Abstract
The purpose of this article is to demonstrate, through the use of empirical evidence, the continued existence of gender-based compensation inequities in the United States. This is confirmed in an analysis of data collected by the authors showing women workers are paid less than men even when holding jobs with the same titles. Similar findings have been reported in a number of other recent studies. There appears to be grounds to conclude that the difference in pay cannot be totally and satisfactorily explained by factors such as experience or education. While inequities exist, whether continued paycheck inequality proves intentional discrimination remains unclear. However, to address the problem, remedial action is recommended in the form of the passage of new statutory law and the expansion of existing common law.
How should history judge whether the United States has achieved equal employment opportunity in the half century since the passage of the Equal Pay Act? 1 Is it enough to assert that equal “opportunity” has been achieved, or is it more accurate to conclude that equal opportunity is not enough, that true equality in the workplace requires equal “results.”
Compensation discrimination has been illegal for 50 years, as proscribed under U.S. law in the Equal Pay Act; thus, one might logically conclude that the problem should no longer exist on a broad and pervasive national level, but that conclusion would be largely incorrect. 2 This article will present empirical evidence that the problem of paycheck inequity does indeed still exist. Assuming the validity of the studies discussed below, then the rhetorical question becomes how long should women have to wait for the law to eliminate salary discrepancies for doing the same work as men? How long should it take for a law to become an effective tool to solve the problems that prompted its passage in the first place? If 50 years after a law was enacted it is still not providing adequate relief for those whom it was designed to protect, should not we admit at least partial failure, and adopt new remedies to deal with the problem? Should the world’s largest economy say to half of its workforce, “Just be patient, half a century isn’t long enough to correct the problem, you need to wait a little longer?”
The equal pay problem is insidious in nature because it is often not possible to explain or prove exactly why paycheck inequity still exists. Many assert that the difference in pay is based on qualifications, or education, or experience, or career interruptions, or some other justification. The United States has gone through decades of legislation and litigation only to find that the problem remains unresolved largely because the legal requirements for proving and winning compensation discrimination lawsuits are often unrealistically difficult. 3
This article will examine recent empirical studies demonstrating that women make less money, even when holding the same or similar jobs, than their male counterparts. Specifically, the article will analyze the results of a recently completed multi-year study, conducted by the authors for the AAPL (American Association of Professional Landmen), on compensation in the energy industry, looking at men and women holding the position of “landman” (the official term used in the industry for a person who negotiates leases and contracts related to the acquisition of mineral rights for energy companies). Other general compensation studies will be evaluated as well, including two major studies conducted by the GAO (now the General Accountability Office). Based on these studies, a recommendation will be made to encourage the utilization of new theories of employer liability to address the unresolved problems in equal employment opportunity.
Current Protections Against Compensation Discrimination
The Equal Pay Act of 1963 requires that men and women be given equal pay for equal work in the same establishment. The law against compensation discrimination includes all payments made to or on behalf employees as remuneration for employment. All forms of compensation are covered, including salary, stock options, profit sharing and bonus plans and benefits. 4
The jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Specifically, the Equal Pay Act provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility and that are performed under similar working conditions within the same establishment. Each of these factors is summarized below 5 :
Skill—measured by factors such as the experience, ability, education and training required to perform the job
Effort—the amount of physical or mental exertion needed to perform the job
Responsibility—the degree of accountability required in performing the job
Working Conditions—this encompasses two factors: (a) physical surroundings and (b) hazards
Exceptions—pay differentials are permitted when they are based on seniority, merit, quantity or quality of production or a factor other than sex (affirmative defenses)
Furthermore, the law has been strengthened over the years with amendments and case decisions, most recently with the passage of the Lily Ledbetter Fair Pay Act in 2009. 6 Therefore, legal protections appear, at least on the surface, to be in place to address the problem. Thus, since compensation discrimination is clearly prohibited by law, one might reasonable conclude that the problem should not be prevalent in the workplace. However, much to the contrary, it continues to exist on an almost epidemic level, as will be demonstrated by the studies discussed below.
