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Conclusions This report has been concerned with two questions: To what extent does the fact that women and minorities are on the average paid less than nonminonty men resect discn~runation In the way jobs are com- pensated? If wage discrimination exists, what can be done about it? On the basis of a review of the evidence, our judgment is that there is substantial discrimination in pay. Specific instances of discrimination are neither easily identified nor easily remedied, because the widespread concentration of women and m~nonties into low-pay~ng jobs makes it 6~iCU]t to distinguish discriminator from nondiscn~nato~ mm~-- nents of compensation. One approach, which needs further development but shows some promise, is to use existing job evaluation plans as a standard for comparing the relative worth of jobs. This chapter summarizes the endence leading to these conclusions. reviewing this material three considerations should be kept In mind. First, discnmination, as the term is used In this report, does not imply Intent but refers only to outcome. Wage discriIIiination exists insofar as workers of one sex, race, or ethnic group are paid less than workers of another sex, race, or ethnic group for doing work that Is of "oompa- rable," that is, equal, worth to their employer. Second, the report has focused most intensively on sex discrimination because the issue of comparable worth arises largely in connection with job segregation, the propensity for men and women and for m~nonty and nonminonty workers to hold different sorts of jobs, and job seg- regation is more pronounced by sex than by race or ethnicity. Moreover, 91
92 WOMEN. WORK, AND WAGES while most available data are at the national level, minonties, because of their numbers and geographical distribution, are more likely to be concentrated in particular occupations at a local level. We have therefore not been able to examine differentials by race or ethnic group with the same procedures we used to examine differentials by sex. In addition, most of the available studies of patterns of employment within firms refer to differences between men and women. Finally, the available analyses relating to the relative worth of jobs pertain almost entirely to sex discrimination. In this context, the fact that we focus mainly on discnmination based on sex should not be interpreted to mean that the committee has judged discrimination based on race or ethnicity to be of lesser importance. Third, we have not been able to make.any assessment of what the social and economic consequences may be of implementing wage policies based on the principle of equal pay for jobs of equal worth. This is an extremely complex question, with no clear answers, which goes well beyond the charge to the committee. We do, however, want to call attention to the need to give careful thought to the possible impact of implementation of a policy of equal pay for jobs of equal worth on the economic viability of firms as well as on employment opportunities for women and minonties. THE EXTENT AND THE SOURCES OF PAY DIFFERENTIALS It is well established that in the United States today women earn less than men and minority men earn less than nonminonty men. Among year-round full-time workers, the annual earnings of white women in the late 1970s averaged less than 60 percent of those of white men, while the earnings of black men averaged 7~75 percent of those of white men. Such differential earnings patterns have existed for many decades. They may arise In part because women and minority men are paid less than white men for doing the same (or very similar) jobs within the same firm, or in part because the job structure is substantially segregated by sex, race, and ethnic~ty and the jobs held mainly by women and minority men pay less than the jobs held mainly by nonminonty men. Since passage of the Equal Pay Act of 1963 and Title VI! of the 1964 civil Rights Act, legal remedies have been av~ilabic for the first source of wage differentials. Although the oommittcc recognizes that instances of unequal pay for the same work have not been entirely eliminated,
Conclusions 93 we believe that they are probably not now the major source of differ · . cnces in earnings. With respect to the second source of wage differentials, the disparate distnbution of workers among jobs and the concentration of women and minority men in low-paying jobs, the data are cigar. Women and minorities are differentially concentrated not only by occupation but also by industry, by firm, and by division within firms. Moreover, the cadence shows that this differential concentration has persisted, at least with respect to women, over a substantial period of time. In the face of this differential concentration, then, the question of whether pay differentials are discriminatory can be stated quite simply: Would the low-pay~ng jobs be low-paying regardless of who held them, or are they low-paying because of the sex, race, or ethnic composition of their incumbents? To be able to state the question simply, however, is not to be able to answer it simply. In the committee's judgment, a correct response recognizes that both elements account for observed earnings differen- dals. Our economy is structured so that some jobs will inevitably pay less than others, and the fact that many such jobs are disproportionately filled by women and minorities may reflect differences in qualifications, interests, traditional roles, and similar factors; or it may reflect exclu- sionary practices with regard to hiring and promotion; or it may reflect a combination of both. However, several types of ewdence support our judgment that it is also true in many instances that jobs held mainly by women and minonties pay less at least In part because Hey are held mainly by women and minorities. First, the differentials In average pay for jobs held mainly by women and those held mainly by men persist when the characteristics of jobs thought to affect their value and the characteristics of workers thought to affect their productivity are held constant. Second, prior to the legislation of the last two decades, dif- fcrentials in pay for men and women and for nunonties and nonm~nor- ities were open acceptable and were, in fact, prevalent. Tbc tradition embodied in such practices was built into wage structures, and its effects continue to influence these structures. Finely, at the level of the specific firm, several studies show that women's jobs are paid less on die average than men's jobs with the same scores denved from job evaluation plans. The e~dence is not complete or conclusive, but the consistency of the results in many different job categories and ~ several diffcrcut Apes Of studies, the sue of the pay differentials (even after worker and job characteristics have been taken into account), and the lack of endence for alternative explanations strongly suggest that wage discrimination is widespread.
