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Pay Equity: Assessing the Issues
ROBERT T. MICHAEL and HEIDI I. HARTMANN
Despite the progress economists and so-
ciologists have made in recent years in
understanding wage determination and the
occupational structure of the labor market,
large unexplained] differences in wages be-
tween women and men remain. Differences
in skill, experience, effort, labor force at-
tachment, and many other variables that
have been studied do not account for all
the earnings differences observed. On the
face of it, the unexplained gender differ-
ences in wages are consistent with the wide-
ly held belief that there is substantial dis-
crimination against women in the labor
market a systematic bias in wage payment
that favors men over women. The inability
of social accountants to "explain" the gender
gap in wages is often joined with the wide-
spread social suspicion of sex bias, and the
former is viewed, at least indirectly, as
evidence of the latter.
"Comparable worth" or"pay equity" has
been proposed, along with equal employ-
ment opportunity and affirmative action, as
a strategy to eliminate gender bias from the
labor market, particularly in the determi-
nation of wages. Comparable worth or pay
equity strategies generally rely on the use
1
of objective criteria to value the content
and requirements of jobs job evaluation)
in a way that eliminates gentler as a com-
pensable factor.
One's assessment of comparable worth as
a prescription for social ill (legends partially
on one's understanding of the reasons for
the observed gender difference. If that dif-
ference in wages is attributed to legitimate
market forces just not yet well unclerstoocl
or not yet well measured in studies, then
the prescription is probably viewed as a
poor one: It imposes restrictions and bias
on a worIcl that is working fine, albeit not
well understood. In this view there is no
social ill, so there is no rationale for any
medicine. If, on the other hand, the gentler
difference is attributed to systematic bias
in the labor market, then there is a social
ill, and a need for some medicine. In this
case, if that prescription is comparable worth
policy, it becomes necessary to employ "ob-
jective criteria" for setting wages in a way
that eliminates gentler bias. If comparable
worth is prescribed, there is a need to assess
its side effects as well as its potency.
Extending the metaphor of illness and a
proper prescription one step further, com-
OCR for page 2
2
parable worth is not designee! to cure all
possible labor market discrimination against
women. It is a prescription for a specific
illness that has to clo with certain jobs being
undervalued. In particular, if jobs held dis-
proportionately by women are undervalued
according to some objective criteria partly
because they are held disproportionately by
women, then comparable worth is a med-
ication a wise cloctor would consider pre-
scribing. If instead a different illness exists,
one that is related to limited access to certain
jobs for women, or to limited onnortunitv
for advancement by women, or to lower
pay to women for the saline work (as distinct
from comparable work), then other medi-
cation, such as equal employment oppor-
tunity legislation, remedial affirmative ac-
tion, or traditional equal pay remedies, would
be more appropriate.
In sum, the logic that would lead one to
conclude that comparable worth is a wise
social policy requires the following: (1) there
is a gender difference in wages that is not
explainecT by legitimate market forces; (2)
the gender difference is linked to the un-
dervaluation of jobs held disproportionately
by women; (3) the jobs can be objectively
evaluated such that an appropriate level of
compensation can be determined by some
mechanism other than competitive labor
market forces (or that removes the effects
of gender bias from market forces); and (4)
performing the evaluation ant] implement-
ing the implied appropriate wage structure
is on balance preferred both to eliminating
that wage difference by any other means
and to not eliminating it (i.e., any adverse
si(le effects from its implementation are
overcome by the benefits of implementa-
tion).
These are the issues addressed by the
papers contained in this volume. They are
empirical studies by a wide spectrum of
social scientists. The researchers were se-
lected for funding by the Pane! on Pay
Equity Research because each stucly acI-
dresses key issues of fact that are important
PAY EQUITY: EMPIRICAL INQUIRIES
to assessing the appropriateness of compa-
rable worth strategies: What determines in-
dividual ant! occupational wages? How are
wages set ant] how do firms and agencies
structure their pay plans? How are decisions
about promotions and new hiring made? How
have workers fared as a result of comparable
worth implementation ant! how did they react?
Careful descriptive studies can contribute to
our unclerstanding of many of these issues,
and more analytic stuclies can address issues
of causation. Nevertheless, the clifficulties of
drawing causal inferences from the nonex-
perimental ciata used in the social sciences
must be noted here. The simultaneous op-
eration of many factors in the real worIc! and
the inability to devise perfect measures and
controls make it very difficult to identify
causes with much certainty.
As described in the preface, our Panel
on Pay Equity Research selected eleven
empirical studies of aspects of the compa-
rable worth debate through a competitive
proposal process. Several additional experts
were asked to comment on these papers at
a workshop. The papers and selected dis-
cussant comments in this volume address
three questions of fact:
1. To what extent is the gender difference
in wages in the United States today ex-
plained by personal differences in skill, ef-
fort, experience, and other characteristics
that might be legitimate determinants of
wages? Although essentially a factual issue,
there are many ways to measure that fact,
so it is not a trivial task to answer this
question. The papers by Gerhart and Mil-
kovich, by Sorensen, and by Nakamura and
Nakamura address this question using data
on earnings of inclividuals. The essay by
Subich, Barrett, Doverspike, and Alexander
adds psychological perspective by reviewing
the literature that considers gender differ-
ences in socialization and their potential
impact on individual life outcomes.
2. Since job or occupational difference
appears to be so intricately related to gender
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ASSESSING THE ISSUES
differences in wages in the United States
today, how should job or occupational seg-
regation by gender ancT differences in the
average wages of female and male workers
in occupations be understood? The papers
by Baron and Newman, by Parcel, and by
Filer address this question, with the job or
the occupation as the basic unit of their
analyses.
3. Since there are examples of the im-
plementation of"comparable worth" plans,
what is the evidence regarding their impact?
Are such side effects as job loss or structural
change significant? These are the questions
addressed by the three papers by Orazem
and Mattfla, by Evans and Nelson, and by
Gregory, Anstie, Daly, and Ho.
THE EMPIRICAL INQUIRIES
Gender Differences in Wages:
Wage Determination for Indivicluals
Male-Femate Salaries and
Promotions in a Large, Private Firm
The Gerhart and Milkovich paper inves-
tigates gender differences in wages ant] labor
market treatment controlling for personal
characteristics. The strategy in this paper
is to study one large, private, unnamed,
highly diversified firm and investigate cle-
tails of salary and employment (lynamics
(promotions and salary adjustments). The
authors study workers in administrative and
professional jobs, examining patterns of wages
and wage changes for employees who were
with the firm continuously from 1980 through
1986. The primary data set includes 5,550
men and 840 women.
The strengths of this study include the
following: (1) much is "held constant" in an
investigation of behavior within a single
firm, (2) the study has an unusually goof]
independent measure of each employee's
job performance (a 4-point scale), on which
the firm's compensation policy is explicitly
based, and (3) the measures include job
tenure on that job, an especially important
3
factor for an investigation of gender differ-
ences in wages. Two problems with the
study, discussed by Winship, are (l) a stucly
of only one firm cannot yield generalized
findings we do not know whether the find-
ings here apply to other firms or other
periods of time, and (2) the focus on em-
ployees who were continuously employed
by this firm over the 6-year period] under
scrutiny imposes a censoring of the data-
employees who left the firm may have tract
systematically different characteristics or ex-
periences in the firm. A section of this paper
does compare findings for the censored set
of workers with an uncensored set.
