Wage Equity for Women: Gender Pay Gap and Comparable Worth

Compensation and the 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 its labor force, and rewarding employees for their contributions. 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.

Comparable Worth and the Equal Pay Act

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 those 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.

Workforce Trends and Pay Differentials

In the decades since Taylor (1989) argued for the 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 faring 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 of 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 that 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 toward a reduced gender gap in compensation over time, the magnitude of pay discrimination is much greater for older women who may be working in jobs comparable to those of their younger counterparts. One excuse offered for the disparity in pay between older men and women is a difference in educational attainment, which would explain why younger women—who are more likely to hold a college degree—experience a smaller pay gap. However, the gender pay gap actually increases with increasing levels of education.

References

National Women's Law Center. (2013). 50 Years & Counting: The Unfinished Business of Achieving Fair Pay. Retrieved from

Perry, J., & Gundersen, D. E. (2011). American women and the gender pay gap: A changing demographic or the same old song. Advancing Women in Leadership, 31, 153–159.

Taylor, S. H. (1989). The case for comparable worth. Journal of Social Issues, 45(4), 23–37.