Probing the basis for differential pay practices of younger workers in low paying hospitality firms

Understanding the basis for differential pay practices by age is an important policy issue now that claims for pay discrimination on grounds of age may be mounted. Difficulties in determining the relative job worth and personal worth of workers in particular age groups are highlighted. We identify a need to develop a practical mechanism for assessing the validity of age‐related pay differences in keeping with contemporary notions of jobs and skills that will provide a basis for employers to demonstrate objective justification that their employment practices are not discriminatory. More comprehensive and wide‐ranging research is necessary to differentiate age‐related pay practices and develop further theoretical insights.     

DETECTING AND REMOVING DISCRIMINATION UNDER EQUAL OPPORTUNITIES POLICIES

Abstract. This paper surveys part of the recent voluminous literature on the economics of discrimination, focusing on two key questions. First, how should discrimination be measured and can in fact unambiguous estimates be derived, as the basis for detecting where discrimination is present and setting in train measures to eliminate it? Second, to what extent has the implementation of equal opportunities legislation improved the relative standing of women and minority workers in the labour force? This section includes a discussion of the likely effects of recent changes in the law such as the equal value amendment in the UK or the introduction of comparable worth in the USA. The survey concludes that our ability to detect discrimination at all precisely is still rudimentary and consequently policy measures are likely to be inefficient for this reason.     

Unequal jobs or unequal pay?

This article draws on new data to consider whether women would benefit most from upgrading the skill levels of their jobs or from achieving equal pay for work of equal value. It looks in detail at skill, gender, and whether work is full-time or part-time, concluding that reassessment of the value of women's jobs would be of greater immediate financial benefit to women than upgrading the skill level of their jobs unless this upgrading gave them access to men's jobs at men's pay and benefit rates.     

Job evaluation systems and pay grade structures: do they match?

Job evaluation is usually applied in an organization in order to assess the relative value of jobs on the basis of which jobs are assigned to classes of pay grades. Thus, the assumption is that job value scores match with pay grade structures, and allow adequate predictions of basic job wages or salaries in practice. The validity of this assumption is questioned in this article. Data of five job evaluation systems (number of jobs: 16,809) were used to assess the effects of three system manipulations, concerning the number of anchors per scale (characteristic), the nature and the number of scales, and the weights of scales. Total job value scores of the manipulated data and the associated pay grades were compared with the non-manipulated ('original') scores. It turned out that even when two sets of job value scores are highly correlated (around 0.99), pay grade classification agreement was always less than 90 per cent, and in many instances much less. This result has important implications for the use of job evaluation in practice: when a fine grained system of pay grades applies, total job value scores may be deficient. Implications for a better match between total job worth values and pay grade classes are discussed.     

Henry George and Comparable Worth: Hypothetical Markets as a Stimulus for Reforming the Labor Market

Abstract . Despite significant improvements in the status of women, a significant gap between the wages of males and females persists. Women's work is not paid according to its comparable worth. Henry George, the 19th century economist and social philosopher, advocated payment according to contribution to production in a freely competitive labor market. The present is an exploitative one distorted by employers’market power, offering no free choice among alternative occupations. When women can prove, as they do, that sex discrimination has played some part in their historically lower compensation rate, the market is shown to be not fair and efficient. Hence non-market decision making is demanded through vigorous and unrelenting prosecution enforcing the equal pay statute of 1964.     

The Use of Attendance Incentive Differentials for Managing Worker Shortages: A Study of Export Manufacturers in Global Supply Chains

Amidst frequent and consequential worker shortages, export manufacturers in developing economies use incentives to reward workers for perfect attendance each month. However, it is unclear to what extent the attendance incentive differentials observed between export manufacturers are shaped by both employers' and workers' interests. By applying prior pay setting theory in the context of evidence of when consequential worker shortages occur due to workers' pursuit of personal or professional interests during workdays, I develop a framework that explains export manufacturers' policy decisions on the incentive level to reward workers' perfect attendance. Hypotheses are tested using data on 104 export apparel manufacturing establishments in Sri Lanka. The findings imply that attendance incentive pay setting is shaped not only by export manufacturers' strategic interest in minimizing vulnerability to worker shortages but also by their understanding of workers' willingness to forgo personal/professional interests (e.g., time-off, alternative careers/jobs) to attend on every workday.     