A specific question addressed by Gerhart
and Milkovich is what, if any, is the salary
disadvantage for women compared with men
in this firm? In 1980, overall, the answer
is that a woman received a salary that was
only .84 of a man's salary, before adjusting
for human capital differences, an(l was about
.88 after adjusting for schooling, job tenure,
tenure with the firm, ant] a measure of other
potential labor market experience. (The main
influence here is job tenure—the men had
been at their specific jobs a good while
longer than the women.) The salary (liffer-
ential was not much affected by including
in the analysis the 4-point job performance
scale, but if"job level" is accounted for,
the women's pay increaser] to about .96 of
the men's pay. (job level is defined in terms
of status and authority within the firm,
which was measured by a 7-point scale. ) So
we learn, that in this firm, in 1980, for
these categories of employees, adjusting for
all these skill measures and job assignments,
there remained a 4 percentage point dis-
advantage for women within job level, but
a large 12 percentage point difference related
to job level. It is not obvious what we should
make of the finding that within job level the
sex differences in salaries are as small as 4
percentage points, while across job categories
the differentials are far greater.
Interpreting the 4 percent residual re-
mains a dilemma that is a plague of a re-
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4
search strategy that leaves the crucial ele-
ment in the residual: If we can remove the
differential we might attribute it to the
variable that achieved its removal, but if
we cannot remove it from the residual all
we can say is that it is still there. Interpreting
the larger differential across job levels re-
quires an answer to another question. Why
are the women disproportionately in the
lower salaried jobs? Gerhart and Milkovich's
data cannot tell us. If it is because of choices
men and women make about the type of
jobs they want, we would not want to think
of it as discrimination by this firm. If, how-
ever, it is because of restrictions imposed
on women, then we would want to attribute
it to discrimination or put more cautious-
Ty, we could not rule out the possibility that
it is attributable to discrimination.
For a small subset of men and women in
their sample who worked in job titles with
10 or more incumbents, Gerhart and Mil-
kovich find that the higher the percentage
who are female in that job, the lower is the
salary of the men, but not women, in that
job. They conclude that this subset of their
sample "does not really provide support for
the idea that percentage female is an im-
portant structural property that negatively
affects women's (and perhaps men's) attain-
,,
meet.
A second important finding in Gerhart
and Milkovich's study is that the wage dis-
advantage of women declined slightly be-
tween 1980 and 1986—the overall relative
wage of women to men rose from .84 (in
1980) to .88 (in 1986), and adjusted for skill,
performance, and job level, it rose trivially
and surely insignificantly (statistically) from
.96 to .97. Gerhart and Mflkovich suggest
that the firm may now be compensating
women for past inequalities.
Gerhart and Milkovich address two other
questions in their paper: Do men and wom-
en receive equal salary increases? Do they
receive the same promotion opportunities
over time? The answer to each of these
questions is no women fare better than
PAY EQUITY: EMPIRICAL INQUIRIES
men. Women's salaries rose more rapidly
than men's, and over the period 1980-1986,
women "had a distinct promotion advan-
tage," say Gerhart and Milkovich. Men had,
on average, .9 promotions while women had
1.3. Moreover, the advantage women had
in terms of promotions did not decline at
higher job levels. For men, their greater
experience in the labor market appears to
be a major factor that helps explain their
lower level of job promotion, because pro-
motions come more frequently early in one's
career.
To respond to the concern about cen-
soring in their sample, Gerhart and Mfl-
kovich also looked at salaries for all women
and men employed in 1980 or in 1984
without conditioning for continuous em-
ployment. They then compared the average
salary growth for the two separate groups
with salary growth for the subset who were
employed in both 1980 and 1984. They
found that the relative growth rate of women
compared with men was the same in the
two cases: Women's salaries grew by 114
percent of the growth of men's salaries.
Apparently, focusing only on those with
continuous employment in this firm did not
create a biased picture.
In his critique of the paper, Winship
stresses two additional points: (1) the results
are potentially sensitive to the functional
form of the equation used to adjust for skill
and job level, and a less restrictive functional
form might have been better and (2) many
interpretations can be given to the findings
in this paper. Winship elaborates several
alternative stories based on women's
childbearing behavior and the employer's
screening devices that could explain the
findings.
Occupational Segregation and
E.
arcings
Sorensen uses micro-level data from the
May and June 1983 Current Population
Survey to investigate the influence of oc-
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ASSESSING THE ISSUES
cupational segregation by sex and race on
hourly earnings. She estimates regression
equations on hourly earnings separately for
white men, white women, minority men,
and minority women, where minority in-
cludes blacks and Hispanics (other minority
groups are excluded from her study). The
data contain information about tenure on
the current job, but other job market ex-
perience is measured by the convenient and
frequently used device of age minus years
of schooling minus six, approximating the
number of years since the person left school.
We call this the potential experience index.
The measure may be a better indicator of
labor market experience for white men than
for white women, because women tradi-
tionally have spent more of their adult life-
time outside the labor market.
After controlling for personal character-
istics and attributes of the occupation and
industry, Sorensen focuses on the propor-
tion of the occupation that is female, a
variable discussant Smith called the com-
parable worth variable. That variable is sys-
tematically related to lower wages for all
four of the groups Sorensen studies. For
each of the four groups white men, white
women, minority men, and minority wom-
en the wage is about 2 percent lower for
someone working in an occupation with a
10 percentage point higher proportion of
women. The finding seems to hold up when
various alternative ways of estimating the
equations are compared.
For white men and women, Sorensen
looks separately at three sectors: public,
manufacturing, and nonmanufacturing
(mainly the service sector plus construction
and mining). The proportion female in the
occupation lowered the wages of men and
women in the public sector relatively strong-
ly (by about 4 percent for white men and
2 percent for white women for each 10
percentage point increase in the proportion
female). In the nonmanufacturing sector,
the effect was less strong (by 3 percent for
white men and 2 percent for white women),
5
and in the manufacturing sector it was least
strong (by 2 percent for white men and
insignificantly for white women). In her
discussion of Sorensen's paper at the work-
shop, Malveaux noted that the lack of im-
portance in manufacturing could be due to
the importance of industrial or firm seg-
regation within manufacturing (e.g., men
work in durable goods manufacturing and
women in nondurable goods).
Sorensen also investigates the impact of
the percentage of the occupation that is
minority (black and Hispanic) and finds a
statistically significant impact only for white
men a 10 percentage point increase in the
proportion minority is associated with a 4.9
percent lower wage for the white men in
the occupation. That effect is substantially
smaller (-.8 percent) for white men in
another specification of the model, and it
appears to be present only in the nonmanu-
facturing sector of the economy.
Comparing the wages of white men and
white women, Sorensen concludes that dif-
ferences in jobs and personal productivity
account for about 25 percent of the observed
difference in wages overal14$3.32), and in-
dustrial and regional differences account for
another 15 percent. Occupational segre-
gation by sex accounts for an additional 20
percent on average, which leaves about 40
percent unexplained by any of the mea-
surable factors. For minority men compared
with white men, the job and personal skill
variables account for about half of the ob-
served difference in wages overall ($2.11),
but the other half is unexplained that is,
the occupational segregation by sex or race
and the industrial and regional differences
in jobs held do not explain any of the
observed differences between white and
. .
minority men.
Malveaux raised the issue of whether
personal productivity characteristics really
are related to productivity (or are simply
inexpensive screening devices) and whether
they are free of race and gender bias. Dif-
ferences in educational attainment or in
OCR for page 6
6
courses of study, for example, can result
from "tracking" or other factors. The unex-
plained residual might then understate the
extent of discrimination, Malveaux con-
tends.
