Where’s the bacon?
In the last year the gender gap increased from 12.85 per cent to 14.18 per cent to the biggest it has been in a decade.
But the pay gap is just caused by women and the choices they make, isn’t it? Over representation in part-time work, in lower paying fields, choosing to put family over career, and other similar reasons.
At least men and women who work in the same jobs get paid equally, right?
Well, today I’m going to tell you a story, about a real person, in the actual world.
Caroline’s* story
Caroline was a young professional, happy in her work. She got glowing performance reviews, and got along great with her boss, and her colleagues. Work was fun. One day a new guy started, employed in the same job as Caroline. Caroline learned (completely by accident) the new guy was hired on more than she got paid.
Caroline naturally assumed there was some aspect of new guy’s background she wasn’t aware of. Some experience, or a qualification which would justify this difference.
New guy was younger than her, had comparable qualifications, and had been at University when Caroline started in her job. Caroline joined the company in an entry level role a full 18 months before new guy even graduated. She and new guy both had stints in other jobs, except Caroline had six years work experience compared to his 12 months.
Caroline decided to talk to her boss. She was ambitious and willing to work hard – if there was a good reason for the difference (as she was sure there must be) it could all be cleared up with some good old-fashioned communication.
The conversation wasn’t as constructive as Caroline was hoping for.
She was told the difference in pay was due to ‘market movement’ and that people who stay in one place for a long time, “just get paid less than people who have been hired more recently.” She was told this was a ‘legitimate business practise’.
Caroline outlined their comparable qualifications and her greater work experience. She pointed out the guidelines for paying new employees – that when making a pay offer during a recruitment process, internal relativities must be taken into account. She asked if this process had been followed.
Boss told her he was under no obligation to justify his decisions to her about what he paid other staff. He said that if she was unhappy about it she could lay a formal complaint. Or get a new job.
Maybe he was right – maybe Caroline was just being precious; just another whining high-maintenance underling who, despite claiming to be happy in her job, was quibbling over a pay gap of little significance in the scheme of things. What was it anyway? 2% gap? 5%?
Try 22.5%.
Imagine you get paid $540 a week. Your colleague, who has similar qualifications (but who is soewhat younger and less experienced) gets paid $661.50 a week for doing the exact same job. By the end of the year, your colleague will have been paid $6,318 more than you. After just 5 years this is equivalent to $31,590.
What would you do with $31,590?
How much would 22.5% of your pay come to? What would you do with $31,590? Go to Europe? Put it towards a house? Buy 315 unisex Panda Onesies?
22.5% is not what you’d expect from average market movement, or a CPI adjustment. It is NEARLY A QUARTER. Caroline’s salary had been updated for market movement within the last year, when it had been adjusted upwards by 2%.
Caroline asked women she knew in similar positions to find out more about this radical market movement – nobody was getting paid as much as new guy. The conversation with her boss also confirmed the difference bore no relationship to skills, qualifications, experience or performance.
Meanwhile, Caroline’s senior colleagues began assigning her with work originally given to new guy, which he failed to complete, because he didn’t know how. They complained to her about his lack of capability, and apologetically explained there was nobody else they felt confident assigning work to.
Caroline decided to ask the Human Rights Commission for advice. To be sure she wasn’t just going BAT SHIT CRAZY, did they think she had a valid reason to complain? Their answer was yes. She was advised she had a very strong case to complain against her employer.
Caroline decided to seek the advice of a recruitment agent. Perhaps they would help her negotiate an equivalent salary somewhere where she wouldn’t be expected to work twice as hard as a dude in order to be considered equally worthy.
She told her story to a woman not much older than herself. The agent told her that her own employer had recently hired a new guy on a higher rate and she had not been given any justification for this.
The agent said: ‘I don’t care, because I know I’m better than him, and that’s all that matters.’