The Male-Female Comparable Worth Debate: Alternative Economics Perspectives on an Issue That Cuts Across the Social Sciences

Abstract . Writers and speakers on the “comparable worth” or “pay equity” issue refer to “the economic view” but there is no such consensus. Three major paradigms exist in labor economics, the neoclassical, the “radical” or Marxian or Neomarxian, and the institutional Each differs in philosophical orientation, employs different analytical methods, and leads to different policy implications. On the issue of pay equity for women their views are contrasted; differences center on how successfully the market extends full options of choice. The analysis indicates that incremental advances in the direction of pay equity are to be expected, given present incentives in the private sector and less economic constraints in the public sector, provided women continue economic, legal, and political pressure. Surveying The Literature on the comparable worth or pay equity debate, one often encounters reference to the economic view. In reality however, three major paradigms exist in labor economics today; the prevailing neoclassical paradigm, the radical or Marxian view, and the institutional approach. While the three can be viewed as sharing common objectives (to describe, to predict, and to prescribe) they approach issues from different philosophical frameworks, employ different analytical tools, and lead to very different policy implications. Examining the pay equity issue from the perspectives of the three paradigms suggests different insights into the issue than that usually labelled the economic view.     

The equal pay act: Responsibilities and rights

The Equal Pay Act of 1963 (EPA) requires that men and women receive equal pay for equal work. Plaintiffs who claim discrimination on the basis of the EPA may settle out of court, or may bring legal action in the courts. Employers possess specific rights under the law, and can defend themselves against charges of discrimination through a number of “employer defenses.” These defenses involve providing that pay differences are based on seniority systems, merit systems, production systems, or “any other factor other than sex.” This article will also discuss the impact of court decisions that have further honed the responsibilities and rights of both employees and employers under the EPA.     

Effects on earnings of the removal of direct discrimination in minimum wage rates: A validation of the Blinder decomposition

Prior to 1969, the Australian labour market was characterised by institutionalised gender wage discrimination. Wages for the majority of the workforce were set by government wage tribunals, and these tribunals set the wages of women at 75 percent of the male rate of pay. Following equal pay decisions in 1969 and 1972, the award rates of pay for all work were, by June 1975, to be determined without consideration of the sex of the worker. Examination of data from surveys conducted in 1973 and 1989 show that the removal of this institutionalised discrimination is captured by the Blinder (1973) and Oaxaca (1973) wage decompositions as a marked decline in the absolute value of the ‘discrimination’ component of the gender pay gap. The analyses also reveal some merit in the decomposition proposed by Cotton (1988).     

Temporary jobs and job search effort in Europe

Using longitudinal data on individuals from the European Community Household Panel (ECHP) for eleven countries during 1995-2001, I investigate temporary job contract duration and job search effort. The countries are Austria, Belgium, Denmark, Finland, France, Greece, Ireland, Italy, the Netherlands, Portugal and Spain. I construct a search model for workers in temporary jobs which predicts that shorter duration raises search intensity. Calibration of the model to the ECHP data implies that at least 75% of the increase in search intensity over the life of a 2+ year temporary contract occurs in the last six months of the contract. I then estimate regression models for search effort that control for human capital, pay, local unemployment, and individual and time fixed effects. I find that workers on temporary jobs indeed search harder than those on permanent jobs. Moreover, search intensity increases as temporary job duration falls, and roughly 84% of this increase occurs on average in the shortest duration jobs. These results are robust to disaggregation by gender and by country. These empirical results are noteworthy, since it is not necessary to assume myopia or hyperbolic discounting in order to explain them, although the data clearly also do not rule out such explanations.     

Cash in Your Face: The Cost of Racial and Ethnic Discrimination in Housing

According to recent evidence, racial and ethnic discrimination in housing continues to be widespread. This paper estimates the cost this discrimination imposes on black and Hispanic households. Building on the work of4, the paper develops a housing search model and measures the cost of discrimination by its impact on the gain a household can achieve through housing search. The cost of discrimination is then calculated for a representative sample of households. The punchline: Black and Hispanic households pay a discrimination “tax” of almost $4,000, on average, every time they search for a house to buy.     

Discrimination Helps the Under-Privileged

Anthony Wedgwood Benn's agitation for higher pay for youths on Norman Tebbit's government training programmes would increase the numbers on the dole. To legislate against discrimination prevents the under privileged pricing themselves into jobs and homes from which they can them be pushed by their white, stronger or otherwise more attractive competitors.     

Testing the intertemporal labor supply model: are jobs important?

The neoclassical life-cycle labor supply model assumes that hours of work are determined by labor supply choices alone and does not include a role for employers or job distinctions. An alternative model in which employers have an interest in employee hours and changing jobs is costly may reconcile weak and conflicting evidence regarding the neoclassical model. An important implication of such an alternative is that individuals may face hours constraints on a job and thus can choose hours freely only between jobs. This paper tests several implications of the neoclassical model against this alternative model of hours determination. Using a unique panel of individuals and jobs constructed using data on women from the 1988–1992 Panel Study of Income Dynamics, I compare hours variances and labor supply elasticities measured within and between jobs. Results provide some evidence against the neoclassical model and suggest that ignoring the role of employers in determining hours of work can lead to downward bias in estimates of labor supply elasticities.     

