Jess works as a Sr. Compensation Analyst with over 8 years of HR experience. She holds a B.S. in Management and an M.S. in HR Development.
The Problem: Pay Inequality
Pay inequality between men and women is an issue that the American workforce has faced for decades. Traditionally, women did not participate in the workforce or did so in a limited capacity. Nowadays, women make up 57% of workers. Even with being the majority of the workers, on average, full-time working women earn 78 cents for every dollar a man makes. The gap in pay is even greater for African-American and Latino women. Research shows that this disparity is true no matter how the data is evaluated. The inequality is apparent across different types of jobs, and among men and women with similar educations and experience. The pay gap negatively affects women and their families. Congress attempted to remedy the problem with the passage of two laws (both to be discussed later in this article) in 1963 and 1964, yet and still, the pay disparity persists. There is much speculation around why the gender pay gap exists. The reality is that there is no one cause for the discrepancy, and there is likely not one solution that will bring about pay equality.
A significant portion of most organizations’ expenses is employee costs (salaries, benefits, training and development, etc.). It is logical, then, to conclude that employees are among the greatest assets in an organization. One author expresses the need to solve the gender pay gap by saying, “if our people truly are the most valuable resource, we should pay the female majority in a way comparable to their true worth” (Weatherhead, Brennan, & Bares).
Comparable worth is a U.S. doctrine that supports solutions for any undervaluation of women’s jobs. The Equal Pay Act of 1963 addresses and remedies the issue of pay discrimination based on gender for employees working in the same job. The law, while groundbreaking, ignores the fact that jobs that are traditionally held by women are consistently paid less than jobs traditionally held by men. Comparable worth supports equal pay among men and women, not only in jobs of equal content, but also those similar in worth or value (Noe, Hollenbeck, Gerhart, Wright, 2013, p. 510).
There have been several attempts to establish comparable worth as a component of the law, however, the courts have rejected the policy. The first comparable worth court case was Christensen v. State of Iowa, brought to the courts in 1974. The plaintiffs, Pauline Christensen and Phyllis Gohman sued the University of Northern Iowa (a state university) under Title VII of the Civil Rights Act of 1964. Unlike the Equal Pay Act of 1963, Title VII does not require that equity in compensation be based on jobs that are equal. Instead, Tile VII makes it unlawful “to discriminate against any individual with respect to his compensation… because of such individual’s… sex.” The plaintiffs alleged that the practice of paying clerical workers (account clerks, telephone operators, typists, etc.), jobs held entirely by women, less than the plant facilities workers (bus drivers, mechanics, mail carriers, etc.), who were mostly male, for jobs of equal value to the University, was a form of sex discrimination in compensation. The Title VII claims were rejected by the district court because, among other reasons, the University of Iowa was able to prove that its wages were consistent with those paid in the local labor market.
As demonstrated in Christensen v. State of Iowa, comparable worth cases are difficult to prove because if employers are following market pay for jobs, they will not be held responsible for the discriminatory practice of paying men’s jobs more than women’s job – even when those jobs provide equal value to the organization. This does not take into account the fact that, jobs predominately held by women are paid less than comparable men’s jobs across the board. In this scenario, the market data itself is tainted. The idea that the entire labor market engages in discriminatory practices and therefore leads to a so-called “tainted market” is very well documented and supported. In fact, according to An Experimental Study of Job Evaluation and Comparable Worth, “the notion of comparable worth is based on the premise that the market wage does not appropriately measure the value of a job” (Arnault, Gordon, Jones, and Phillips, 2001, p. 811). The connection of the tainted market theory and the comparable worth doctrine is that skills traditionally used by women, for example, direct care and social skills, are esteemed less in wage decisions than are traditionally male skills – physical or supervisor skills, for example (Weatherhead, Brennan, & Bares). Even though both sets of skills require a similar skill level, have similar job complexity, and often times require similar education and experience, overwhelmingly, male jobs are paid more than female jobs – but why is that?
