We Shouldn’t Need Equal Pay Day
March 2, 2022
But we do. Because equal pay for equal work is a moral imperative.
—This article was originally published at Common Good, a publication of Made to Flourish, an organization dedicated to empowering pastors and their churches to integrate faith, work, and economic wisdom for the flourishing of their communities.
Women must work until March 15 in the current year to earn what men earned in the prior year. In 1996, the National Committee on Pay Equity established Equal Pay Day, observed on March 15, to raise awareness about the gender pay gap.
In the U.S., a woman working full time makes about 82 cents for every dollar a man earns. Mapped onto a typical nine-to-five day, women work for free starting at around 3:30 p.m. Wage gaps are even more pronounced for women in higher-level jobs and for women of color. For Christians leading in the marketplace, pay-related injustices should be concerning. Leviticus 19:13 warns, “You shall not defraud your neighbor; you shall not steal; and you shall not keep for yourself the wages of a laborer until morning.” Treating workers fairly is a moral imperative; failing to do so is on scale with fraud and theft.
COMPENSATION IS NOT A PERFECT SCIENCE
Establishing a flawless pay strategy can be difficult in both fast-moving startups and in mature firms where change comes more slowly. Even when hired for the same job, employees bring different levels of knowledge, skills, and abilities to their roles and responsibilities. To complicate matters further, persons join firms at different points of time, at different stages of their working lives, under different external market conditions, and with varying pay expectations and pay histories. Consequently, managing internal equity — or fairness of pay for employees doing the same work within an organization — is not a straightforward science.
Nevertheless, as outlined below, U.S. federal law — encoded in five separate statutes — prohibits employment, pay, and benefits discrimination.
- The Equal Pay Act of 1963 requires that employees of the opposite sex in the same organization earn “equal pay for equal work.” As such, employers are forbidden to pay men and women differently for work that requires equivalent skill, effort, and responsibility under similar working conditions.
- Title VII of the Civil Rights Act of 1964 forbids employment discrimination based on race, color, religion, sex, and national origin.
- The Age Discrimination in Employment Act of 1967 prohibits employment discrimination against persons who are 40 years of age and older.
- Titles I and V of the Americans with Disabilities Act of 1990 ban discrimination against persons with qualified disabilities.
- Title II of the Genetic Information Nondiscrimination Act of 2008 protects employees against group health plan discrimination based on genetic information.
SYSTEMIZING PAY THROUGH JOB EVALUATION
Understanding some labor history can help shed light on the disparities we face today. In an effort to weaken collective bargaining control and suppress organized labor’s power in the U.S. in the 1920s — when mass production was experiencing exponential growth — many large industrial organizations implemented job evaluation systems. Economist Deborah Figart in the Review of Political Economy observed that as Frederick Winslow Taylor introduced time-motion studies and the radical redesign of industrial efficiency, compensation reformers introduced the scientific reordering of pay systems. With this shift toward more rational methods for setting pay, job evaluation systems gained wide popularity with management as a way to order and assign value to jobs based on their relative worth internally. Although largely opposed by organized labor, especially craft trades, the point-factor method of job evaluation became the most prevalent technique for structuring pay, a practice popularized mid-century by Edward N. Hay and his consulting firm. Hay’s four compensable factors — skill, effort, responsibility, and working conditions — became so prevalent in industry and government that they were explicitly written into the Equal Pay Act of 1963.
Job evaluation methodologies resisted amid the 20th century by male-dominated unions were welcomed by women in the workplace. As a mechanism to ensure “equal pay for equal work,” job evaluation promised pay equity. Unfortunately, the principle of equal pay conflicted with widespread social norms at the time, whereby men were perceived as breadwinners and women as caretakers. If and when women entered the workplace, society largely recognized them as secondary earners. Thus, job evaluation methodologies in the mid 1900s — with potential to make a dent in gender-based pay gaps — failed to achieve their intended results. Instead, their design and implementation only accentuated existing biases. Not until the “comparable worth” movement of the 1970s did pay equity begin to make serious advances.
