Comparable Worth

What Is Comparable Worth?

Comparable worth, more commonly known as “pay equity,” is a way for companies to set employee salaries by ranking the value of comparable skills and responsibilities across professions, regardless of sex. The term, which first surfaced in the 1970s, is aimed at leveling the playing field between men and women, regardless of job title. It’s different from equal pay for equal work, which falls under the Equal Pay Act of 1963 and requires individuals to be compensated equally for the same job requiring “equal skill, effort, and responsibility,” banning pay discrimination “on the basis of sex.”

Comparable worth focuses on the worth that a position has to a company. This means that two very different professions within one organization could be found to have the same value. For example, an accountant and an engineer may be found to deliver the same value to the company, based on the review metric. Therefore, both would be compensated equally if comparable worth were applied.

This helps fight the practice in which jobs predominantly held by men have been paid higher than jobs held predominantly by women. Note that when comparable worth discussions emerged, concern about pay discrimination focused on differences based on biological sex and did not include pay differences experienced by nonbinary or gender-fluid individuals.

Proponents argue that comparable worth is an extension of equal pay for equal work. Critics, however, argue that is too simplistic a view and would hurt the free market by setting wages across unrelated professions based on arbitrary value parameters instead of apples-to-apples comparisons.

Key Takeaways

  • Comparable worth, also known as “pay equity,” focuses on comparing the value that different roles bring to a company.
  • Comparable worth is different from the Equal Pay Act of 1963, which focuses on ensuring equal pay for men and women holding equal jobs.
  • Critics of comparable worth say it impedes the free market and companies’ ability to set salaries as they see fit.
  • The wage gap has been narrowing since 1960, but women still earn an average of only 82 cents to every dollar that a man makes.

Understanding Comparable Worth

While the Equal Pay Act of 1963 addresses the pay gap between men and women who perform the same job, comparable worth focuses on the value that different jobs bring to a company rather than the actual job title. In addition to the Equal Pay Act, Title VII of the Civil Rights Act of 1964 protects workers from being discriminated against on the basis of race, color, national origin, sex, and religion.

Proponents of comparable worth look at it as another way to help lift up women who are working in jobs that are of high value to companies but are paid less. For example, they argue that jobs such as nurses, teachers, and clerical workers—which are more likely to be held by women—continue to be undervalued and underpaid, and that implementing comparable worth policies will elevate compensation for those roles.

Critics worry that implementing comparable worth policies will hurt the free market that is defined by setting salaries based on supply and demand. They further argue that creating blanket compensation across different professions won’t fix the wage gap problem.

Comparable Worth vs. Equal Pay

The terms comparable worth and equal pay can sound interchangeable. They are not. Put simply, the Equal Pay Act of 1963 requires employers to pay men and women equally for the same job, regardless of sex. As discussed above, it does not solve the issue that jobs more likely to be held by women tend to pay less than those predominantly held by men. This is one reason that, despite the 1963 act, the gender wage gap remains wide. In 1960, women earned roughly 61 cents to every dollar earned by a man; today, that figure is still not at parity, having only risen to 82 cents earned by a woman for every dollar that a man makes.

That at least partly explains why there continues to be a focus on comparable worth as another tool to reach pay equity between men and women. Unlike the Equal Pay Act of 1963, comparable worth focuses on the skills and value that different positions offer an employer, rather than a specific job-to-job comparison.

Some court cases have addressed comparable worth, but so far, none has succeeded in pushing the issue further toward federal legislative action. That doesn’t mean no one is addressing the issue. Some 20 U.S. states, along with some Canadian provinces, have enacted versions of pay equity for state employees. Companies are also taking action. According to CNN Business, Starbucks (SBUX) said it reached 99.7%  pay equity in 2017 and discloses salary ranges for every position in an effort to be fully transparent.

There’s still a long way to go. Starbucks is among just a handful of companies that have taken big steps toward pay equity. According to Arjuna Capital’s Gender Pay Scorecard report, 25 of the 50 major companies surveyed scored an F when it came to addressing both gender and racial pay gaps.

What’s Next?

Cries for equal pay and pay equity grow louder every year. It’s a slow shift, but governments and companies are starting to make changes, recognizing that attracting and retaining top talent is not defined by gender. There have been studies showing that utilizing comparable worth likely would lead to an increase in salaries in jobs more likely to be held by women. At the same time, studies also suggest that may put a strain on a company’s bottom line and lead to more supply (job seekers) and less demand (actual jobs).

Comparable worth continues to be part of the equal pay conversation, but a number of unanswered questions remain about long-term implications for both the economy and company growth. And so far, comparable worth court cases have not fared well, making it more difficult to lay a foundation for widespread acceptance.

Policy changes could have a big impact for those most greatly affected. According to the New York State United Teachers union, one congressional study showed that nearly 40% of women at the poverty level could leave government welfare programs behind if their wages were reviewed on a comparable worth basis. It will take a combination of legislative moves, company policy changes, and continued lobbying to help reach pay parity across the board.

In 2021, three states are addressing pay equity with new laws. Colorado, for example, will require companies to disclose pay ranges in job postings so that all candidates know what the job could pay before a job offer is made. California will make employers file a pay data report. Maryland will insist that companies disclose a salary range if requested by job candidates. These changes can be of value to job seekers and jobholders of all genders. The campaign continues.

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