Is pay equity equitable? A perspective that looks beyond pay

Summary

In their 1993 paper, "Is pay equity equitable? A perspective that looks beyond pay," N.J. Mathys and L.B. Pincus challenge prevailing notions of pay equity by asserting that the magnitude of pay differences between men and women is often overstated by its proponents. Their core argument posits that a simplistic comparison of wages is insufficient and misleading, as numerous other factors significantly influence compensation. The authors suggest that to accurately assess pay differences in similar jobs, it is crucial to control for variables like the type of industry, the specific company, and the size of the organization. They point out that employees in comparable roles can experience as much as a 20 percent pay increase simply by moving between industries in the same geographic area. Furthermore, they argue that companies and industries with greater financial capacity should not be compared with less profitable ones, citing instances like Chrysler's pay concessions during its bankruptcy avoidance efforts. Research also indicates that smaller companies typically offer lower pay than larger organizations. While the paper's explicit methodology is not fully detailed in the provided abstract, its perspective implies a critical analysis of existing pay equity studies, advocating for a more rigorous and comprehensive approach. It implicitly suggests a methodology that would involve statistical controls for a wider array of compensable factors beyond gender, aiming to isolate the true impact of gender on pay after accounting for legitimate drivers of wage variation. The implication is that once these relevant factors are properly controlled, the observed pay gaps attributed solely to gender would be substantially smaller than commonly portrayed. This perspective challenges the foundational premise of many pay equity arguments, suggesting that policy interventions based on oversimplified analyses might be misdirected or unnecessary, and could potentially lead to unintended economic consequences.