of this evidence, claiming that women are forced into low-paying "women's work." Rather than assigning women to occupations in the old-style communist way, they want to raise pay for women in female-dominated jobs. Their solution sounds simple: Assign points to all jobs in a company, then raise pay for "underpaid" female-dominated jobs -- a technique they term "fair pay" or "comparable worth."

Unfortunately, this approach creates a host of problems. Who's in a position to decide whether jobs are of equal value? How often should job evaluation occur? What happens when disputes arise? Are you worth more than the person working next to you?

Comparable worth also denies the role of the market in setting wages. Should meeting planners earn more than network administrators? What if they are rated equally, but the going rate for network administrators is higher? Should meeting planners then be paid more too?

Finally, comparable worth assumes that preferences and abilities have nothing to do with job choice. While discrimination may have dictated the jobs done by our grandmothers, it seems to have little to do with job choice today. Rather, certain occupations (e.g., teaching) can offer real advantages to women, including scheduling flexibility and lower penalties for workforce absences, not to mention personal fulfillment.

In practice, comparable worth has created more problems than it solves. Sure, pay increases for workers who keep their jobs, but increased costs limit job opportunities for both women and men. Raising pay also reduces incentives for women to leave "women's work," in effect fostering the very job segregation that critics oppose. Comparable worth has also raised equity concerns -- should pay for "underpaid" male-dominated jobs also increase?

Gender-based discrimination is wrong and should not occur. But equal employment opportunity and equal pay for women is the law, and has been since the passage of the 1963 Equal Pay Act and Title VII of the 1964 Civil Rights Act. Comparable worth is a misguided policy and its enactment is more likely to hurt, rather than help, the workplace status of women.

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