3. Scenario 1
Two graduating students are offered a
management trainee position by the Big
Blue Corporation after completing their
B.S. in Business from the University of
Kentucky. The woman student’s offer is
for $37,500 and the male student
receives an offer of $40,000.
– Is this pay discrimination?
– What additional information would you like to
have to determine if pay discrimination
exists?
4. Pay Discrimination
Defined
Access Discrimination
staffing & allocation
decisions
Valuation
Discrimination
pay received
Comparable Worth
equal pay for jobs of
equal value
5. Glass Ceiling
• Minorities & women experience barriers
to achieve highest ranks of the
organization
• Glass Ceiling Commission
• Barriers
– Assignments not related to career
progression
– Discounting performance
– Lower returns
– Limiting access to informal networks
– Family responsibilities distract from work
performance
6. Equal Pay Act, 1963
Forbids wage discrimination on the
basis of sex when:
– employees perform equal work in the
same establishment
– employees perform jobs requiring equal
skill, effort, responsibility & working
conditions
OK to discriminate based upon:
– seniority, performance, factor other
than gender
7. Four Factors Defined
• Skill
– experience, training, education, ability
• Effort
– mental or physical
• Responsibility
– degree of accountability
• Working Conditions
– physical surroundings and hazards
8. Four Factors Do Not
Include
• Household circumstances such as
number of children
• Why?
• Four factors focused on work: work
related
9. Equal v. Unequal Work
• Equal work
– Jobs must be substantially equal, not
identical
– Judged on actual work performed
• Unequal work - effort, skill
responsibility
– must be substantially greater
– must consume significantly more time
– must have value consistent with pay
differential
10. Reverse Discrimination
• White men claiming their pay is less than
women or protected class members doing the
same work
• Case 1: Nebraska
– created model for predicting pay
– raised salaries of women but not men paid less than
model
– violation of EPA
Case 2: Northern Illinois
– one time pay adjustment for women, not permanent
– no violation of EPA
Case 3: Northwest Airlines
– female flight attendants awarded back pay for sex
discrimination
– men argued they should receive back pay too
11. EPA Summary
• Pay system must have substantially
equal pay for substantially equal
work
• Work defined as actual work
performed
• Skill, effort, responsibility &
working conditions define work
• OK to pay women & men unequally
if based upon performance or
seniority
12. Title VII of Civil Rights Act,
1964
Forbids discrimination on the basis of
sex, race, color, religion, or national
origin in any employment condition
– Disparate Treatment : practices
which treat protected groups less
favorably
• must have intent
– Disparate Impact : a personnel policy
which on its face is neutral but has the
effect of discriminating
• intent not needed
13. Comparable Worth
Comparison of the value of jobs
- argues that jobs vary in pay
because of historical
discrimination
- Arises from sex segregation of
jobs
• Discrimination pervades entire
employment relationship including
pay
14. Comparable Worth: Legal
• Criteria is job evaluation
• Under Gunther pay discrimination can be
from dissimilar jobs
• AFSCME v. Washington
– State commissioned pay study showed female
dominated jobs paid less than male dominated jobs
– Did not adjust jobs based on study
– Court said that they had to raise wages because of the
study
– Comparable worth argument supported
• Market data is an acceptable defense for
dissimilar jobs
15. Title VII Summary
• Pay discrimination illegal if intent shown
• Pay discrimination also can be found
using statistics (adverse impact)
• However, Comparable Worth & Job
Evaluation studies do not demonstrate
intent
• Title VII goes beyond equal jobs
• Market rates acceptable defense
• Comparable worth not upheld
16. Pay Difference
Explanations
Firm Differences
Strategy
Employee
Education
Technology
Seniority
Union
Size
Ability to Pay Qualifications Membership
Pay Policy
Employee Pay Differences
Differences Discrimination
Performance
Absenteeism
Turnover
Labor
Work Differences Market
Skill, effort, responsibility,
working conditions
17. Residual Approach to
Explaining Discrimination
• Take all of the variables from
previous slide
• Regress those for men & those for
women
• If left unexplained, then
discrimination
18. Scenario 2
Susan and Joe were hired as
Accountant I in 1995 at $35,000. In
2002, Joe has been promoted to
Accountant III and earns $65,000
and Sue is an Accountant II and
earns $59,500. How would you
ascertain if Sue is a victim of pay
discrimination or if the firm is
paying Sue fairly?
19. Pay Discrimination
Summary
• Despite laws, pay differences still
exist
• Discrimination?
• Personal choice?
• Other factors?