Oil and Gas Industry: A Glaring Example of Paycheck Inequity
The energy industry study, conducted by the authors of this article for the purpose of looking specifically at the position of “landman,” was a longitudinal study, with some parts of it covering a period of 20 years, and it took into account several different variables. For example, the difference between working for a large company versus working as an independent contractor was factored in, as well as years of experience, college degree and industry certification. Regardless of how similar the qualifications of the women and men were, the data demonstrate that compensation differences still exist. The following tables show both general comparisons, and those broken down by measurable variables.
Table 1 displays compensation averages by gender for all landmen. The 2007 survey noted a slight decrease in the compensation gap between males and females; however, in the 2010 survey the gap increased to the largest level of disparity recorded to date, $30,860. In reviewing the data over the past 20 years, dating back to 1990, females have been unable to close the gap in compensation, which has varied from $13,000 to $30,000.
Compensation by Gender for All Landmen.
Table 2 focuses on compensation of male and female “company” landmen (i.e., employees of an energy-related company). In 1990, the gap between male and female company landmen was $17,951. By 2005, the gap had grown to $24,354. In 2007, the gap increased slightly to $25,135. In the 2010 survey, the gap again increased slightly to $25,597, once again the largest ever.
Compensation by Gender for Company-Employed Landmen.
Table 3 addresses compensation averages among male and female “independent” landmen. In 2005, the gap between male and female independents grew to the largest ever, $18,012. In 2007, the gap decreased to $12,381. However, for the 2010 study the gap between male and female independents ballooned to the largest difference in any year of the study, $41,944.
Compensation by Gender for Independent Contractors.
To further understand why this gap existed between male and female landmen, two variables identified earlier in the report that influenced compensation, the industry designation known as Certified Petroleum Landman (CPL) and years of experience, were examined in relationship to gender.
Table 4 reports compensation by gender and CPL; the results demonstrated that a difference still existed, and offered no obvious statistical explanation as to why. The median gap between company landmen males and females with a CPL was $20,000, which is up slightly from the 2007 difference of $18,250. The median gap between independent males and females was $18,000, which was significantly higher than the 2007 result of $7,000. The gap between non-CPL males and females was larger with company landmen where non-CPL company males earned $15,000 more than non-CPL company females and independent non-CPL females earned $7,250 less than independent non-CPL males. (While the CPL does not explain the gap in compensation between males and females, it did demonstrate that a CPL does generate higher income for both males and females alike.)
Compensation by Gender and Industry (CPL) Designation.
Note. CPL = certified professional landman.
A final comparison examined males and females with similar years of experience (0-5 years of experience) and the same educational level; see Table 5. The reason behind investigating compensation at this entry level of experience was to determine if females begin their career with a gap in compensation. Company landmen and independents who are male with 0 to 5 years of land experience and a bachelor’s degree earned $80,000 and $72,500, respectively (median). However, female company landmen and independents with 0 to 5 years of land experience and a bachelor’s degree both earned $73,000 and $68,000 (median).
Compensation by Gender: With Bachelor’s Degree, 1 to 5 Years to Experience.
Thus, with similar years of experience and the same educational level, male company landmen earned $7,000 more than females, while independent males earned $4,500 more than independent females. These results demonstrate that the problem of compensation inequity continues to be present even when the length of experience and educational levels are controlled.
Summary of Findings in AAPL Study
Analysis of these results indicates the gap between male and female landmen continues to be very significant, currently approximately $30,860 for all respondents to the survey, the largest difference recorded in the past 20 years. Females do not appear to be any closer in closing the gap with males regarding overall compensation in 2010 than they were in 1990.
Moreover, when the medians were compared between male and female company landmen and independents with similar experience (0-5 years of experience) and educational background (bachelor’s degree only), company landmen males earned $7,000 more than company landmen females, while independent males earned $4,500 more than their female counterparts. Thus, clearly, regardless of which variables are factored out, women continue to make less than men. The significant and rather unexplained difference in compensation between male and female company landmen remains an unresolved problem.
