Pope Protests, but Proportional Pay is Not Required for U.S. Pay Equity

Since the Pope added his voice in protest about about gender based pay differentials a while after Equal Pay Day, maybe this is a good time to revisit the status quo.

Current American federal law only compels equal pay for practically identical work.  The usually highly imbalanced disproportional pay to protected classes is the big "hidden" issue that confuses people when they confront the issue.  It is different in Canada.

While Canada requires pay proportionality, the U.S. does not.  Here, tiny distinctions can justify large pay variances.  Minor tweaks in either job title or specific work content elements or educational criteria can result in relatively immense differences in pay.  And when the Stateside adverse impact falls disproportionately on protected classes, it can be justified by "the market" and "internal equity" defenses.  Grossly disparate treatments may not be right or proper, but they remain legal here.

Note that before Canada finalized its Bill of Rights, they sent analysts to attend American compensation seminars on pay equity.  They told me this is their usual pattern, to let America screw things up first and then learn from our mistakes.  Accordingly, they require “equal pay for work of equal value”  instead of the U.S. “equal pay for equal work” standard within enterprises.  Canada requires comparable pay for comparable content while America demands equal pay only for identical content.

This is just another example of the apparently minor but substantially immense differences between American and Canadian labor laws.  Even though we started earlier, we still remain far behind our neighbors to the North in the pay equity arena. 

Partly as a result of the continuing disparity between Canada and the U.S. in gender equity issues, Equal Pay Day was created in 1996 by the National Committee on Pay Equity where I had a long history of prior involvement.  Their first Executive Director and I were the only Americans to address Canadian Crown Corporations in an Ottawa Labour Canada conference on the topic many years earlier.  Unfortunately, both the NCPE and their creature, the DOL Women’s Bureau, continue to pound on the broad and misleading but emotionally engaging 77% to 78% factoid that obscures the real issue.

More information will not necessarily solve the gender equity problems in America.  OFCCP disclosures compelled under the new pay transparency rules for government contractors will not shed much light.  First, because they must use SOCs, which might not map clearly for understanding outside the federal ranks.  The generally broad SOC occupational categories will not always match up with internal job titles or specific employer classification systems in ways that assure identical common agreements.  Differing terms will create legitimate problems when comparing apples and oranges.  Second, the industry matches under the rules will probably also use the new federal NAICS code which is completely inconsistent with the old SIC industry coding approach sanctified in history.  SIC industry codes are still retained by credit agencies, pay surveyors and the SEC (whose excuse is that they are not a statistical organization and thus exempt from the requirement for such federal agencies to abandon the SIC codes).  The two systems have contrasting base approaches.  SIC codes were ranked by 1930s employment demographics and address what is made, handled or delivered.  NAICS codes are assigned by the process applied by the enterprise to make, handle or deliver the product or service.  Transitioning to new industry codes will also be troublesome but inevitably essential, since pay data tends to be highly specific to industry.  Those are all complications that obstruct pay equity comparisons. 

Employers whose whose self-audits reveal pay equity issues may want to review a guide which is a slight rewrite of the pamphlet “Job Evaluation – A Tool for Pay Equity” that I wrote for NCPE many years ago.  Most of this will fall on deaf ears, however, since maybe only one comp pro in 50 knows enough to even understand the causes of the historical problem, much less how to implement effective palliative measures.  If you are one, you have a high future earnings potential... if America ever embraces the concept of gender-free pay proportionality.  

E. James (Jim) Brennan is an independent consultant with extensive total rewards experience, specializing in job evaluation, market pricing and pay budget distribution.  After HR corporate jobs in chemical/pharmaceutical manufacturing, he consulted at retail, government, energy, IT, tax-exempt and other industries throughout North America before becoming Senior Associate of pay survey software publisher ERI until 2015.  A prolific writer (author of the Performance Management Workbook) and speaker, he gave expert witness testimony in many reasonable executive compensation cases both for and against the Internal Revenue Service.  Jim also serves on the Advisory Board of the Compensation and Benefits Review.

Image "Balanced Weight Scale" courtesy of scottchan / FreeDigitalPhotos.net

Comments

[Tony Bergmann-Porter]

Um, I hate to rain on your parade Jim, but 24 YEARS after enacting comparable worth legislation, the Canadian province of Ontario still had a 26% “gender pay gap” in 2011.

http://www.payequity.gov.on.ca/en/about/pubs/genderwage/wagegap.php

As a practical matter, the “gender pay gap” will cease to exist only if and when all occupations have an exactly equal gender balance of individuals who are either willing or required to work an equal number of hours, and who are required by law or custom to devote equal amounts of time to child rearing and/or other caregiving responsibilities. And it is not at all clear that any of that is attainable in an environment of freedom and unconstrained choice.

http://www.slate.com/articles/double_x/doublex/2010/11/going_dutch.html.

[E. James (Jim) Brennan]

You are correct, Tony, that pay by gender comparisons are complicated by multiple diverse factors. Some researchers agree with you that the financial incentives for more overtime http://finance.yahoo.com/news/jobs-with-the-worst-gender-wage-gap-183821927.html# act most against women.

Better laws only help but can’t solve historical problems. Of course, if choices were unrestrained by law, we would still have child labor and slavery, too.