Preferences,Comparative Advantage,and Compensating Wage Differentials for Job Routinization*

I attempt to explain why there is not much evidence on compensating wage differentials for job disamenities. I focus on the match between workers’ preferences for routine jobs and the variability in tasks associated with the job. Using data from the Wisconsin Longitudinal Study, I find that mismatched workers earn lower wages and that both male and female workers in routinized jobs earn, on average, 5.5% and 7% less than their counterparts in non‐routinized jobs. However, once preferences and mismatch are accounted for, this difference decreases to 2% for men, and 4% for women, not statistically significant in both cases.     

Discrimination,technology and unemployment

I study the interaction between discrimination and investment using a directed search model where firms decide the capital intensity of their production technologies before being matched. Discrimination makes some workers cheap to hire. As a consequence, some firms might save on capital costs adopting labour intensive technologies. This framework allows one to reconcile search models with three well-known facts regarding the labour market outcomes of minority workers: low wages, high unemployment and occupational segregation. Furthermore, the model questions the role of equal pay legislation in reducing inequality since removing this restriction, i.e., allowing firms to post type-contingent wages, eliminates the negative effects of discrimination on investment and wages.     

Pensions, non-discrimination policies, and the employment of older workers

This paper analyzes firms' decisions to hire older workers. We model, the role of pensions in back-loading pay for specifically trained workers. We then evaluate the effects, of imposing age discrimination rules and non-discriminatory fringe benefit rules, and analyze the consequences for the firm's decision to hire older versus younger individuals. The model predicts that defined benefit pension plans deter the hiring of older workers, but only if hired for entry level position. The reason is f hat the wages of this group cannot be lowered enough to pay for the benefits. Data from a new survey of employers are used to test this hypothesis. The findings show that a more generous defined benefit pension plan reduces employment prospects for older, entry level workers. Employers offering defined benefit pension, plans employ older workers, but tend not to hire them into entry level jobs.     

Are Reports of Discrimination Valid? Considering the Moral Hazard Effect

A bstract .   Antidiscrimination laws are designed to prompt employers to stop excluding black workers from jobs they offer and from treating them unequally with respect to promotion and salaries once on the job. However, a moral hazard effect can arise if the existence of the laws leads black employees to bring unjustified claims of discrimination against employers. It has been argued that employers may become more reluctant to hire black workers for fear of being subjected to frivolous lawsuits.
Using the Multi-City Study of Urban Inequality (MCSUI), we find that male and female black workers are far more likely than whites to report racial discrimination at work. This is the case even when a host of human capital and labor market factors are controlled for. Further, nearly all black workers who report they have been discriminated against on the job in the MCSUI Surveys also show statistical evidence of wage discrimination. This is not the case for white males or females. We find little evidence to support a moral hazard effect.     

Wage curve, unemployment duration and compensating differentials

In this study unemployment effects on individual pay are investigated following the study on ‘wage curves’ by Blanchflower and Oswald (1990). In bargaining models, higher unemployment should lower wage pressure; due to compensating wage differential arguments, on the other hand, workers who take jobs with higher layoff risks should be rewarded. In a cross-sectional study on Austrian data, a negative wage curve is confirmed. Contrary to the results by Blanchflower and Oswald no U-shape is found, also long-term unemployment seems to be important. No conclusive evidence of compensating differentials has been determined.     

Cash transfers versus jobs programs

This paper uses a microsimulation computer model to compare the work incentive and distributional implications of public service employment programs and direct transfer programs. The simulation findings suggest that a pure direct transfer program would diminish poverty and inequality by somewhat more than an equal cost plan than combined direct transfers with a jobs program. Moreover, the results imply that a redistribution scheme based entirely on direct transfers is at least as effective per dollar of tax expenditure in raising incomes as a combination of direct transfers and jobs. Furthermore, the simulated job and direct transfer combinations were predicted to cause reductions in private sector earnings that are at least as large as those that would result from comparable schemes that relied solely upon direct transfers.     

An anatomy of zero‐hour contracts in the UK

We present the first attempt to locate zero‐hour contract (ZHC) jobs—jobs that lack a guaranteed minimum number of hours—within theoretical frameworks of the employment relationship and occupational class and empirically explore their characteristics using successive UK Labour Force Survey. In line with these theories, we find this contentious form of employment to be strongly differentiated by the nature of occupational tasks and to overlap with nonstandard employment features (e.g. part‐time and temporary). They are also highly concentrated in a small number of occupations and sectors, with over half of ZHC jobs found in just 10 occupations. We further show that ZHCs are associated with indicators of inferior job quality such as low pay and underemployment. Although we find no evidence that ZHCs are a particularly pervasive feature of the UK labour market, further growth cannot be ruled out in certain occupations.