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Equivalent value language about pay was written into the original Canadian Bill of Rights after they carefully studied the flaws in the U.S. pay equity laws. "Comparable Worth" (CW) has been a success wherever applied, from Australia to Europe.

Red-herring arguments will be launched against it, so get ready for the silly season of outrageously ridiculous accusations. Because no comparable worth advocate would ever claim that a secretary should automatically be paid as much as a truck driver; although a good argument could be made that a Secretary of State should be paid more than her chauffeur. CW means that whatever methods or rules a particular enterprise uses to classify jobs or set their pay values should not be biased against protected classes. The same protocols the entity uses to pay WASPS should be applied to others, for example. Value systems vary, so each employer can have its own unique program, but it must be a neutral one with no disparate negative impact on protected classes. CW works more efficiently than the hodge-podge of disparate pay programs cobbled together in the typical large firm to maintain the systemically discriminatory pay practices that doom most workers to a pay ghetto unless they are lucky enough to break into "a man's job."

Some congressional testimony on the topic is here http://www.paq.com/edot/pdf/IPS.pdf. A comprehensive GAO report is out of print but still available under the title Description of Selected Nonfederal Job Evaluation Systems, GAO/GGD-85-57, July 31, 1985, available from either GAO or the Gov Printing Office.

Most employers are justifiably terrified of Comparable Worth because it will require change. CW will indeed expose unsupportable pay practices that must be abandoned and will identify gaps that must be closed. Both cost money.

Jim:

You and I have had this discussion before. :)

Everyone else:

So, Jim says no problem, no unintended consequences and the only issue with implementing comparable worth is that it requires change. Do you agree? Let's hear from others.

It is, coincidentally, Equal Pay Day today. Didn't realize that when I posted this, but now would like to take credit for my astute sense of timing. Let me also say that I am FOR equal pay and AGAINST pay discrimination. My intent and focus is to be sure that we address pay discrimination in a way that is not anti-business and doesn't produce negative consequences that far outweigh the good we do. But enough about me - I want to hear from you.

Anybody? Anybody?

Ann,
I need to do some more research before registering anything that might be construed as an opinion. However (notice how lack of detailed understanding hasn't kept me quiet?), I am concerned about potential impact on geographic pay differentials. Nothing I've read includes geographic differentials in the list of valid reasons for different pay.
Am I needlessly concerned?

Steve:

With the broadening of the definition of "establishment" to allow comparison of wages across different locations in the same county or political subdivision of a state (versus one location), this is a concern that others have mentioned as well - including SHRM, in the statement it released in response to the House passage of the PFA...
http://www.shrm.org/Advocacy/Issues/CivilRights/Pages/PaycheckFairnessAct.aspx

In our years of job evaluation and compensation consulting, we have seen both intentional and unintentional systemic pay inequities. Most of the CEO's and top leaders have expressed amazement and concern when pay inequities have been identified. We have found that the majority of these clients have worked to address these pay inequities and they have implemented comparable worth and pay analysis systems to maintain fair base-pay programs. If the Paycheck Fairness Act passes with the comparable worth language, I believe it will be interesting to see how it influences or restrains the more individualized pay for performance initiates since compensation budgets are tight due the economic downturn.

Blair:

Thanks for sharing your experience here. I certainly agree that it will be interesting...

Geographic location is such a neutral but (regressively) significant compensation variable that I can't imagine how it could be banned. I am unaware of any way geo diffs could be realistically applied that would have disparate effect on protected classes. If you pay less in Dothan than in Manhattan, that would be constent with the market differences and all employees in each location would be equally affected. Remember, many states have over-rides to the FLSA minimum wage, so employers are legally required to follow geographic patterns at the very bottom. Even the federal government applies geographic pay differentials.

Government policies do have unintended consequences. Actually, it could be argued that all policy decisions have unintended consequences. A quick review of the shifting history of pay-for-performance / balanced score card approaches should suffice as evidence for our context.

In most of our organizations, we attempt to empower the people closest to the challenges to solve the issues they face because things often get lost in translation and because those closest to the issues are best informed to make decisions and course adjustments.

In my opinion, this legislation would probably have the opposite effect, taking the decisions out of the hands of managers and compensation professionals and placing those decisions increasingly in the regulatory stratosphere where feedback loops are non-existent and where bad policy decisions are rarely reversed even after a partisan shift.

Let's say a company has a point-factor job evaluation system, and applies those points against the market for truck drivers to determine their pay system parameters. Let's also say that the same company uses the same point factor system for all their positions, but applies those points against the market for customer service representatives to determine their pay system parameters.

Same job evaluation system; same points (at least in this hypothetical scenario); but the points are used against two separate and distinct labor markets.

If I understand the comparable worth philosophy, the company should pay their truck drivers and customer service reps equally based on the internal job evaluation system, and not give any separate weights for the different truck driver and customer service labor markets.

While I haven't given this issue the life-long study that my friend Jim Brennan has given to the issue, I can't help but think there will be unintended consequences of disregarding the labor market when making comparable worth pay decisions.

If you disregard the labor market you may find yourself overpaying in one market and underpaying in another. To solve recruiting challenges you'd end up having to overpay one group of employees in order to get the other group of employees to market rates.