Overall, Sorensen concludes that as much
as 20 percent of the national femaTe-male
earnings disparity could in principle be
eliminated by a policy that eliminates] oc-
cupational sex-based differences in wages,
ignoring all the other complications that
might arise. The wage ratio for women to
men could be increased, say, from about
64 percent to 72 percent, which would
reduce the size of the wage gap from $3.32
to $2. 66. As Malveaux pointed out, this
means comparable worth is a limited strat-
egy, though by no means an insignificant
one.
Labor Market Crowding and
Earnings of Women
Nakamura and Nakamura provide a rather
different study of individual wage deter-
mination. They argue that it is important
to understand how wages are cletermined
in female labor markets, and they refer to
a substantial empirical literature that sug-
gests that there are distinct male and female
labor markets. The Nakamuras use data from
the 1980 U. S. census to investigate the
wages of employed women 20 to 24 years
of age. That data set is one of the few with
sufficient numbers of observations to permit
examination by occupation and other
subgroups of interest. The authors focus on
crowding in the labor market, by which
they mean a relative abundance of women
offering their labor in a particular market.
They measure crowding by the number of
women in the entry age bracket (20 to 24)
compared with another age (25 to 29) and
by the employment rate of women of that
age compared with the other age.
Nakamura and Nakamura suggest that
there are two reasons why we should expect
women with relatively low levels of eclu-
PAY EQUITY: EMPIRICAL INQUIRIES
cation, those who are black, and those with
children to be especially vulnerable to labor
market crowding: (1) barriers to entry to
better jobs (such as schooling requirements)
may protect the more e(lucated women but
not the less educated and (2) effective labor
bargaining can secure concessions from em-
p-Ioyers through contractual agreements that
rely on seniority and promotions from within
the firm, so that those already employee}
can protect themselves from crowding. This
suggests that crowding would have an ad-
verse effect on the wages of lower skilled
and black women an(1 on those who are
mothers, but not on the wages of higher
skilled en cl white women.
This indeed is what Nakamura and Nak-
amura find tentative evidence of in their
regressions of the log of wages on personal
characteristics and state-level measures of
crowding and unemployment. The relative
population size an(l employment rate of
women aged 20 to 24 tend to (depress wages
of women in occupations that have fewer
welI-educated women personal service,
other clerical, secretarial, and sales—but
not so in occupations requiring more school-
ing managerial, health, and professional/
technical occupations. Similarly, the crowc3-
ing effects are (liscernible for women in the
sample sorted by less education, by the
presence of children, and by race (black),
but not so for women with more than 12
years of education, with no children, and
who are nonblack.
In his comments on the Nakamura ancT
Nakamura paper at the workshop, Ehren-
berg raised two cautionary notes. First, he
suggested that the evidence of crowding is
cloucled by inadequate control for job ex-
perience and by a mismeasurement of the
crowding variable. Census data do not re-
veal how much labor market experience the
women have, and the conventional mea-
sure, years of potential experience (age mi-
nus years of schooling minus six), probably
overstates the experience for blacks, moth-
ers, and the less eclucated, for reasons he
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ASSESSING THE ISSUES
articulated. The crowding measures, Eh-
renberg thinks, would be better suited if
they were occupation specific instead of
state specific. He further cautions that if
the crowding is the product of voluntary
choice by women, the case for public policy
intervention is not strong. He urges sub-
sequent research looking into the process
by which women make their occupational
choices.
The studies of individual earnings by the
Nakamuras, Gerhart and Milkovich, and
Sorensen substantiate that the pay received
by a woman is less than the pay received
by a man, when skill and other relevant
factors are accounted for. Of the three pa-
pers, perhaps Sorensen s paints the bleakest
picture since a substantial gender gap re-
mains in the Current Population Survey
data after adjustment for measured char-
acteristics. One of the important variables
negatively affecting earnings, she finds, is
the proportion of an occupation which is
female. Although Gerhart and Milkovich s
data on one firm exhibit large gender dif-
ferences in job assignment, the proportion
female of a job floes not seem to affect
wages, salary growth, or promotion. The
evidence over the 6 years following 1980
indicates that women who had less initial
experience have had more promotions ancT
raises and that the gender gap in wages was
smaller, although not eliminated, by 1986.
Nakamura and Nakamuras paper looks to
the national job process and identifies three
subsets of women who, they believe, are
easily vulnerable to labor market crowding.
Sex-Role, Occupational Choice,
and Salary
A very different orientation to incliviclual
wage determination is represented by Sub-
ich, Barrett, Doverspike, and Alexander.
Their paper discusses a set of issues about
psychological differences in men and women
and whether those differences might par-
tially be responsible for observed wage dif-
7
ferences. This paper provides a survey of
literature on psychological research on fac-
tors identified as related to occupational
behavior and its outcomes. The factors in-
clude male-female differences in knowledge
of salaries in various occupations, in self-
confidence and personal expectations in the
marketplace, and in risk-taking behavior.
Subich and her colleagues indicate, for
example, that the literature supports the
notion that risk taking is a masculine attri-
bute, that men are bol(ler than women and
more venturesome physically and with fi-
nancial decisions. This gencler-role differ-
ence, we are told, may carry over to men
being more likely to gamble by asking for
a raise.
Subich and colleagues conducted two pil-
ot studies with college students, the results
of which are reporter! in their paper as
illustrative of psychological gender differ-
ences. The studies found that when asked
about salaries in their inten(le(l occupations,
both genders overestimated salaries sub-
stantially, but men di(l so to a greater extent
than women. There was, they report, no
clear evidence of a gender difference in
confidence about ones own occupational
success. Men, however, did seem to be
more prone to risk taking. Both fin(lings
might contribute to salary differences be-
tween women and men.
Subich and colleagues remind us that
there are subtle personal factors that affect
expectations and performance in the labor
market. These factors suggest alternative
remedies to reduce male-female (liffer-
ences. At the workshop, discussant Hu(lis
suggested a future research strategy to iden-
tify some of these factors. Though, as she
noted, the subjects in the pilot studies were
college seniors with, presumably, some in-
terest in the job market, data from workers
would be more fruitful to analyze. Risk-
taking behavior by female and male em-
ployees- taking a risky overseas assign-
ment, for example could be directly ex-
amined in a large firm, where actual salary
OCR for page 8
8
data, including salary history, would be
available. Hudis further suggests that within
a firm equal employment opportunity policy
could be influenced by knowledge of wom-
en's and men's risk-taking behavior. If risk
taking pays off, then women should be
encouraged to try it, and information about
the rewards of various career opportunities
should be more widely shared.
Jobs and Occupations as the
Unit of Analysis
Three papers in this volume study the
relationship among occupation-based wage
rates (average wages for women and men
in an occupation), gender, and various fac-
tors that could explain how and why oc-
cupational wage rates differ. The interest
in jobs and occupations as the unit of analysis
in comparable worth studies has several
bases. Most important, perhaps, is the com-
parable worth claim itself: Female-domi-
nated jobs and occupations are underval-
ued not indiviclual nurses, but the nursing
profession itself is paid less than it is worth.
A theoretical framework for evaluating
the reasonableness of the comparable worth
claim had already been establisher] in so-
ciology and economics with the study of
institutional labor markets and occupational
structure. That body of literature has also
contributed to the comparable worth stud-
ies. Given that employers do treat howlers
of particular types of jobs similarly (as group
members rather than as individuals) and
given that many occupational groups exhibit
stable relationships with each other, it fol-
lows that female-dominatecl occupations may
exhibit some differentiating characteristics.
Thus, the "percent female" of a job or
occupation has become a variable of note.
