Incomparable Worth: Pay Equity Meets the Market.

Whaples, Robert

Proponents of comparable worth (CW) argue that women are consistently underpaid because of discrimination in the labor market. Their solution is to try to legislate equal pay for work of equal value. In Incomparable Worth, Steven Rhoads argues that the benefits of such legislation do not outweigh the enormous costs. His evidence will strengthen the resolve of CW's opponents, convert many agnostics, and give CW's supporters nightmares.

Despite mainstream theoretical work predicting that CW will disrupt labor markets and cause inefficiency, supporters have convinced many that the actual implementation of CW programs is quite successful. Rhoads investigates three cases (Minnesota, Britain, and Australia), which are central to the proponents' argument. He demonstrates that many of the mainstream predictions have come true, and argues that the programs are failures because they have never produced "objective job evaluation results, though they have often obtained bizarre ones."

Take the case of Minnesota, whose law covers public employees. The biggest question of any CW system is, how are jobs to be compared? In Minnesota consultants use complex Job Evaluation Systems (JES). These may entail up to a thousand questions to determine exactly what is done on the job, and usually include the skills, responsibility, initiative, physical and mental effort and working conditions involved. The consultants assign points for each facet of the job, then add them up. Often, JES studies find that female-dominated jobs are paid less than male-dominated jobs with the same number of points. The law mandates that something be done to rectify this situation, usually granting wage increases to those in the female-dominated occupations.

Minnesota's plan is sold to national audiences as a triumphant success, however, Rhoads explains that the sales pitch contains much misinformation. For example, official estimates of added payroll costs from CW are biased downward by ignoring additional wages going to workers in underpaid male-dominated, and balanced occupations. Moreover, the Minnesota Department of Employee Relations brags about these low costs, while berating localities for not adopting stricter standards which would inflate the costs.

Rhoads also shows severe operational problems in Minnesota's CW process. He confirms predictions of arbitrary wage setting and consequent inefficiencies, but his critique is far more devastating, revealing that wage setting is prone to political manipulation.

The arbitrariness is well documented.

* In one case, fire fighters and secretaries received the same scores for stress. More importantly, plans generally give paltry weights to negative working conditions. The working conditions category accounts for as little as 1.4 percent of the total score in a typical JES study. This is clearly inconsistent with what workers are willing to pay to avoid bad working conditions.

* A leading JES emphasizes decision making, and gives higher ratings to managers with an authoritarian style than to good delegators.

* Employees doing the same job but working for different city governmental agencies, who received the same salaries before CW, are often given systematically different salaries after CW.

Arbitrarily setting wages out of line with the forces of supply and demand has caused great inefficiencies.

* CW leads to salary compression or inversion, and cases in which qualified workers refuse (and don't strive for) promotion because their salaries will rise little or even fall.

* Librarians generally win big raises even though many were lined up waiting for openings at the old salary. This increase in the librarians' economic rents means that fewer books can be bought.

* Above-market pay for teachers' aides leads schools to use less of them, giving teachers less time to spend with students and more manual chores to do.

* Supply and demand considerations are permitted if the impact is nondiscriminatory. However, the shortages are mainly in the technical fields, so the impact seems discriminatory since most of these jobs are male dominated. Thus, in the computer field, because of CW, expensive consultants and capital substitutes are used, and poorly qualified workers are hired.

* Public sector nurses' wages are below the private market, so vacancies have expanded. Managers are unwilling to pay more when there is a shortage because "if we pay them more, everyone else in the band must come up."

CW insists that the focus be on the value of the job, not the value of the employee. If literally carried out it does not allow pay for performance within a job classification. Worse still, the evidence shows that Minnesota's system has fomented discrimination. "Everyone discovered that the people who controlled job evaluation won the CW sweepstakes," and proponents regularly put pressure on job evaluators to reshape their systems in ways that lead to higher ratings for predominately female jobs. Gender bias has reentered, because those in charge object when a nonfemale group plays by the CW rules and wins, and only regard it as fair if women come out ahead after job evaluation studies. Politics, not economics, determines wages.

Among the big gainers in the evaluation process are those jobs that have articulate, forceful representatives on the evaluation committees. Questionnaires are creatively answered or willfully doctored to make jobs seem more important. Librarians, because of their ability to collect evidence and make an articulate case, have won big. They are, in essence, paid for skill in working the CW system, rather than productivity or value to anyone.

Finally, "there is nearly universal agreement that the process was disruptive." The politicking involved has sapped morale, leaving everyone disgruntled. While women are angered by the bias they see remaining in JES scores, men are angered at the bias they see created by the feminization of the evaluation systems. One personnel chief laments, "I lost some of my closest friends."

The evidence from the Europe and Australia is even more frightening, because their programs have infected the private sector. I will leave readers dangling to encourage them to read the book.

In the concluding section Rhoads unmasks the hypocrisy of CW supporters as they speak among themselves, and let down their guard. One confesses that, "every detail of job evaluation is political," but emphasizes strongly the need to "act as if |the details~ are technical issues."

Rhoads's bottom lines are that CW is rent seeking and CW is a failure if one thinks systematically about costs, benefits and equity. My bottom line is that this is an excellent book which you should read and assign to students. There is little room to criticize Rhoads. Perhaps he could have been more quantitative, especially in estimating efficiency losses, but this job can be carried out by others.

Robert Whaples Wake Forest University