There has been much speculation as to why men’s work is valued more than women’s work. Some of the gender gap in pay is attributed to the experience gap – that is men have more work experience than women because women take time away from their careers to have and raise their children. The experience gap is decreasing in size however as women opt for more continuous careers (England, 2000). The gap in pay has also been attributed to women choosing to go into lower paying careers. Of course, this reasoning does not factor in the tainted market theory discussed above, however, even if a woman’s choice is a valid reason for being paid less, it is interesting to note that on average, female jobs require as much education as men’s jobs (England 1992). Based on the analysis of four class-action cases that dealt with alleged gender discrimination in compensation, Nelson and Bridges concluded four possible reasons for pay inequity between men and women:
- The evaluation structures and methods that organizations use tend to favor male jobs. This is also supported in Arnault, et al. 2001 study on evaluation and comparable worth.
- Nelson and Bridges conclude that men have a political advantage when it comes to pay – that is that male workers are more politically organized in getting exceptions granted to the work that they do and the subsequent pay for that work.
- Along those lines, the researchers found that male managers were more likely to fight for higher compensation for their jobs filled by men than they were for jobs filled by women.
- Finally, and probably most jarring, the practice of using benchmark jobs to set pay for non-benchmarked jobs contributes to the pay inequity.
Benchmarking is used to determine appropriate pay for jobs that are not well understood and therefore difficult to collect salary data for. In this case, market data is collected for benchmark jobs (those that are well understood and relatively standard across organizations and industries). Pay for non-benchmark jobs is then set relative to the benchmarked job. Nelson and Bridges point out that this practice contributes to pay inequity because female jobs are most likely to be compared to other female jobs. When female benchmarked jobs are already undervalued, setting pay of other jobs by comparison is a questionable practice as far as establishing equity is concerned (Nelson and Bridges 1999).
There is no one factor that causes pay inequity in jobs providing comparable worth to organizations. Instead, it seems to stem from multiple well supported and well documented organizational practices that all work in favor of male jobs maintaining their position as leaders in terms of pay. As singer and songwriter, James Brown so plainly put it, “This is a man’s world” (Brown, 1966). The courts have largely supported Brown’s philosophy when comparable worth cases have been brought forth. In Paula England’s summary of Nelson and Bridges book Legalizing Gender Inequality, England deduces that the American justice system will always stand against comparable worth claims because providing justice to women “requires a wholesale upheaval of pay systems” (England, 2000, p. 921). Further, England observes that forcing employers to set wages on standards other than local labor market wages will “overturn the American free enterprise system” and it “challenged judges’ ideological world view too much” (England, 2000, p. 921).
Since 1997, sex discrimination and Equal Pay Act cases have consistently made up one third of EEO cases filed (http://www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm). This issue has been around for a long time and doesn’t seem to be going away anytime soon. So, how do organizations move forward with establishing pay that is fair and equitable across all jobs? The process begins with performing job analysis and job evaluations.
Job Analysis is the process of gathering detailed information about jobs (Noe, et al., 2013). According to The ECS Decision Maker’s Guide to Salary Management, the purpose of performing a job analysis is to ensure that pay decisions are based on an in-depth understanding of jobs (Wyatt Data Services, 1995). Although primarily used for pay decisions, the information gathered in the job analysis can serve multiple other purposes in an organization including writing job descriptions, job design, job evaluation, recruitment, selection, placement, training and development, performance management, and organizational design (Kovac, 2006). There are three commonly used methods of job analysis: interviewing, observation, and using questionnaires.
A job analysis interview is a planned discussion with the job incumbents and their managers. The process typically begins with explaining the purpose of the interview and then asking questions (and follow-up questions) to get an accurate and comprehensive understanding of the job. The initial questions are generally prepared ahead of the interview. The direct interview style of job analysis allows for employees and managers to fully explain every aspect of a job and to address any concerns they may have regarding the job or the job analysis process (Wyatt Data Services, 1995). The advantages of using the interviewing method are that it allows employees to describe tasks that cannot be observed and allows for analysis of jobs where employees perform cyclical work and observing the incumbent for a short period of time would not be an ideal method of collecting job information. The disadvantages of utilizing the interviewing method are that incumbents could exaggerate or omit job duties. Another disadvantage is that the information gathered from multiple interviews may be difficult to combine (Kovac, 2006).