In the papers that use the job as the unit
of analysis, Baron and Newman find that
both female dominance ancT minority dom-
inance of jobs in the California civil service
system lower the wage rate for those jobs;
Parcel also finds negative effects for percent
PAY EQUITY: EMPIRICAL INQUIRIES
female for male, but not for female, em-
ployees; and Filer finds the effect small and
insignificant for both genders.
Effects of Demographic Composition
on Pay Rates for lobs
Baron and Newman study how the pay
rates for specific jobs are affecter] by the
demographic characteristics of the people
who hol(l those jobs. They consider the
state of California's civil service system-
over 3,000 separate jobs an(l nearly 125,000
incumbents. The time perioc] they consi(ler
is 1979 through 1985; some of the analysis
considers the annual cross sections anc] some
considers changes over the 6 years. Their
dependent variable is the prescribed start-
ing pay for a job, not the earnings of those
in the job, so their measure is not directly
affected by any sex or race differences in
skill, seniority, or productivity. They study
how that authorized starting salary is af-
fected by factors like percent female or
percent black, and they hoIc] constant in
various levels of detail the job's content as
measured by educational and experience
requirements or by occupational cIassifi-
cations that purport to reflect the (difficulty,
or value, of the job.
Their results are striking. No matter how
many controls they introduce to take ac-
count of the job characteristics, significant
and sizable effects of sex composition and
race composition on those starting pay rates
remain. "jobs dominates] by men pay con-
si(lerably more than otherwise comparable
jobs (dominated by women," they conclu(le.
Their Table 5-4 shows that the regression-
estimated penalties apparent in female- and
minority-dominated jobs are dramatic. Con-
sider a nonsupervisory clerical job in "office
or allied services," for instance, a job re-
quiring 13 or more years of schooling and
no more than 4 years of experience. If it
had the demographic composition of the
average fulI-time white male's job (which is
61 percent white male, 13 percent white
OCR for page 9
ASSESSING THE ISSUES
female, 5 percent black male, 3 percent
black female, etc. ), the starting 1985 month-
ly salary would be $2,230. If it had the
demographic composition of the average
full-time white female's job (which is 18
percent white male, 47 percent white fe-
male, 3 percent black male, 9 percent black
female, etc. ), the starting 1985 monthly
salary would be only $1,860.
Baron and Newman also compare jobs in
1979 and 1985 and investigate whether the
changes in the composition of incumbents
are related to changes in starting salaries.
They estimate that over the 6 years stucTied,
the penalty on the starting salary associated
with the presence of blacks and male His-
panics increased. Typical of this finding is
the estimate that a 10 percent increase in
the percentage of black males lowered the
starting salary of the job by 2.6 percent in
1979 but by 3.9 percent in 1985. The adverse
effect on the starting salary of white and
Hispanic females, on the other hand, seemed
to be reduced: a 10 percent increase in
white females lowered the salary by 3.3
percent in 1979, an elect that was weakened
to 2.7 percent by 1985. They also find that
more recently created jobs ones that were
not in the system in 1979—have less severe
penalties than older jobs for female- and
minority-dominated jobs. This, they con-
tencT, is related to the fact that a dispro-
portionate number of the new jobs were in
high-skill, high-paying occupations, not to
an across-the-board increase in equity in
starting salaries.
Overall, Baron and Newman conclude
that their results show that "the entry of
females and minorities into positions de-
values them." The penalties against female with information from the Dictionary of
anciminority-dominate~jobs appear severe, Occupational Titles (DOT) and has 503 oc-
and the underpayment associated with these cupations in her study. Filer merges data
workers is greatest in jobs that have many from several ancillary sources, including the
incumbents. DOT, and, in order to obtain appropriate
Baron an(l Newman's careful analysis of
the job and pay structure of a single large
employer is useful. Because they study start-
ing salaries of jobs (rather than actual wages
9
of male or female incumbents), the "resid-
ual" problem is less severe. With indivicI-
uals, there might always be some unmea-
sured characteristic, such as motivation, that
might have an elect. With jobs, the im-
portant requirements are more likely to be
states! and therefore known to the research-
ers. As Ross points out in her comment,
Baron and Newman's study could be rep-
licatec! at many public agencies (and possibly
private firms as well). Of course, a study
that is not about actual wages received
leaves certain questions unanswered. The
effect of this gender- and race-biased struc-
ture of job salaries on actual salaries received
by women, men, and minorities is not ex-
plore(l here. Also, as with most statistical
studies, the wage setting process and the
employer's intent are unexplored. Ditl the
employer lower job salaries when women
and minorities entered them? Were women
and minorities recruited because of a short-
age of white men and/or because job re-
quirements were changing? Baron anc! New-
man's analysis controls for skill changes in
the stated job requirements, but those skill
requirements may lag or leacl changes in
actual practice.
Occupational Differences and
Earnings
Both Parcel and Filer use the detailed
occupation (1980 census) as the unit of anal-
ysis an(l study the occupation's average earn-
ings. Parcel acljusts the earnings of all work-
ers to a full-time equivalent level, while
Filer uses data on only full-time, full-year
workers. Parcel augments the census data
matching, uses 430 occupations.
Using factor analysis based on the DOT,
Parcel identifies five distinct attributes of
the occupations: the "substantive complex-
OCR for page 10
10
ity" of the occupation, the "physical dex-
terity/perceptual ability" required in the
occupation, its "physical activity/working
conditions," and two others. Parcel imbeds
these attributes of the occupation in a the-
oretical context combining supply and de-
mand variables with measures of social or-
ganization. She has measures of the average
educational and experience levels of the
occupations' incumbents, the labor market
conditions of the occupation (e.g., the re-
serve labor pool), and characteristics of the
incumbents (e. g., the percentage offemales,
blacks, Hispanics, and Asians, and the per-
centage of men and women who are mar-
ried). Mindful of the deficiencies in the
traditional measure of potential experience
for women, Parcel attempts to improve the
measure by adjusting for race and marital
status, as described in her paper.
Typical of occupational-level analyses when
estimated for men and women combined,
the percent female in an occupation is found
by Parcel to have a sizable negative effect
on the annualized earnings in the occupa-
tion a 10 percentage point increase in the
proportion female is associated with a $710
reduction in the average earnings in the
occupation. Many of the other factors also
display their usual effects. Parcel summa-
rizes, "female-dominated occupations are
low in earnings, experience, percent males
married, unionization, and the job content
measures of physical activities. They have
high reserve labor pools, are urbanized, and
have high black and Asian concentrations."
When Parcel estimates the effect of per-
cent female separately for men and women,
however, she finds a significant negative
effect for men, but no effect for women.
She argues that "percent female is but one
aspect of occupational market social orga-
nization" that affects female earnings. Other
social dimensions of labor market organi-
zation that affect earnings include minority
concentrations, extent of unionization, and
proportions of males and females married.
Smith finds Parcel's work skillful and sen-
sible, but he questions the whole line of
PAY EQUITY: EMPIRICAL INQUIRIES
inquiry that includes as an explanatory vari-
able the occupation's percent female. He
argues that such a variable does not add to
our knowledge about how wages are set in
labor markets or whether there is or is not
discrimination. He thinks it does no more
than verify that the wage distributions for
men and women differ; it does not help us
understand why they differ. If the negative
coefficient on percent female offers evidence
of discrimination against women, he asks,
then does Parcel's positive coefficient on
"percent Asian" imply the existence of dis-
crimination in favor of Asians Or are there
other unmeasured factors?
