Still a Ways to Go: Gender Pay Gap

Wage Equity for Women

Compensation and Gender Pay Gap

Compensation is one of the main functions of human resource management (HRM), with the goals of meeting an organization's objectives, maximizing an organization's investment in a labor force, and rewarding employees for their contribution. Ideally, HRM should implement a compensation policy that provides equitable and consistent treatment for all employees, thereby improving productivity, employee retention, and loyalty. The term 'procedural justice' has been used to describe this process and represents, for example, whether an employee perceives a compensation policy as equitable and fair.

Based on Taylor's (1989) analysis, the Equal Pay Act of 1963 fails to address procedural justice because it ignores jobs with 'comparable worth.' The Equal Pay Act requires equal compensation for equal work, but Taylor (1989) points out that jobs with equal value to an employer or society also deserve equivalent rates of compensation, regardless of whether comparable jobs entail the same education, skills, responsibility, and tasks. The standards used to determine comparable worth are internal and external equity, which represent pay rates that accurately reflect differences in job content within an organization and across an industry, respectively. The use of these standards, however, becomes problematic when evaluating whether there is evidence of gender discrimination within a female-dominated profession.

In the decades since Taylor (1989) argued for implementation of HRM policies based on comparable worth, there has been much progress for women in the workforce. Perry and Gundersen (2011) list these improvements, including women representing nearly 50% of the workforce and recently outpacing men in earning undergraduate and graduate degrees. The number of women working in historically male-dominated professions has also been increasing, but the pay gap between men and women remains significant at 20% overall, with younger women doing better than their older counterparts. In support of this finding, Perry and Gundersen (2011) present data showing that women in management, engineering, and information technology earn significantly less than men, in contravention to the scope and purpose of the Equal Pay Act.

Taylor's (1989) argument for equitable treatment based on comparable worth still seems valid in light of the pay differential between women currently entering the workforce and older women who have been in the workforce for decades. For example, Perry and Gundersen (2011) cite data showing women between the ages of 16 and 24 experience a gender-based pay differential of 93%, while women aged 35 and older have a pay differential of 75%. While this does reveal a positive trend over time for a reduced gender-gap in compensation, the magnitude of pay discrimination is much greater for older women who may be working in comparable jobs to their younger counterparts. One excuse offered for the disparity in pay between older men and women is a difference in educational level, which would explain why younger women, who are more likely to have a college degree, experience a lower pay gap; however, the gender pay gap actually increases with increasing education.

Perry and Gundersen (2011) discussed the possibility that the gender pay gap may never completely disappear, because women making career decisions incorporate family and social considerations and men do not. Employers take into consideration family obligations, especially the loss of productivity when women decide to start having children. The overall effect of both factors is that women tend to seek female-dominated jobs with more flexibility, which in turn results in lower earnings. This in turn suggests that women self-segregate to jobs that are more forgiving of family obligations, such as child care and healthcare aids. These jobs will continue to pay low wages, as long as society continues to undervalue these professions.

The two issues of equal pay for equal work and comparable worth are addressed in a recent publication by the National Women's Law Center (2013). The persistence of a gender pay gap within a profession can be tackled, according to their analysis, by strengthening the equal pay laws, while comparable worth issues can be minimized by increasing access to male-dominated professions, raising the wages of female-dominated professions, and implementing family-friendly HRM policies in the workplace. Some of the problems with the current equal pay laws are employer loopholes, threat of retaliation, and limited awards for violations.