MAKING SENSE OF THE GENDER PAY GAP
Today, business and cultural commentators regularly reference the gender pay gap and, unfortunately, often exaggerate it, which raises the question: What does the gender pay gap truly represent? And how should we interpret it?
The comprehensive crowdsourced survey that most pundits reference comes from PayScale, a global provider of compensation data, services, and software. In their 2021 State of the Gender Pay Gap, the company reported that the deficit continued to narrow, improving by $0.08 since 2015. Women make $0.82 for every $1.00 men make — measured by the median salary of women compared to the median salary of men independent of job type or employment features — is what PayScale refers to as the opportunity pay gap. This gap also represents the systemic hurdles women face in reaching higher-paying positions often occupied by men. Drawing on a 2021 Organisation for Economic Cooperation and Development paper, senior contributor Tom Spiggle in a recent Forbes article recounts why this deficit exists: Glass ceilings (unacknowledged barriers restricting upward mobility) account for about 60 percent of the gap, while sticky floors (unfair social norms and gender stereotype) account for 40 percent of the gap.
The controlled gender pay gap — which is rarely quoted — tells a different story. When PayScale statistically accounts for job title, education, years of experience, industry, location, and other remunerative factors — thereby capturing median salary for men and women with the same qualifications in the same job — the pay margin between genders tightens considerably. Women earn $0.98 for every $1.00 men earn. Although still concerning, a $0.02 gap is less monumental an inequity to overcome than an $0.18 deficit.
IMPLICATIONS FOR CHRISTIAN MANAGERS
What lessons should we draw from this data? First, even small differences in pay can lead to significant disparities over time. A woman who makes $49k per year, two percent less than a man who makes $50k per year, will earn $41k less in salary over 20 years, assuming an interest rate of seven percent compounded annually. As the wage gap increases, the disparity grows exponentially. A woman who makes $41k per year, 18 percent less than a man who makes $50k, earns $369k less than the man in 20 years, again assuming an interest rate of seven percent compounded annually.
Second, the will for equitable pay doesn’t always lead to equitable results. Compromised pay plans can encumber fairness in both the short and long term. Although the controlled pay gap is approaching zero, higher paying positions are disproportionately accessible to men, as reflected in the uncontrolled numbers. In the hopes that job evaluation methodologies would normalize equal pay for equal work, systemic barriers in the form of glass ceilings and sticky floors have impeded progress. One example is the ongoing narrative that men outshine women in science, technology, engineering, and math-related (STEM) fields. Rather than enabling an unbiased approach to pay, job evaluation systems have, at times, further entrenched work-related gender and racial stereotypes that make it hard for women and people of color in certain industries to get hired, promoted, and paid at levels commensurate to white men.
Finally, scientifically valid statistics are essential for solving complex problems. As Christian leaders in the marketplace, it’s imperative that we source our numbers well. In the case of the gender pay gap, the pay for women lags behind the pay for men when data are both controlled and uncontrolled, but differences vary widely across industries, career stages, and racial/ethnic categories. For example, the pay gap widens as women progress professionally. When pay numbers are statistically controlled, women at an executive level make $0.94 for every $1.00 men at the executive level make. When data are not statistically controlled for job title, education, experience, industry, location, and other compensable factors, the disparity increases to $0.70 on the dollar.
Christians have an opportunity to distinguish themselves in the marketplace by championing equal pay as a practice consonant with the values of the kingdom of God. Those who have historically suffered pay inequity based on gender or racial discrimination, whether personal or systemic, have just cause that Christians are called to resist and redress when possible. For many Christian leaders today, ensuring equal pay is a tangible means for enacting the way of God. The rationale behind laws against fraud and theft of any kind, as explained in Leviticus 19, is “You shall be holy, for I the Lord your God am holy.”