94 WOMEN. WORK, AND WAGES IDENTIFYING AND ELIMINATING PAY DISCRIMINATION The identification and correction of particular instances of pay dis- cnmination are, however, not easy tasks. One procedure that has been suggested is to compare the actual rates of pay of jobs with the relative worth of jobs; wage discrimination would be suspected whenever jobs are not paid in accordance with their relative worth. This relative (or comparable) worth approach in turn requires a generally acceptable standard of job worth and a feasible procedure for measuring the relative worth of jobs. In our judgment no universal standard of job worth exists, both because any definition of the "relative worth" of jobs is in part a matter of values and because, even for a particular definition, problems of measurement are likely. One approach to the relative worth of jobs avoids the issue of values by equating the worth of jobs with existing pay rates. In this approach, no comparable worth strategy is needed to adjust the pay rates of jobs, because the pay rates themselves renect the relative worth of jobs. The belief that existing pay differentials between jobs provide a valid meas- ure of the relative worth of jobs depends on the view that the operation of labor markets is freely competitive and that pay differentials primarily reflect differences in individual productivity and are not substantially influenced by discrimination. While there is a good deal of controversy about the nature of labor markets, in our view the operation of labor markets can be better understood as reflecting a variety of institutions that limit competition with respect to workers and wages and tend to perpetuate whatever discrimination exists. As a result of these institu- tional features of labor markets, existing wage rates do not in our judg- ment provide a measure of the relative worth of jobs that avoids dis · · ~ cnmluatlon. Several of these institutional features are inherent to the current op- eration of labor markets and cannot easily be altered. Substantial in- vestment in training makes it difficult for workers to shift from one occupation to another in search of higher pay. Moreover, even within specific occupations, workers are not generally free to sell their labor to the highest bidder; they are constrained by geographical location and imperfect information as well as by institutional arrangements designed to encourage the stability of the work force by putting a premium on seniority. Nor do employers generally seek labor on the open market; a large Faction of all jobs are filled through interval promotions or transfers. Finally, both the supply of and demand for labor and the pay rates offered are strongly affected by still other force~particularly
Conclusions 9S union contracts and governmental regulations. Whenever jobs are rel- atively insulated from market forces, traditional differences In pay rates tend to be perpetuated over time. Hence, insofar as differences in pay between jobs ever did incorporate discriminatory elements, they tend to, be perpetuated. JOB EVALUATION PLANS Although no universal standard of job worth exists, job evaluation plans do provide standards and measures of job worth that are used to estimate the relative worth of jobs within many liens. In job evaluation plans, pay ranges for a job are based on estimates of the worth of jobs according to such criteria as the skill, effort, and responsibility required by the job and the working conditions under which it is performed. Pay for an individual, within the pay range, is set by the worker's charac- tenstics, such as credentials, senionty, productivity, and quality of job performance. Job evaluation plans vary from firm to firm; both the mtena established and the compensable factors and relative weights used as measures of the criteria differ somewhat from plan to plan. In our judgment job evaluation plans provide measures of job worth that, under certain circumstances, may be used to discover and reduce wage discrimination for persons covered by a given plan. Job evaluation plans provide a way of systematically rewarding jobs for their content- for the skill, effort, and responsibility they entail and the conditions under which the' are performed. By making the criteria of compensation explicit and by applying the criteria consistently, it is probable that pay differentials resulting from traditional stereotypes regarding the value of "women's works' or work customanly done by minorities wail be reduced. But several aspects of the methods generally used in such plans raise questions about their ability to establish comparable worth. First, job evaluation plans typically ensure rough conformity between the meas- ured worth of jobs and actual wages by allowing actual wages to deter- m~ne the weights of job factors used in the plans. Insofar as differentials associated with sex, race, or ethnicity are incorporated in actual wages, this procedure will act to perpetuate them. Statistical techniques exist that may be able to generate job worth scores from which components of wages associated with sex, race, or ethnicity have been at least partly removed; they should be further developed. Second, many firms use different job evaluation plans for different Apes of jobs. Since in most firms women and minority men are con- oentrated in jobs with substantially different tasks from those of jobs
96 WOMEN, WORK, AND WAGES held by nonminority men, a plan that covers all jobs would be necessary in order to compare wages of women, minority men, and nonminor~ty men. The selection of compensable factors and their weights in such a plan may be quite difficult, however, because factors appropriate for one type of job are not necessarily appropriate for all other types. Nevertheless, experiments with firm-wide plans might be useful in mak- ~ng explicit the relative weights of compensable factors, especially since they are already used by some firms. Finally, it must be recognized that there are DO definitive tests of the "fairness" of the choice of compensable factors and the relative weights given to them. The process is inherently judgmental and its success in generating a wage structure that is deemed equitable depends on achiev- ~ng a consensus about factors and their weights among employers and employees. Tat ~.J~1~ 4 __ ~ · _1 ~ ~e _ ~ · ~ ~ ~ ~ no u~ve~opment aria Implementation of a Job evaluation plan is often a lengthy and costly process. The underdeveloped nature of the tech- nology involved, particularly the lack of systematic testing of assump- tions, does not justify the universal application of such plans. In the committee's judgment, however, the plans have a potential that deserves further experimentation and development.