Filer's analysis considers numerous fac-
tors from a variety of data sets. Although
he also uses DOT information, he uses a
wide array of very specific occupational de-
scriptors rather than a condensed and syn-
thesized (factor analyzed) set of five features
of each occupation. At one level, Filer con-
firms Parcel's finding. His Table 7-1 reports
results on hourly wages for a change of 100
percentage points in the percent female. If
we reduce the impact to a change of 10
percentage points and express it in annual
earnings, we find his estimate of the de-
crease in earnings (due to a 10 percentage
point increase in the proportion of the work-
ers who are female) to be between $626
~ = $3.13 x 0.1 x 2,000 hours), controlled
only for demographic and skill factors and
unionization, and $270 (=$1.35 x 0.1 x
2,000 hours), controlled in addition for ef-
fort, responsibility, and working conditions.
Parcel's finding was $710 relatively uncon-
trolled, and $500 to $574 with various con-
trols. Smith, in his comment, points out
that Table 7-1 also suggests that 20 percent
of the wage gap is attributable to the "com-
parable worth variable" (the proportion fe-
male), a figure identical to Sorensen's.
But Filer argues that these figures are
misleading, because they are "inherently
incapable of addressing comparable worth
issues," defined by Filer to be a concern
for raising wages in jobs or in occupations
heavily filled by women. His argument has
OCR for page 11
ASSESSING THE ISSUES
similarities to the point made by Smith in
his discussion of the Parcel paper. If women
are paid, say 75 percent as much as men,
for any reason, then the average wage in
an occupation will automatically be lower
the higher the proportion of women in that
occupation, even though the "percent fe-
male in the occupation" has no effect what-
ever on any inclividual's wage. The corre-
lation between the average wage and the
percent female is just a reflection of one
wage schedule being below the other. It
tells us nothing about why those schedules
differ.
Filer, therefore, argues that one should
investigate separately men's and women's
wages across occupations if one is interested
in seeing whether the proportion female in
an occupation has any effect per se on wages.
(Note that Sorensen did this in her indi-
vidual-level analysis and that Baron and
Newman's study of starting salaries in jobs
cloes not suffer from this problem. Both
authors found large, significant differences
in earnings due to differences in occupa-
tional gender composition.)
When Filer conducts an inquiry on men's
and women's average occupational earnings
separately, he reports perhaps the most
controversial finding in this volume. When
a large number of controls are used, re-
flecting demographic characteristics, indi-
vidual productivity factors (aggregated to
the level of the occupation), unionization,
and the usual job content factors used to
assess comparability (effort, responsibility,
ant] working conditions), there is no evi-
dence that the percent female in the oc-
cupation has an influence on either the
wages of women or the wages of men. What
appears to be an effect in other formulations,
"results from the lower wages for women
within each occupation," which Filer con-
tencis can be corrected, if desired, by ap-
plication of the equal employment laws, and
would be `'immune to comparable worth
. ,,
remet lest
Smith expresses reservations about Filer's
approach, claiming that the inclusion of so
11
many separate variables (over 225) makes
interpretation of the coefficient of each near-
ly impossible and leads to questioning "the
believability ofthe entire exercise." Another
factor related to having a large number of
variables, as Filer cloes, may also be of more
substantive importance. As panel member
Blau pointed out during the workshop, some
of Filer's variables may be proxies for gender
itself rather than indicators of substantive
factors that couIcI reasonably be linked to
productivity differences.
Summarizing these findings at the job or
occupational level of analysis, the authors
find that all three papers confirm that wom-
en's wages are less than men's wages at the
occupational level. Baron and Newman's
strategy does not suffer from the compo-
sitional effect about which Filer and Smith
warn, ant! Baron and Newman do find a
systematic tendency for jobs held dispro-
portionately by women to have lower start-
ing pay than apparently comparable jobs
held disproportionately by men.
Filer's strategy for adjusting for average
productivity differences between the oc-
cupations and the universe from which his
data are drawn are very different from Baron
ant! Newman's, and his conclusion is dif-
ferent as well. He finds no evidence of a
systematic tendency for occupations hel(l
disproportionately by women to have lower
average full-time salaries than comparable
occupations held disproportionately by men.
Filer does confirm that within an occupation
women earn less, but not because it is an
occupation dominated by women. This dis-
tinction may be subtle, but the potential
vali(lity of a comparable worth policy may
hinge on it.
Filer's findings, however, are weakened
by the weak rationales for some of the many
variables in his analysis (some of which may
be correlated with percent female rather
than with compensable job factors). Parcel
has employed a technique (factor analysis)
that is clesigned to reduce a large number
of variables to a few theoretically coherent
and more easily interpretable major factors.
OCR for page 12
12
When her regressions are run separately
for men and women, she, like Filer, finds
no effect for percent female on the earnings
of women, but unlike Filer, she finds a
significant and sizable negative effect of
percent female on the earnings of men in
the occupation.
Implementation of Comparable
Worth Policies
Comparable worth policies have been im-
plemented in some private firms and gov-
ernmental jurisdictions of various sizes. Three
papers in this volume address the effect
such policies have had. Two of the papers
investigate the impact of state-imposed com-
parable worth legislation on the state-wide
government pay schedules in Iowa (intro-
duced in 1985) and in Minnesota (passed
in 1982~. The third studies the effects of a
national policy of pay equity introduced in
Australia ant] Britain in 1975.
lowa's Comparable Worth Plan
Orazem and Mattila study the case of
Iowa, a state that hired a consulting firm
to evaluate the 800 job classifications in the
state employment system and, according to
the authors, instructed the firm to "ignore
market wages in conducting its analysis"
and in making its recommendations about
changes in wage structure. The firm used
a point system to evaluate the attributes of
the job or its requirements, using skill level,
effort, responsibility, and working condi-
tions to determine the "worth" of the job.
As Orazem and Mattila describe it, the
recommendations of the firm were modified
in the political process of implementation,
in which the employee unions and state
political leaders figured prominently. In ear-
ly 1985 the new system went into effect,
at an estimated wage-bill cost to the state
of about $19 million annually roughly $1,000
per employee.
Orazem and Mattila take the state pay
PAY EQUITY: EMPIRICAL INQUIRIES
schedule of December 1983 (before com-
parable worth) as the benchmark for their
study. They use a 20 percent sample of the
personnel files of the state's employees,
gathering information on the individual's
personal characteristics and experiences as
well as his or her job and pay. For the 3,734
persons on whom 1983 actual biweekly earn-
ings are known, Orazem and Mattila cal-
culate two additional earnings figures: (1)
the earnings associated with the consulting
firm's pay recommendations, based on the
comparable worth study (the "recommend-
ed" earnings), and (2) the earnings associ-
ated with the compromise plan actually im-
plemented in 1985 (the "compromise"
earnings). These latter two biweekly earn-
ings figures are counterfactual estimates,
not the actual earnings of employees. Or-
azem and Mattila contend that this esti-
mation scheme gives them a clearer picture
of the effect of the new scheme, without
confusing it with the many other factors
that may also have affected wages between
December 1983 and the introduction of the
actual plan some 15 months later.
Orazem an(l Mattila then perform several
regression analyses of the log of biweekly
earnings, using each of the three earnings
figures separately. The authors compare the
effects of personal characteristics and job
attributes on the wages actually paid in 1983
to their effects on the recommen(lecl wages
and to their effects on the compromise
wages.
Nearly half the employees in the state's
wage system were women, and Orazem and
Mattila found that the biweekly wage of the
women initially was about 78 percent that
of the men, unstandarclize(l for anything.