The observation method of job analysis involves watching employees while they work and recording what the worker is doing, how work is being done, how long each task takes to complete, etc. This method is best used for jobs that have repetitive tasks that are easy to observe. Example of jobs where the observation method is appropriate include bus drivers, machine operators, carpenters, mechanics, etc. The observation method is the preferred analyzing method for jobs that require manual labor. The advantages of this method include gathering first-hand knowledge of the duties performed, seeing the complexities involved in the job, and the method is simple to execute. The disadvantages to this method are that the presence of an observer could make the employee nervous which may cause the employee to alter their normal behavior. The method is also time-consuming and as such, can only be done with a limited number of incumbents. Finally, the observation method is not appropriate for jobs that involved significant amounts of attentiveness or application of concepts, theories, and principles to their work as these tasks are not easily observable (Kovac, 2006).
The questionnaire method is based on the completion of written questionnaires that gather information from both the employee and the supervisor or manager. Questions can be open-ended, structured and behavior-based and/or structured and task-based. Selecting the best style of question for the questionnaire is based on what is best able to produce the most significant and complete information. Questionnaires that use a combination of open-ended and structured questions are the most utilized because they provide flexibility to the analyst. Questionnaires will typically ask for the incumbents’ major duties and responsibilities, projects or programs the incumbent is involved in, methods of getting work done, relationships (direct reports and level of contact within and outside of the organization) and other relevant information needed to understand the size and scope of a job (Wyatt Data Services, 1995). The advantages of using the questionnaire method are that it is less expensive and less time consuming than the other two methods. Additionally, this method is easy to execute and if done anonymously, employees may be more open in their responses which will lead to a more accurate analysis of the information. The disadvantages of using this method are that responses may be inaccurate or not completed. When open-ended questions are used, it may be difficult to interpret responses, and if not made mandatory, the response rate may be low (Kovac, 2006).
Selecting a Job Analysis Method
When considering which method of job analysis to use, the analyst must consider two factors. First, the analyst must consider the scope of the study – that is whether the study is simple or complex, or has significant implications for the entire organization or very little impact on the other jobs within the organization. For example, if an analyst in a hospital setting is analyzing the nurse job, any findings or changes would have a significant impact on the organization and its compensation program because nurses make a large part of the employee population in a hospital. In contrast, if the analyst in the hospital setting is analyzing payroll coordinator jobs, the impact of any findings or subsequent changes would likely be far less significant to the organization as a whole. Secondly, the analyst must consider his or her self – amount of time and resources that can be dedicated to the analysis, and his or her level of experience and comfort level with performing the analysis (Wyatt Data Services, 1995). The interviewing method is time-consuming and requires an experienced interviewer. This method may not be ideal for a new analyst. The observation method is simple to execute, however, it is time-consuming. The method would be ideal for a new analyst, however, may not be ideal for an analyst who has limited time to dedicate to the task. The questionnaire method is the least expensive method and would work well for an analyst with limited resources, however, the questions may be difficult to construct and would likely require an experienced analyst to create. If resources are available, the inexperienced analyst may solicit the support of a consulting firm to create the questionnaire, alleviating the potential pitfalls in faulty question design (Kovac, 2006).
Once the organization has made the determination on the most appropriate job analysis method(s) to use, the information gathered can then be used to conduct a job evaluation.
Job Analysis Poll
Job evaluation is the process of determining the internal value or worth of a job. The evaluation system takes into account compensable factors – valuable and measurable characteristics that an organization chooses to pay for – from the job analysis and generates a score which can be used to compare or provide the valuation of jobs. There are many methods of job evaluation. The most widely used method is the point-factor system (Noe, et al., 2013).