*Multiple head/desking*
Other women have said to me “Women often prefer to take the moral high ground. As long as you know you’re better and your boss knows it too, that’s more satisfying than fighting over a few extra dollars.”
I hope this is wrong. However, I can see how it’s easier to justify and accept your current situation, rather than face confrontation to change it. Caroline’s attempt took guts – after all, is getting a good salary as important as getting a good reference in a one-horse town?
Others have said Caroline’s situation is just as likely to have happened to her if she were a man; troubling because:
- still illegal
- I have looked for some evidence this happens in equal measure to men and women, but due to a lack of transparency, there doesn’t seem to be a way of confirming this.
Others have suggested if new guy was able to negotiate himself a better deal, then good for him. Problematic because:
- STILL ILLEGAL. Do I need to explain this? People with the same skills doing the same jobs are meant to get paid the same.
- Research has found men and women get very different responses when they initiate negotiations. Women’s reluctance to negotiate was based on an entirely reasonable and accurate view of how they were likely to be treated if they did. Women who asked for more were subtly penalised – the perception was they were “less nice”.
(Sidenote: I tried to negotiate during a job offer recently. They offered me an entry level salary for a role which required 2 to 3 years experience. When I asked for more the manager said in an unimpressed tone “Um, It seems like you care an awful lot about money”. …Given that it’s the main reason most people work? Why yes! How perceptive of you!)
- thirdly, kinda hard to negotiate a good deal when you have NO IDEA what other people get paid.
Market theory sux
So let me get this straight – we’re meant to ask for more, and we’re meant to guess how much?
Don’t markets require good information, transparency and openness in order to operate efficiently? Would you go to a market expecting to sell bananas and get a good price for them if all the other banana vendors kept their prices a complete secret from you? No, because that would be INSANE.
How is a ‘legitimate business practise’ legitimate if it results in Acts of Parliament being breached?
Opponents of market theory argue it is a particularly weak justification for gender-based wage discrimination, “…the lack of information and mobility of some workers make the market model an inaccurate description of how relative wages are determined …” Economic theory presumes a perfectly functioning market, which economists admit, is something they just made up.
While few complaints have been taken in NZ (possibly because women are not aware when they are being paid less) Courts in the U.S. have rejected market force defences in Equal Pay claims.
In 2001 the University of Texas argued market forces dictated a higher salary for a new male employee over an existing female employee because the salary paid to a new employee is driven almost entirely by market forces – the University must expend resources to attract qualified individuals in a market where other organisations have the same goal. The Court stated the University’s market forces argument was totes lame, had been totes lame in other cases, and simply perpetuates the discrimination Congress wanted to alleviate when it enacted the Equal Pay Act.
The U.S. Supreme Court considered a case where a pay difference arose because female employees were willing to work for less than equally skilled male employees. It found “[t]hat the company took advantage of such a situation may be understandable as a matter of economics, but its differential nevertheless became illegal once Congress enacted into law the principle of equal pay…”
Guys, GUYS. The U.S. Supreme Court agrees with me. No big deal.
But that’s why organisations have pay scales right?
Caroline talked to other staff at her level. All of them women. All of them started at the very bottom of the pay scale despite having higher qualifications, and years of experience more relevant than new guy. Why then did new guy get to walk in on 94% of the (since adjusted) pay scale?
Are pay scales just for girls and wusses? Are pay bands just for SHITS AND GIGGLES?! Some studies say, possibly.
The European Commission found where uniform (but anonymous) pay scales were in place, countries reported they are not transparent. Although positions are in theory ranked according to fixed scales, in practice, staff often earn salaries that are several times higher, with different components of the salary used ‘creatively’ to move away from the scales.
So pay scales can’t provide the transparency we need.
Get your shit together NZ
The NZ Human Rights Commission and the UN Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) have both recently slammed NZ for lapsing into an 80s time-warp in respect of women’s equality and un-ambitious target setting.