By comparison, the recommended plan would
have raised that raw proportion to 86 per-
cent, an(1 the compromise plan that was
actually implemental would have raised
that proportion to 82 percent of the males'
wages. After adjusting for human capital
variables, Orazem and Mattila estimate, by
one technique, that the women's biweekly
OCR for page 13
ASSESSING THE ISSUES
initially was 94 percent that of the
wage
men s wage, and that the recommended
plan would have raised that proportion to
complete parity (100 percent); the compro-
mise plan would have raised the proportion
only to 96 percent. (Other techniques of
estimating these figures yielded somewhat
different results, but the qualitative con-
clusions here are robust.) They suggest that
the women's biweekly wage was raised
through the compromise plan by about $50
and the men's wage was raised by about
$30, for an average increase of about $40,
which translates into a $1,000 annual earn-
. .
1ngs Increase.
Orazem and Mattila detail in their paper
the major factors determining the actual
1983 wages ant] discuss the changes in the
effects of those factors implied by the rec-
ommencled and compromise plans. The
compromise plan resulted in a tiny reduc-
tion in the dispersion of biweekly earnings,
compared with the 1983 actual distribution.
It is interesting to note that the recom-
mended plan dicI in fact completely elim-
inate the statistical significance of the vari-
able "percent female" as a determinant of
the wage, thus eliminating a strong negative
14.6 percent effect on the actual 1983 wages.
The compromise plan, by contrast, restored
(or retained) a small gender differential of
5.8 percentage points. The recommended
plan would have involved pay cuts for 7,300
workers and increases for 10,750, but one
element in the compromise was that no
one's wage would be lowerecI.
Regarding the factors determining wages,
Orazem and Mattila point out that from a
human capital perspective, the "measured
discrimination against women is very slight"
in the sense that measures ot Skill and
market conditions appear to explain nearly
all of the variation in wages (R2 = .815 in
their Table 8-3, including the human capital
variables but exclucling the proportion fe-
male of a job). But they also point out that
from the perspective of a comparable worth
advocate, their comparable worth mode}
13
implies that "large discrepancies in pay exist
between men and women because women
are concentrated in jobs that are paid below
the value placed on comparable male jobs."
(I.e., R2 = .769 in their Table 8-4, the
mode! including percent female on a job.)
As so often is the case, one's perspective
on the finding can dramatically influence
the interpretation it seems to support.
In her discussion at the authors' work-
shop, panel member Schoen pointed out
that readers of the paper could more ade-
quately form their own interpretations if
the authors had provided more description
of the institutional factors at play in Iowa.
From her own experience with job evalu-
ations, unions, and comparable worth, Schoen
believes outcomes will vary substantially
from state to state. Although protection
against lower wages is a common outcome,
she stressed that wage protection is often
not accomplished by altering factors and
weights in the job evaluation scheme, but
by protecting current workers. An uncler-
standing of the particular economic an
political situation the unions and state lea(l-
ers faced wouIc] help the reader evaluate
the reasonableness of the outcome.
Pay Equity in Minnesota
Evans and Nelson study the case of Min-
nesota, which passed pay equity legislation
in 1982 for its state employees. The new
policy was implemented over 4 years be-
ginning in 1983. Minnesota had since 1979
had a job evaluation system based on a point
factor scheme. The pay equity legislation
of 1982 built on that scheme, requiring a
single job evaluation system for all job clas-
sifications in the state employment system.
The evaluation measured the skill, effort,
responsibility, and working conditions off
each job and yielded a composite score for
each job. All job classifications with the
same score were then considered to have
equal value and, hence, to command equal
pay. Evans and Nelson stress that con-
OCR for page 14
14
versing this score into pay level was un-
ciertaken in Minnesota using the white mate's
'wage as the norm.
The vast majority (86 percent) of Min-
nesota state employees are represented by
unions, including a large majority of women
working for the state. Neither the unions
nor the state government aggressively a~l-
vertisec] or notified employees of the impact
of the pay equity legislation. "Changes in
one's paycheck formed the major 'notifi-
cation' of pay equity, a notification that did
not distinguish between regular pay raises
of approximately 3 to 4.5 percent per year
and the additional increment due to pay
equity raises." Over the 4 years of imple-
mentation (1983-1986), Evans and Nelson
report, about 8,500 of the state's 34,000
employees received pay equity raises, an
of those 90 percent were women. The raises
added about 3.7 percent to the state's wage
bill.
Evans and Nelson report findings from a
telephone survey in June 1985 of about 500
state employees. The survey asked the re-
spondent about his or her "support for,
knowledge about, receipt of, and reactions
to pay equity." The employees were rela-
tively well eclucated (e.g., 37 percent had
a bachelor's degree or more), and a majority
had worked for the state for more than 7
years. The average salary of state employees
in 1984 was $22,500. While Orazem and
Mattila consider the economic impact of the
pay equity legislation in Iowa, Evans and
Nelson focus on the psychological effects in
Minnesota in terms of the attitudes and
knowledge of state workers about the new
scheme.
The survey indicates that the employees
overwhelmingly supported the concept of
pay equity; support for the concept ap-
peared to be strong at both ends of the
political spectrum and both ends of the
occupational ladder. Likewise, the survey
indicates the actual policy of pay equity was
well known to the respondents: 82 percent
of them ha(l heard of pay equity or com-
PAY EQUITY: EMPIRICAL INQUIRIES
parable worth legislation. Evans and Nelson
characterize the specific understanding of
the (letaits of pay equity as "quite knowI-
edgeable," based on the respondents' an-
swers to the questions in the survey.
The most intriguing findings in the sur-
vey, as Evans and Nelson stress, involve a
comparison of whether the respondent
thought he or she received a pay equity
raise comparer] with whether he or she
actually received one. The authors had in-
formation on actual raises from the state
employment records and could compare
those facts against the telephone responses
to questions about whether a raise was
received. Recall that, for reasons the authors
describe in their paper, neither the unions
nor the state employment office made a
major effort to inform the employee about
his or her pay equity raise. The fincling is
striking: Of those who actually received a
pay equity raise (nearly one-third of the
survey sample had received a raise), 56.9
percent knew they receive(l one, 21.6 per-
cent reported not receiving one, and 21.6
percent never had heard of the pay equity
policy. As Evans and Nelson say, "the social
movement potential of pay equity is cer-
tainly unfulfilled if 43.2 percent of the peo-
ple who benefit from the policy are unaware
of their benefits." About half the sample
correctly reported that they received no pay
equity raise. The accuracy of the reporting
was greater at higher levels of education
and salary.
Evans and Nelson discuss the role of the
union in supporting the implementation of
pay equity and its strategy of avoiding pub-
licity about its implementation. They con-
clude that the strategy dampened both op-
position to and support for the pay equity
policy. In fact, of those surveyed 36 percent
reported that they believer! that pay equity
policy causerl many problems in the work-
place, despite the overwhelming support of
it as a concept.
In commenting on the Evans and Nelson
paper at the authors' workshop, panel mem-
OCR for page 15
ASSESSING THE ISSUES
her Waite noted that a single cross-sectional
telephone survey cannot elicit information
about how the change in wages changed
job satisfaction or attitudes toward pay eq-
uity The survey offers only a static view,
as the authors acknowledge. Waite also com-
mented on one of the unique factors at play
in the Minnesota case, as described by
Evans and Nelson: The job evaluation hac]
been done prior to the adoption and im-
plementation of the comparable worth pol-
icy. Thus, the general realignment of jobs
and pay that often results from a new pay
plan was not part of the comparable worth
process. The comparable worth realignment
was allowed to be a more specific, limited
event. Waite suggested that the strong con-
sensus in favor of comparable worth in Min-
nesota may not be easily achieved in other
states, where the job evaluations and re-
sulting wage realignments are more directly
occasioned by the comparable worth policy
itself.