Then you have another unintended problem (trust me I've seen this). The group that is just at market will insist that they be overpaid like the other group!

To me this is not a sound way of making compensation decisions.

I believe in equal pay for equal work. But equal pay for equivalent work is a different matter.

Jamie:

Thanks for the clear and well-expressed points; you articulated a major aspect of my concern much better than I've been able to.

Paul:

Good example; when you get away from lofty rhetoric to the nuts and bolts of how pay design and management decisions are made (which is the level I am better able to understand), I can't see how we avoid having to override market practices and pressures with "politically correct" internal factors ... or how we avoid the consequences which would stem from this. I've touched, broken apart, analyzed and worked with a lot of internal job evaluation systems, so I feel I have a pretty "hands-on" sense of what they do and how they work. We may indeed, as Jim states, uncover and be better positioned to address discriminatory practices, but it is my belief that we will be throwing out an awful lot of baby with the bathwater.

Thanks so much - everyone - for the continuing discussion here.

Most excellent example, Paul, because that's precisely how the Tennessee Valley Authority maintained the traditional pay differentials between the male jobs and the female jobs back in The Day. They used the same evaluation system but compared some jobs to the big-city competitive market rates and other jobs to the strictly local small-town market rates. Guess how the results fell out?

Statute of limitations is probably long expired, of course. That wasn’t a “realistic” technically-appropriate application of neutral geo diffs, IMHO, since the workers were all employed in identical locations. The union considered it a careful deliberate manipulation to create a systemically discriminatory result; but it was legal.

Not nice, to put some babies in an acid bath.

Jim,

Obviously I'm not as familiar with the TVA case as you are, but from your first paragraph it sounded like TVA was using GEOGRAPHIC considerations to differentiate the pay policies.

In the hypothetical example I provided my focus is more on the labor market for the different POSITIONS - i.e., the labor market for truck drivers versus the labor market for customer service reps.

While the grand total of job evaluation points may end up being the same, isn't there still the potential of being a very different supply and demand for truck drivers and customer service reps? That difference in supply and demand could result in a differentiation of market labor rates that have nothing to do with "gender discrimination".

Yes, you are correct about job evaluation. Job evaluation can be either a cause of improper discrimination or a solution to improper discrimination. If job evaluation is used to establish pay, then your job evaluation system could be challenged as biased if it produces systemically discriminatory results.

In the TVA case, they selectively defined their competitive market targets with geographically diverse selections even though the employees worked in the same location. The geographic source of the competitive market data was different despite all being employed in the same work location.

By the way, I just discovered that the link I supplied above to EEOC testimony about job evaluation and pay discrimination ( http://www.paq.com/edot/pdf/IPS.pdf ) won’t take you directly to the testimony as long as it has a period embedded at the end. That ancient speech is all about this precise subject. The facts haven't changed, either.

Jim,

Great article! Thanks for sharing it.

My great take-away from the 1980 article was that if a company is paying disparate rates of pay within their company, one solution would be to adopt a solid job evaluation system. I have no quarrel with that, if that's the best that a company can do to address their issue.

But my concern is that even with a rock-solid job evaluation system, the forces of supply and demand can still impact the market wage rates for different positions. And supply/demand fluctuations are not necessarily related to gender discrimination.

My fear is that well-intended federal legislators are so convinced that wage differences are related to gender discrimination, and have such a great desire for social engineering to address differentials they don't understand, that they overlook the influence of other factors that impact differences in compensation levels.

And think about the idea of our elected officials trying to legislate how job evaluations should be conducted in support of their "comparable worth" philosophy. People in the compensation consulting business know better than I do the varieties of job evaluation systems that may be out there. It opens up a whole new arena of litigation. Or at worse, it opens up a whole new era of federal government oversight on company job evaluation systems.

Maybe I'm a little naive on this subject but I still believe in Adam Smith's invisible hand of the marketplace that produces a more efficient allocation of resources than what a well-intended, but short-sighted, legislator can produce with "comparable worth" interventions.

I see no reason for any government agency to ever meddle in job evaluation. Agree that it's not their business as long as the results are not biased; MN has long had a comparable worth law on its books, just like many nations. No two firms have precisely the same job evaluation plans with the exact same values for each job, nor should they, since those are just measurement tools that should serve the entity's total reward policy, and no two firms pay identically.

It's exactly like employment testing... government didn't get into the testing business when it required that employment tests be validated for neutrality.

Most Job Evaluation (JE) systems reflect internal equity considerations; a few are more carefully crafted to also directly determine and assign pay rates; the majority require a separate classification process to assure that the internal ranking values can be translated into market-clearing pay ranges. It's only when employers hide behind their unique JE program to justify sex-based or race-based adverse pay treatment that the regulators may get suspicious and demand proof of non-discriminatory design. If you can prove that drivers are worth more than secretaries, even when everyone knows that drivers exist in far greater supply and are less in demand than shorthand-capable secretaries, you can prevail with a "pure market place" argument.

This illustrates the real risks of CW... if an employer offers its JE plan as a defense against clear evidence of disparate impact, it opens a door. Close examination may expose and reveal a lot of illegitimate shenanigans formerly hidden from sight within "black box" JE plans or classification schemes that were previously secret and thus immune from examination. No one want new troubles... we have enough old ones already.

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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