In order to complete the job evaluation, the organization must determine the compensable factors that will be used to establish job value. The factors should relate to the job function, and the number of factors should be kept at the minimum needed to incorporate all the significant characteristics of the job (Wyatt Data Services, 1995). Compensable factors may include:
- working conditions,
- job complexity,
- required education and experience,
- job responsibility, etc.
Once the compensable factors are determined, and each factor is scored for a job, factors can either be weighted based on importance to the organization, or all factors could be seen as having equal weight, and therefore, a simple sum of the factor scores determines the value of the job. Theoretically, by using the score from the job evaluation in combination with the labor market wage data for a job, an analyst could derive a pay structure for the job.
It is important to note that the internal valuation and external market data do not always agree (Noe, et al., 2013).
The job evaluation process is not without its flaws. There is no standard procedure for conducting a job analysis, therefore, results will likely vary between organizations, and could vary between evaluators (Arnault, et al., 2001). The process is very subjective and could be affected by the evaluators' knowledge (or lack thereof), and personal biases. In a 1980 publication, Donald Schwab criticized job evaluation for this same reason. He claimed that job evaluation methods are not construct-valid, or in other words, the evaluation methods do not measure what they claim to measure.
Comparable Pay for Comparable Worth
Every organization has its own set of compensable factors and therefore has its own evaluation system. Comparable worth between jobs will look different for different employers. For example, when looking at a Certified Nursing Assistant (CNA) job at a nursing home – where patient care is the objective – one would expect the value of the job to be higher than an analysis of the CNA job at an elementary school. In this example, perhaps the CNA works alongside the school nurse and educating students is the objective of the organization. The valuation of this same job could be different in this case because, although the education and experience requirements might be the same, the work in the nursing home is probably more complex than the work in the elementary school. Although valuation of jobs depend on what an organization views as valuable, the fact remains that job ranking and pay classification dynamics are largely biased against female-dominated jobs. Comparable pay advocates have the stance that many pay evaluation methods are proven to have a disparate negative effect on women and should be challenged (Weatherhead, Brennan, & Bares).
Economist and employers alike have argued that setting pay based on local labor market rates is enough justification for having the pay gap remain as it has been. The reality is that “companies do not pay the market rate, because there is no one universally accepted, appropriate rate for any job” (Weatherhead, Brennan, & Bares). This means that organizations are not only using the labor market rates to set pay, but also their internal value systems. Even if organizations are setting pay solely on the market rates, the existing discriminatory impact of the current valuation of jobs would continue to have a negative impact on women’s jobs. Comparable worth seeks to ease this impact. Still, critics of comparable worth argue that forced implementation of such a policy is too radical and unworkable (Eisenberg, 2011).
Although critics of comparable worth expect the policy would be unrealistic and cumbersome to implement, in places where the policy exists, the effects on pay inequality have been large and have resulted in relatively little cost with no significant other negative effects. The costs that have been incurred have been distributed over a number of years (Boushey, 2000). Such policies have been implemented for government jobs in many places including Iowa, Minnesota, the state of Washington, Michigan, Denver, San Jose, Australia and Canada (Weatherhead, Brennan, & Bares). According to a 1999 study by the Institute for Women’s Policy Research, of the twenty states that have implemented comparable worth in their public sector jobs since 1989, all improved their female to male wage ratios. Further, analysis done in three of these states found that comparable worth was implemented without significant undesirable side effects such as an increase in unemployment claims. The costs to implement comparable worth in these states’ public sector jobs range from 1 to 11.8% of the state’s payroll, with the average at 4% (Boushey, 2000). These findings are encouraging to those who seek to have comparable worth legislation more widely spread.
Human Resources professionals should be sure to comply with existing pay equity laws and work diligently to ensure that compensation is not administered in a discriminatory way. If an organization decides to implement a comparable worth policy, it is important to note that attempting an entire overhaul of the compensation system is not the most cost-effective approach. The HR professional should instead target underpaid female dominated jobs and establish comparable pay to those jobs (Boushey, 2000). HR professionals should also review evaluation practices that may lead to the overvaluation of men’s work and/or the undervaluation of women’s work.
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This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2018 Jess Newton