Women's Pay in Australia,
Great Britain, and the United States
Gregory, Anstie, Daly, and Ho provide
a very different empirical inquiry from oth-
ers in this volume. Their study provides a
two-decade perspective on the relative earn-
ings and employment of women in three
nations. They point out that Australia and
Britain have experienced substantial in-
creases in the female-male earnings ratio
over the past 20 years but that same ex-
perience has not been shared by workers
in the United States. In their paper, Gre-
gory and his colleagues address three ques-
tions about that experience and attempt to
synthesize the evidence from the three
countries.
In Australia, wages, or minimum wage
rates, are awarcled by an official network of
governmental tribunals for every occu-
pation in the nation, for both the private
and public sectors. For the period from
1950 to 1969, Gregory ant] colleagues tell
15
us that the official wage setting boards ex-
plicitly market! down the wage in all oc-
cupations clominated by women to 75 per-
cent of the wage received by men. The
wage levels set were explicitly lower for
female occupations than for male occupa-
tions. Over the 6 years from 1969 to 1975
that official practice was eliminated and the
average wage ratio of awarded female to
male wages rose accordingly from 72 percent
to 92 percent, a dramatic change in a very
short time span. That historic experience,
mirrored in somewhat mutec] form in Brit-
ain, makes the three-country comparison
quite informative.
The first question a(ldressed by Gregory
and colleagues is why the relative earnings
of women compared with men are so dif-
ferent in the three countries. In 1981 in
Australia full-time average earnings of wom-
en were 79 percent as much as men, while
in the United States and Britain women
earned only about 60 percent and 64 percent
as much as men, respectively. The authors
use a conventional human capital moclel
approach to attempt to provide an expla-
nation. Their data consist of weekly full-
time wage and salary earnings from house-
hold survey data from each of the three
countries—a 1981 survey in Australia and
in Britain, and the March 1982 Current
Population Survey in the United States.
A standar(l (lecomposition analysis is per-
formed to see if the observed differences
in weekly earnings of full-time workers are
attributable to differences in the human
capital endowments of men and women,
that is, to differences in schooling, job ex-
perience, marital status, and the presence
of children. Although the statistical mode}
for each country performs reasonably well,
and to a similar degree, as an explanation
of the variation in earnings among men and
women, it does not explain why women
earn so much more relative to men in Aus-
traTia. They conclude that the human cap-
ital endowments of women relative to those
of men, seem to be much the same in each
OCR for page 16
16
of these countries." Since large differences
do not exist between women and men in
one country compared with another, those
human capital differences cannot explain
the differences in relative earnings.
The second question Gregory and col-
leagues consider is why the pay ratios have
changed so dramatically in Australia and in
Britain but not in the United States in recent
years. The answer, they argue, lies in in-
stitutional considerations. In Australia, the
governmental tribunals simply changed the
acceptable relative wage from one that was
substantially lower for women than for men
to one that reflected "equal pay for work
of equal value" without regar(l to the sex
of the employee. In Britain, too, the authors
describe a predominantly regulated wage
structure in which national agreements in-
volving large unions set rates of pay for a
wide range of workers. Explicit discrimi-
nation against women in pay rates charac-
terized the British labor market, say Gre-
gory anti his colleagues, until the Equal Pay
Act of 1970, which became effective in
December 1975. Table 10-3 in their paper
shows the dramatic rise in the relative wages
of women between the passage of that act
and its implementation.
In Australia and in Britain, Gregory and
colleagues contend, "it was relatively easy
to remove that which was identified as pay
discrimination and, as a result, to affect
dramatically the pay relativities between
the sexes." In the United States, the federal
legislation designed to achieve "equal pay
for equal work" was passed earlier than in
the other two countries—as early as 1963
or 1964. Its effect, however, is not nearly
so evident in the aggregate time series data
on relative wages, and the authors offer
several conjectures about why that is so.
They note that the large-scale institutions
in the Australian and British labor markets
(the minimum wage tribunals and collective
bargaining agreements) had ma(le the dis-
crimination implicit in market wages ex-
plicit; the same large-scale institutions coul
PAY EQUITY: EMPIRICAL INQUIRIES
correct the explicit discrimination. In the
Uniter! States there are no comparable large-
scale institutions, and wage changes thus
depend on the decisions of many actors in
the labor market.
The third question acldressed by the au-
thors has to do with potential side effects
from the comparable worth medicine, spe-
cifically potential employment loss. They
ask how the dramatic change in female
earnings rates in Australia and Britain has
affected the employment rate and the un-
employment rate of women. The answer is
a surprising one: The effect seems to be
very slight. The female share of total hours
worked rose over the period 1970-1984 in
all three countries (by 25 percent in Aus-
tralia, by 27 percent in Britain, and by 31
percent in the United States), but the rel-
ative wage of women rose substantially more
in Australia relative to the other two coun-
tries. The small employment responses to
the sharp changes in relative wages of wom-
en in Australia and in Britain are surprising;
they imply, the authors contend, a very low
substitutability of men for women in the
productive processes of the country. Their
"cursory glance 'at unemployment rates also
suggests only a slight impact in the relative
(remand for female workers in Australia.
Ehrenberg, in his comment, calls atten-
tion to the virtues of bringing an interna-
tional comparative perspective into the cle-
bate about the policy of comparable worth
in the Unitecl States. He argues, however,
that the authors have not "pushed their
empirical analyses as hard as they might
have," and consequently, they may have
drawn some inappropriate conclusions. For
example, Ehrenberg notes that the coeffi-
cients on human capital variables differ from
country to country, but that insufficient
explanation is offered. Both Ehrenberg and
the authors note that such differences could
be attributable to either real phenomena,
such as differing labor market structure, or
measurement errors. The reasons need to
be further explored. Ehrenberg would also
OCR for page 17
ASSESSING THE ISSUES
like to see a more thorough analysis of the
relationship between changes in the relative
wage of women and changes in employment
and unemployment levels.
One of the more intriguing implications
of the paper by Gregory and his colleagues,
as Ehrenberg notes, is that it may be easier
to raise the relative wage of women in a
country where wages are centrally set and
where there has been explicit discrimina-
tion. In the United States, where the labor
market is highly decentralized and where
discrimination in wage setting is unlikely
to take such an overt form, the circum-
stances may prove more difficult to change.
CONCLUSION
No single paper or volume can resolve
major social issues like the one addressed
here. The papers collected in this volume
contribute to a better understanding of sev-
eral dimensions of wage differentials and
the comparable worth remedy. First, they
substantiate differences in wages between
women and men, even after measurable
productivity-relatec] variables are taken into
account. Second, they explore the role of
occupation in the wage determination pro-
cess, investigating the particular role played
by the female dominance (percent femaTe)
of an occupation. Third, they examine em-
pirically the results of implementing com-
parable worth or comparable worth type
policies in several real world situations. In
none of these areas are tong-standing de-
bates resolved, but the papers do contribute
to consensus on several important issues.
Research Consensus
The papers substantiate the fact that wom-
en earn less than men after adjusting for
measurable factors that might affect labor
productivity. Several of the papers focus on
estimating the components of these wage
differences (Sorensen and Gerhart and Mil-
kovich at the indiviclual level, and Parcel
17
and Filer at the level of average occupational
wages). Others investigate mechanisms by
which that fact comes about (Nakamura and
Nakamura, Subich and colleagues, Baron
and Newman, and Gerhart and Milkovich).
