Comparable worth

The concept by which women who are usually paid less than men can claim that men in comparable rather than in strictly equal jobs are paid more.

Comparable worth refers to the requirement to pay men and women equal wages for jobs that are of comparable (rather than strictly equal) value to the employer. Thus, comparable worth may mean comparing quite dissimilar jobs, such as nurses to truck mechanics or secretaries to technicians. The question comparable worth seeks to address is this: Should you pay women who are performing jobs equal to men’s or just comparable to men’s the same as men? If it’s only for equal jobs, then the tendency may be to limit women’s pay to that f the other lower paid jobs in which women tend to predominate.

County of Washington v Gunther (1981) was a pivotal case for comparable worth. It involved Washington County, Oregon, prison matrons who claimed discrimination. The county had evaluated comparable but non-equal men’s jobs as having 5% more job content (based on a point evaluation system) than the women’s jobs, but paid the men 35% more. Should the women matrons not be paid more then they were, even though the comparable (in terms of points) men’s jobs were unequal to (not the same as) theirs? After seesawing through the courts to the US Supreme Court, Washington County finally agreed to pay 35,000 employees in female dominated jobs almost $500 million in pay raises over seven years to settle the suit.

Comparable worth has implications for job evaluation. Virtually every comparable worth case that reached a court involved the use of the point method of job evaluation. By assigning points to jobs, point plans facilitate comparability ratings among different jobs should employers still use point type plans? Perhaps the wisest approach is for employers to price their jobs as they see (with or without point plans) but to ensure that women have equal access to all jobs. In other words eliminate wage discrimination issue by eliminating sex segregated jobs.

The pay gap

All this not withstanding the fact is that women in the United States still earn only about 77% as much as men, although the gap is narrowing a bit.

What accounts for the difference? One pay specialist cites four factors; women’s starting salaries are traditionally lower because employers traditionally view them as having less leverage; salary increases for women in professional jobs do not reflect their above average performance , (men with equal performance receive bigger raises); white collar jobs, men tend to change jobs more frequently which enables them to be promoted to higher level jobs over women with more seniority ; and in blue collar jobs, women tend to be placed in departments with lower paying jobs. Education may reduce the wage gap. Studies suggest that schooling’s impact on earnings is greater for females than for males, other things equal. This may be because education increases both women’s and men’s productivity but also reduces the male female earnings gap attributable to female discrimination.

Keeping Tabs on executive pays in the USA

For 15 years the Board of Directors of United Health Group Inc. supported its CEO with almost $ 2 million in compensation. Recently the board ousted him, allegedly because as the Wall street Journal put it his explanation for a pattern of unusually well timed stock option grants didn’t add up.

There are various reasons why boards like United Healthcare’s are clamping down on executive pay. As of 2005,t he Financial Accounting standards Board requires that most public companies recognize s an expense the fair value of the stock options they grant. The Securities and Exchange Commission (SEC) now requires filing more compensation related information. The Sarbannes Oxley Act makes executives personally liable, under certain conditions for corporate financial oversight lapses. Writing in the Harvard Business review, the chief justice of Delaware’s Supreme Court recently said that governance issues shareholder activism and other changes have created a new set of expectations for directors. The net result is that lawyers specializing in executive pay suggest that boards of directors ask themselves these questions:

Has our compensation committee thoroughly identified its duties and processes?

Is our compensation committee being appropriately advised?

Are there particular executive compensation issues that our committee should address?

Do our procedures demonstrate diligence and independence? (This demands careful deliberations and records).

Is our committee appropriately communicating its decisions? How will shareholders react?

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