The Politics of Fair Pay: Revisiting the Wage Gap

Originally posted October 2014

Fixing the wage gap (even for organizations committed to its eradication) is no simple task.

Last April the country celebrated (read that word with great sarcasm) “equal pay day”, the day that women had to work to in 2014 to be paid as much as men were paid in 2013. Equal Pay Day inspired legislators to push for a vote on the Paycheck Fairness Act that fell short of Senate consideration last April by just six votes. According to the New York Times, “In the last round, in April, 42 Republicans voted to prevent the act from reaching the Senate floor for consideration. Half of those votes were cast by Republican senators from states where the gender pay gap exceeds the national average.”

With mid-term elections around the corner, the Dems see another chance to make a point about equal pay and perhaps remind women voters of the “insensitivity” by Republicans on the wage gap. But in a strange set of circumstances, should this bill be up for consideration and again be thwarted by the Republicans that would potentially work in the Democrat’s favor in November. Even though the Dems want this bill to move forward, if Republicans were to prevent that, it gives the Democrats stronger messaging around Republican “insensitivity” leading up to the mid-term elections. So it seems that neither the Republicans nor the Democrats really want to consider the Wage Gap this fall. Ah politics!

On the other side of the coin, in August President Obama signed an Executive Order requiring that all government contracts (including construction companies) file annual pay data. Contractors will be required to submit to The Office of Federal Contract Compliance Programs (OFCCP) a pay report that provides summary information “…in a calendar year by sex, race, and ethnicity under each of the existing ten job categories...” In a press release OFCCP said it will use the compensation data to “direct its enforcement resources towards contractors whose summary compensation data suggests potential pay violations.” But it is likely that the enforcement efforts will focus on contractors “...with pay gaps that are greater than the standard.” Wait, what? What is the standard for pay gap? Is our current “wage gap problem” measured at about $.77 on the dollar going to be the standard? We can hope not. The only really acceptable standard is $0.

But fixing the problem even with organizations committed to wage gap eradication is no simple task. Consider the challenges faced by McGill University in Canada.

According to an article in the Wall Street Journal it took McGill 13 years at a cost of US$19 million to address the issue. And even now, according to the WSJ “McGill says it can't say how much the pay-equity program has changed the salary landscape for its employees. It hasn't conducted an analysis to determine what impact the program has had on median pay for women or for its employees overall.”

Why is it so difficult to fix this problem even for companies committed to do so? Complexities come in many forms: differences in pay by location, job classifications, tenure and seniority of workers, and comparability (or lack thereof) of jobs all add to the challenges. Back to the WSJ article, McGill had to ask itself if female secretaries and male landscapers should be paid the same or different amounts.

Let’s look at a hypothetical example. A company operates in downstate New York and the Cleveland, Ohio area. Managers are predominantly male in the New York location and predominantly female in the Ohio location (this wasn’t planned, it just happened that way). The New York location was the first to be opened, and its employees have longer tenure than do those in Ohio. The cost of living in New York is higher than Ohio. All these managers have the same job classification, the same responsibilities, and the same opportunities, except those in NY are paid more than those in Ohio. Does that constitute a wage gap? What do you think?

An easier example is to look at a hospital where there are male and female nurses. Just one location or geographic area to consider and just one job classification. In this case it should be simple to see if there is a wage gap. But consider this, if there are overtime opportunities and women can’t accept them because of responsibilities to home and child care, does that constitute a wage gap? What do you think? 

And the wage gap isn’t just about “take home” pay. Lower pay means lower social security accumulations and potentially lower retirement plan contributions. That makes the wage gap a lifelong problem for women. For more on The Wage Gap see our article in the April issue of PSX.