Review of the Results of Other Empirical Studies
The most recent U.S. General Accountability Office (GAO) study updated a 2002 study it conducted, which examined the glass ceiling for female and male managers. 7 The updated study used data from a more comprehensive, longitudinal study—the Panel Study of Income Dynamics. The study also accounted for a host of external factors for the first time, chief among which were the differences in men’s and women’s work patterns, including leave from work to care for family.
Despite a widespread general belief that there has been continued progress toward gender equality in the workplace, the U.S. federal government has confirmed the findings in the Institute for Women’s Policy Research (IWPR) study that the workplace earnings gap between men and women still persists today. According to GAO Report GAO-04-35, the weekly earnings of full-time working women were about three fourths of men’s during 2001. The report was prepared from a study of the earnings history of more than 9,300 Americans for the last 18 years. In its report to Congress, the GAO stated that despite extensive research on the progress that women have made toward equal pay and career advancement opportunities over the past several decades, there is no consensus about the magnitude of earnings differences between men and women, and no explanation as to why such differences may exist.
However, this difference in the GAO study does not reflect key factors, such as work experience and education, that may affect the level of earnings individuals receive. Studies that attempt to account for key factors have provided a more comprehensive estimate of the earnings difference. Recent information is somewhat lacking because many studies on earnings differences relied on data that predated the mid-1990s. But, even when accounting for these factors, questions remain about the size of and reasons for any earnings difference. To provide insight into these issues, Congress asked that the GAO examine the factors that contribute to differences in men’s and women’s earnings.
To address this issue, the GAO carried out a two-stage study: it performed a quantitative analysis to determine differences in earnings by gender and also to identify what factors may account for the differences. For example, according to a GAO calculation based on Current Population Survey (CPS) data from 2000 using both full-time and part-time workers, women’s annual earnings were about half of men’s.
The GAO study used data from the Panel Study of Income Dynamics, a nationally representative longitudinal data set that includes a variety of demographic, family and work-related characteristics for individuals over time. It tracked work and life histories of individuals who were between ages 25 and 65 at some point between 1983 and 2000. Using a statistical model, it estimated how earnings differ between men and women after controlling for numerous factors that can influence an individual’s earnings.
To supplement this analysis, the GAO reviewed the relevant literature and interviewed a variety of individuals with expertise on earnings and other workplace issues to obtain a broad range of perspectives on reasons why workers make certain career and workplace decisions that could affect earnings.
In addition, the GAO contacted employers to discuss these issues as well as to identify what policies employers offered to help workers manage work and other life responsibilities. The study was conducted from 2002 to 2003 in accordance with generally accepted government auditing standards. The GAO study disclosed three key findings:
Of the many factors that account for differences in earnings between men and women, its model indicated that work patterns are key. Specifically, women have fewer years of work experience, work fewer hours per year, are less likely to work a full-time schedule and leave the labor force for longer periods of time than men. Other factors that account for earnings differences include industry, occupation, race, marital status and job tenure.
When accounting for differences between male and female work patterns as well as other key factors, women earned, on average, 80% of what men earned in 2000. While the difference fluctuated in each year studied, there was a small but statistically significant decline in the earnings difference over the time period.
Even after accounting for key factors that affect earnings, the model could not explain all of the difference in earnings between men and women. Due to inherent limitations in the survey data and in statistical analysis, it was difficult to determine whether this remaining difference is due to discrimination or other factors that may affect earnings. For example, some experts said that some women trade off career advancement or higher earnings for a job that offers flexibility to manage work and family responsibilities.
Thus, in the study, the GAO experts were able to account for much of the difference in earnings between men and women but were not able to explain the remaining earnings difference. It is difficult to evaluate this remaining portion without a full understanding of what contributes to this difference.