None of the studies disputes the existence
of a difference in wages for men and women,
although Filer contends it is not related to
the female dominance of a given occupation.
The role of percentage female is not re-
solved, though consensus has emerged on
the proper way to assess its effects. A re-
lationship between percentage female ant]
average wages of an occupation (the weight-
ed average of the male ant] female wages)
could simply reflect a compositional effect
of more or fewer women if women are paid
less than men in each occupation. To iden-
tify an effect on wages of the female (lom-
inance of an occupation per se, all other
things being equal, the wages of women
and men must be examined separately (or
normative wages rather than actual wages
can be used, as in the Baron and Newman
study). Except for Filer (using 1980 census
data) and Gerhart and Milkovich (in a single
firm), the studies reported here do fine] a
significant net effect on wages of percent
female in an occupation, when other factors,
such as productivity differences and job
requirements are taken into account. The
Baron and Newman study of listed starting
salaries of jobs in the California civil service
provi(les perhaps the most dramatic results:
When women or minorities enter occupa-
tions the starting salaries fall, everything
else, including job requirements, being
equal. Such a finding suggests that jobs may
be devalued by employers when women and
minorities do them supporting a premise
that lies behind the comparable worth rem-
ecly. Alternative explanations, however, are
also possible for example, that wages fall in
response to changed conditions and then
women and minorities take jobs that white
men no longer fief] attractive.
Consensus also emerged on the effects of
comparable worth policies. The dramatic
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18
turnabout in the nationally administered or
regulated wage setting environments in
Britain and, especially, in Australia have
had little negative impact while moving the
wage structure dramatically closer to gender
equality. In Australia, the actual wage ratio
increased from 59 to 74 percent and in
Britain from 60 to 71 percent between 1964
ant] 1979; comparable worth type policies
in the two countries eliminated 37 and 28
percent of the wage gap, respectively. In
the United States, Sorensen estimated the
maximum proportion of the national wage
gap that couIcT be eliminated by comparable
worth at 20 percent, and in the two actual
cases reported here (Iowa ancl Minnesota)-
both, not surprisingly, involving plans that
resulted from political compromise, the re-
ductions amounted to 18 percent and 15
percent of the respective wage gaps. Al-
though the size of these effects suggests
that comparable worth policy is not as rev-
olutionary as some might have hoped, it
nevertheless amounts to a substantial im-
provement for women workers, without ap-
parently causing negative side effects.
Though the outcomes of comparable worth
policies have varied according to the locale,
positive effects and minimal negative side
effects have generally been reported in
the three cases presented here. The three
papers on comparable worth implementa-
tion taken together attest to the significant
impact public policy can have on wages.
The impact was large in Australia, where
labor market institutions are centralized,
and smaller in the United States, where
labor markets are far more decentralized.
Research Needs
While there is consensus on some issues,
many questions remain unanswered. The
studies reported here suggest several new
directions for research. Nakamura and Nak-
amura's investigation of the crowding pro-
cess finds that in states where there are
more young women, relative to others, their
PAY EQUITY: EMPIRICAL INQUIRIES
wages are lower and that women with fewer
years of eclucation and more children are
more affected by crowding than others. Their
study could be replicated for occupations
(rather than states) to see which occupations
are more susceptible to crowding. The paper
by Subich and her colleagues reports pilot
studies of students that investigate whether
their attitudes ant! expectations might con-
tribute to lower earnings for women. The
pilot studies suggest that risk-taking be-
havior of employees in firms, where salary
history data exist, might be a fruitful area
for further research.
Several of the studies report evidence of
improvement in the relative position of
women in the past few years: Gerhart and
Milkovich, in their single-firm analysis, find
that in recent years women have received
more salary increases and promotions than
men. Baron ancl Newman, despite their
generally negative finclings, do find that
starting salaries in new jobs are less affected
by gentler and race/ethnicity bias than are
starting salaries in older jobs. Further in-
vestigation of the extent of change and the
reasons for the change wouic! be useful.
The introduction of comparable worth
legislation in the states of Iowa and Min-
nesota has improved the relative economic
position of women civil service workers
without having ha(l major adverse effects
on the state budgets or having engenclerec!
political tensions, as reporter] by Orazem
and Mattila and by Evans an(l Nelson. In
neither state, however, was the relative
wage of women to men raised by more than
8 percentage points (in Iowa, the relative
wage went from 78 percent to 82 percent
and in Minnesota from 74 percent to 82
percent). Neither of these papers addresses
effects beyond the civil service labor market
within each state. It would be of interest
to know if any effects are felt by private
employers or local governments, and wheth-
er they are positive or negative.
Further research on the mechanisms
through which the earnings of women and
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ASSESSING THE ISSUES
men are made to differ also seems warranted.
The papers in this volume provide evidence
of the salience of gender in the labor market,
both in terms of wage differences and sex
segregation. Many, but not all, of the papers
find that the proportion female of an occu-
pation Towers its wages. Several of the Caners
also find that percent female has a negative
effect on wages for men, but not for women,
within an occupation. The interpretation and
policy implications that follow from these
findings deserve more attention. Whether
women choose female-dominated lobs. ner-
haps because there are compensating non-
wage differentials or because women's pref-
erences differ, on average, from men's; whether
they are tracked into them; whether women
are discriminated against whatever their
choices; whether men are discriminated against
within female occupations; or whether other
(as yet unmeasured) factors are important,
we still do not know.
Several of the papers suggest research
(Erections that may be especially promising.
Ffler's results suggest that the more sig-
nificant portion of discrimination may occur
within occupations rather than between them.
This in turn suggests that differences be-
tween firms or industries in their "treat-
ment" of occupations might be important
and that the practices of individual em-
ployers should be examined further. Ger-
hart and Milkovich's finding that job as-
signment "explains" sex differences in wages
suggests that the process of job assignment
within the firm should be examined. What
motivates individuals, both employers ant]
employees, in job assignment, pay setting,
job selection, and wage acceptance is sug-
gested as a useful area of study by several
of the papers, especially the one by Subich
and colleagues. Further historical and in-
stitutional studies of how things "came to
be" are also warranted. The papers taken
19
together also suggest that further research
on measurement issues is important, in-
cluding research on the variables that belong
in the list of legitimate contributors to ex-
plaining the wage gap. As we suggested
above, further research on the general equi-
librium consequences of comparable worth
implementation is also warranted. Both the
potential spill-over effects from one sector
of the economy to another and the general
influence on the labor market have not been
adequately explored.
There are numerous labor market ant]
comparable worth studies that will be use-
ful in answering the basic questions "why
are women pair] less than men" and "what
should be done about it, " but we The editors
of this volume, although not necessarily the
members of the full panel] suggest that an
acI(litional fruitful line of inquiry in the near
future may be investigation of the relation-
ship between gender ant] social behavior
more generally. How do the social expec-
~ons of men and women generally in
and out of the labor force affect their
earnings and opportunities? How are female
earnings and the (listribution of family in-
come relate(l? Differences in the roles of
women and men in regard to the important
social responsibility of raising children may
have significant labor market implications.
The expectations for the genders in the
conduct of familial and household duties
and in political, religious, and sexual be-
havior are examples of some of the areas
that need to be better stuclied for their
impact on labor market outcomes.
The economic realm ant] labor earnings
in particular do not exist in isolation from
other aspects of the genclerec! division of
social life more generally. Both research
and policy intervention will be more suc-
cessful if they are pursued in this broader
context.
. . .
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Representative terms from entire chapter:
labor market