For those of you too lazy to read it, Jan Logie did it for you. There are close to 50 substantive recommendations about what NZ should be doing in respect of gender equality; for e.g.:
- enact appropriate legislation for equal pay (including equal pay for work of equal value)
- ensure there is a monitoring institution for gender pay inequity.
Summary
In 1972, it was common for workers to be employed on collective agreements. What the person next to you got paid wasn’t secret. 2013: union membership lags, individual contracts abound. Some places make it a sack-able offense for you to share pay information. We live in a culture where pay is often a closely guarded piece of personal information.
That is the crux of why we need our legal framework updated. Insufficient information is available to ensure equal pay at its most basic level is being enforced.
What information do we have?
- The gender pay gap in NZ is getting bigger
- Lots of research (and heaps more I don’t have space to cite) from around the world suggesting men receive average starting salaries $10k higher than women with the same qualifications, in the same jobs (And suggesting that men earn on average 10% more than women with the same qualifications several years after graduating. The gap emerges after only one year).
There is a debate on how much of the gap can be put down to gender disparities in the labour market (such as working hours, experience, sector, or position of responsibility) and how much is ‘unexplained’, but some studies estimate the unexplained bit could be as high as 40%.
So we know there MIGHT BE a significant portion that is unexplained. In the absence of an appropriate explanation the only reason can be unlawful discrimination on the basis of gender (prima facie discrimination).
I want to go to there
There are a number of ways in which we could improve transparency without breaching individual privacy. I’m not advocating a particular method, but to give examples:
The Pay Equality Bill, by Dr Judy McGregor (recently the Equal Employment Opportunities Commissioner) calls for transparency on salary levels across genders within a company. A campaign was launched last year in support of it, including this fun video.
This Green Party Members Bill which would require employers to record the gender of their employees along with current reporting requirements. Workers and unions would be able to request information to assess whether the Act is being applied. A number of other countries (Austria, Finland, France, Italy, Norway, Sweden) already take similar approaches.
Less $$ = Sad face
The pay gap comes at a massive cost to the economy. Women’s consumer power and role as primary purchase decision-makers for their households means that when a woman is cheated out of a portion of her pay check, the whole economy suffers. Less $$ = Less SHOES; which in turn means slower economic growth. [Women also do ALL of the Christmas shopping, which means if we don’t fix this you will continue to get shitty socks, forever. IS THAT WHAT YOU WANT?! ]
Happy ending?
Caroline was poised to hit ‘send’ on her complaint when a wonderful thing happened. Caroline’s boss informed her she would be given a pay rise to match new guy!
This is the part where it all ends, and there is a musical number and all the characters in the cast are now friends, and for some reason there is a dancing bear in roller skates. Only joking.
Despite the raise exactly matching new guy’s salary, her employer was adamant there were no equal pay issues and they had done nothing wrong, standing by their legitimate business practise explanation. Finally, the day the rise took effect Caroline was told that now she was earning 94% of the pay scale she would be expected to ‘step-up’ (despite exceptional performance reviews?)
Sure, Caroline got a pay rise – because she found out entirely by accident that she was being treated unfairly. Next time she might not find out. How about all the women who haven’t found out?
It’s pretty simple, really
We don’t know that pay discrimination (direct or indirect) against women is pervasive, insidious, and omnipresent. And we also don’t know that it’s not.
Do you know what your colleagues earn?
* Not her real name
Oh wow. When I began my professional career over 20 years ago this was a BIG problem, incredible that nothing has changed in 20 years! I wasn’t as brave as “Caroline” (GO Caroline!!), when I found out (by accident) a male employee doing the same job as me (but with less experience) was earning $10,000pa more than me ($10,000 was a lot of money back in those days), I just found another job that paid me what I was worth. I agree the lack of transparency is the major contributor to the problem, I have no idea what my male colleagues (with less experience) get paid, but I am going to take a leaf out of Caroline’s book and damn well ask in the next pay review round!