The GAO study found that earnings differences that result from individuals’ decisions about how to manage work and family responsibilities might not necessarily indicate a problem unless these decisions are not freely made. On the other hand, an earnings difference may result from discrimination in the workplace or subtler discrimination about what types of career or job choices women can make. 8
It is difficult, and in some cases, may well be impossible, to precisely measure and quantify individual decisions and possible discrimination. Because these factors are not readily measurable, interpreting any remaining earnings difference is problematic. However, even accounting for factors such as occupation, industry, race, marital status and job tenure, reports the GAO, working women today earn an average of 80 cents for every dollar earned by their male counterparts. 9 This pay gap has persisted for the past two decades, remaining relatively consistent from 1983 to 2000. This well-documented 80% phenomenon is not, by itself, definitive proof that women are victims of discrimination in pay, as explained below, but it is something that cannot just be ignored, because the GAO studies are generally thought to be accurate and valid studies.
In attempting to explain the discrepancies in pay between men and women, the GAO study reached two stunning conclusions:
Differing work patterns lead to a large earnings gap between men and women suggesting that working women are penalized for their dual roles as wage earners and those who disproportionately care for home and family.
Men with children appear to get an earnings boost, whereas women with children lose earnings. Men with children earn about 2% more on average than men without children, according to the GAO findings, whereas women with children earn about 2.5% less than women without children.
Institute for Women’s Policy Research Studies
Studies related to CEO compensation are not particularly relevant or convincing because of the absence of standard criteria for measuring qualifications and direct versus indirect compensation. Thus, CEO compensation studies are mostly discounted as not providing significant proof of compensation discrimination. However, it is at least worth noting, if only for observational purposes, that according to recent studies by the IWPR women in positions such as CEO or in-house counsel often earn about 75% of what men with the same job titles earned. The median weekly salary for a woman chief executive, for example, was $1,500, compared with $2,000 for a man. Once again, this is not conclusive, but it does confirm in general the perception that women often make less than men even in the same or similar jobs. 10
Bureau of Labor Statistics (U.S. Department of Labor)
Another source of data related to compensation, and potential inequities, is the Department of Labor’s CPS, which tends to show that women have typically earned less than men. Specifically, in 2001, the published CPS data showed that for full-time wage and salary workers, women’s weekly earnings were about three fourths of men’s. However, these data are generally thought to be somewhat deficient in that it is primarily self-reported data and thus may be based on incorrect or incomplete census forms filled out by the people completing them.
Summary of Findings
Many factors account for differences in earnings between men and women. 11 When accounting for differences between male and female work patterns as well as other key factors, women earn less than men; this fact is indisputable. Even after accounting for key factors that affect earnings, various models cannot explain why the difference in earnings between men and women exists, and therein lays the essence of the problem—unexplained inequities.
According to U.S. Rep. Carolyn Maloney (D-New York, 14th), The world today is vastly different than it was in 1980, but sadly, one thing that has remained the same is the pay gap between men and women. . . . After accounting for so many external factors, it seems that still, at the root of it all, men get an inherent annual bonus just for being men. If this continues, the only guarantees in life will be death, taxes and the glass ceiling. We can’t let that happen.
12
New Remedies Needed to Correct the Problem of Paycheck Inequity
The data derived from the studies discussed in this article as well as others indicate that paycheck inequity between men and women is a fact; it does exist. The question is of course whether this inequity is convincing evidence of discrimination, and if so, what can be done to address the problem?
There are some inherent challenges in equating study results with intentional discrimination, such as the difficulty in ensuring that job content in the compensation studies in similar, not just job title. It is also correct that the “value added” to an organization by the holder of a particular position in one organization is sometimes difficult to equate to the holder of the same or similar position in a different organization. These shortcomings should be acknowledged.
However, despite such issues with the studies discussed herein, there is a mountain of data suggesting that paycheck inequity is a widespread problem, one that is too prevalent to simply be coincidental. It is a problem that needs to be addressed. What follows below are two recommendations for possible methods to address the problem. These recommendations should at least serve as the basis for additional debate and study on the issue of paycheck inequity.
