Comparable Worth: Comparable to What?
In 1963, John F. Kennedy signed the Equal Pay Act into law. The Equal Pay Act made it illegal for employers to pay unequal wages to men and women employed in the same job with the same characteristics, such as longevity and performance. At the time of its passage, the median woman earned 58 percent of what the median man earned.
Forty years later, according to the National Committee on Pay Equity, the median woman earns 75 percent of what the median man earns.[1] This oft-cited statistic is the reasoning behind policy proposals that seek to go beyond “equal pay for equal work,” such as “comparable worth” or “paycheck fairness.”
The premise underlying comparable worth and paycheck fairness is that female-dominated jobs are paid less than male-dominated jobs simply because they are female dominated. Comparable worth advocates argue that wages in female-dominated professions are lower because of sexual discrimination, both historical and ongoing, and government intervention is needed to remedy this imbalance until the gap between the wages of men and women is eliminated.
Comparable worth proponents deny that supply and demand set wages in the labor market. From their perspective, businesses don’t really pay employees in female-dominated industries what they are “worth” to the business. Outside “experts” therefore must be appointed, by law, to tell them what various employees are “worth” to them.
If the experts decide that the job of cleaning personnel is comparable to the job of receptionist, by law the employer must pay the janitor the same as the receptionist. In practice, this tends to lead to shortages, as wages no longer reflect supply and demand in the marketplace.
In Minnesota, for example, nurse shortages arose in many cities after the passage of comparable worth legislation. Many job evaluation systems determined that nurses were paid more than they were “worth."[2] This occurred despite already existing nurse shortages that would normally indicate the need to raise wages. The subsequent decline in nurses’ compensation led to an even greater shortage of nurses illustrating perfectly the danger of ignoring supply and demand in setting wage rates.
A comparison of wage rates between men and women is a dubious measure of discrimination anyway, and should not be used to make public policy. The oft-cited statistic that women make just 75 percent of what men make is based on the wages of the median man and woman.
The median is an aggregate, a measure of central tendency. As such, important variables that impact wages such as age, years of education, type of education, years in the workforce, etc., are not controlled. When these factors are taken into account a completely different picture of today’s workforce and the need for heavy-handed government intervention emerges.
Consider the following example. John Doe has a bachelor’s degree and has worked continuously for the past ten years. His twin sister Jane has an associate’s degree and has not worked three out of the last ten years due to the births of her two children. Given their different education levels and work history, it is only understandable that Jane’s wages at the end of ten years would be lower.
Once other factors are taken into account, the wage gap is reduced considerably, sometimes becoming almost nonexistent. For example, women aged 27 to 33 without children earn 98 percent of what their male counterparts do.[3]
The narrow wage gap between the men and women of Generation X reflects the tremendous gains that women have made over the last couple of generations. From 1989-2000, the number of women earning degrees increased by 26 percent.[4] Nearly 1.7 million more women that men are currently enrolled in college.[5] The wages of Ohio women, after adjusting for inflation, have increased by 10 percent over the last two decades.[6]
Despite these tremendous gains made by women under a system of free enterprise, politicians continue to re-introduce comparable worth legislation. Comparable worth is a poor solution to a nonexistent problem. Replacing the market with politics is not in the best interests of Ohio’s women or its economy.
Footnotes:
[1] National Committee on Pay Equity, “Wage Gap Persists in 2001,” fact sheet. Available on-line at http://www.feminist.com/fairpay/f_wagegap.htm.
[2] Steven E. Rhoads, Incomparable Worth: Pay Equity Meets The Market (New York, NY: Cambridge University Press, 1993), Chapter 3.
[3] June O’Neill, “The Shrinking Pay Gap,” Wall Street Journal, 7 October 1994.
[4] U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics, 2001 (Washington, DC: National Center for Education Statistics, 2002), Table 247.
[5] Digest of Education Statistics, Table 172.
[6] Amy Hanauer, Leah Curran, and Mark Cassell, Pink Collar Work: Gender and Wages in Ohio (Cleveland, OH: Policy Matters Ohio, October 2002).
Rebecca A. Thacker is an associate professor of management at Ohio University and Joshua C. Hall is Director of Research at The Buckeye Institute. www.buckeyeinstitute.org This article originally appeared as The Buckeye Institute's July 2003 Perspective.