New Statutory Remedy
It is time to admit that the 50-year-old Equal Pay Act has accomplished all that it can. Women need new and different legal remedies to address the problem of paycheck inequity. One important step would be to pass a new law, currently pending in Congress, known as the Paycheck Fairness Act (S.84, H.R.377), also known as the Fair Pay Act (S.168, H.R.438), which has been reintroduced in the current 113th Congress after failing to pass the Senate on June 5, 2012, by a vote of 52-47.
It seeks to end wage discrimination against those who work in female-dominated or minority-dominated jobs by establishing equal pay for equivalent work. For example, within individual companies, employers could not pay jobs that are held predominately by women less than jobs held predominately by men if those jobs are equivalent in value to the employer. The bill expands damages under the Equal Pay Act and amends its very broad fourth affirmative defense. In addition, the Paycheck Fairness Act call for a study of data collected by the EEOC and proposes voluntary guidelines to show employers how to evaluate jobs with the goal of eliminating unfair disparities.
The passage of a new law will help address the problem because, while each of the studies discussed in this article, including the AAPL study, the GAO studies and the IWPR study, was able to account for some of the difference in earnings between men and women by looking at certain variables, the authors of each concluded that they were not able to explain the complete reason for the remaining earnings difference. It can difficult to evaluate the remaining portion of the compensation inequity without a full understanding of what contributes to this difference. Specifically, an earnings difference that results from individuals’ decisions about how to manage issues such as work and family responsibilities may not necessarily indicate discrimination unless these decisions are not freely made. On the other hand, it is entirely possible, and indeed likely, that some of the earnings difference disclosed by the various studies results from either direct discrimination in the workplace (disparate treatment) or a subtler form of indirect discrimination regarding career and/or job choices women may sometimes be forced to make (disparate impact).
Nonetheless, due to the way the discrimination statutes are written, and the burden of proof required in such cases (including a “causal connection”), it is difficult, if not impossible, to identify discrimination. Proving exactly why the remaining earnings difference exists may simply not be possible. However, one can often explain, with the help of data collected by studies such as those discussed above, what is not the cause of a difference in pay. Thus, it is easier and more feasible to prove a negative (what is not the reason) than to prove a positive (what is the reason). This is why the passage of a new statute would help by addressing the need to look at discrimination through a different lens and take a more holistic approach to the problem.
It should be mentioned that passage of this bill in the current political climate is unlikely, though not impossible. Also worthy of comment is the fact that at least in part the proposed law depends on using a concept somewhat analogous to “comparable worth,” which has been tried previously but proved difficult to achieve due to practical realities. 13
New Common Law Remedy
In both American and British common law (also known as case law), there is a tort doctrine dating back to the mid-1800s known as “res ipsa loquitur”; Latin for the “thing speaks for itself.” It became frequently used in the 20th century, achieving a level of widespread popularity in certain types of personal injury cases, such as exploding bottle cases (e.g., Coke). In those cases, often a person could not prove in court exactly why a bottle exploded, causing their injury; only that it was not due to the fault of the plaintiff, but that if a bottle explodes, there must have been something was wrong with the bottle, and thus sought recovery based on “res ipsa loquitur.” Plaintiffs often won their case, without having to directly prove fault and causation.
It is this kind of proof, one that works by excluding all other possible explanations, that should now be applied to gender compensation discrimination cases. While it is true that tort law and employment law are two different areas of the law, the principles of “res ipsa loquitur” could be applied successfully in either.
As the detailed empirical studies discussed above demonstrate, a compensation gap exists, and it cannot be completely explained away by factors such as education or experience. That should be enough to indicate, assuming all other variables are accounted for, that discrimination has occurred and that the employer is responsible. If you are a woman holding the same job as a man, but making less money, you deserve redress even if you cannot prove exactly why you are being paid less. Something is wrong with a system that “pretends” to prohibit compensation discrimination but makes the remedies for it next-to-impossible to access. This is a problem that can and should be corrected with the passage of new law, as well as through an enlightened position of leadership by executive managers of organizations.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.