Reposted from the Wall Street Journal.
Should female secretaries be paid at the same rate as male landscapers?
That was one of the many questions facing McGill University in Montreal as it launched a sweeping program, required by Quebec law, to ensure gender pay equity among its roughly 12,000 full-time equivalent employees.
American employers might soon face similarly sticky questions about how to define equal pay. While pay differences between men and women remain a hot topic in the U.S., most U.S. companies have been unwilling to publicly address the issue.
Now, as many U.S. companies gird for a new federal requirement to report pay data by gender, McGill’s gender-equity program, which it developed over 13 years at a cost of at least 20 million Canadian dollars (US$19 million), offers a glimpse at what pay engineering looks like.
In February, McGill sent out checks covering back pay and raises for 2,100 current and former employees deemed to have been underpaid. For some workers with long tenures, that meant sizable sums—as much as C$80,000 in some cases, said Sean Cory, president of a union that represents university research employees.
The program’s goal was to ensure that pay for female-dominated professions was keeping pace with male-dominated ones of equal importance. If administrative assistants were considered as valuable as groundskeepers, the thinking went, the women who jotted down phone messages and kept appointment calendars should be compensated as well as the men working the lawns.
To recalibrate its paychecks, McGill spent years sorting employees into 150 job classifications, then ranking each job’s importance according to the education and skills required.
There were mathematical hiccups, lawsuits and labor disputes along the way. At one point, facing a legal challenge, the university tossed out its statistical approach for establishing equal-pay groups and started over.
Another conundrum involved a mostly female team of assistant cooks and a mostly male team of executive cooks. McGill’s pay analysis called for paying the assistants more than their bosses were earning. University officials still are trying to sort the issue out with the school’s unions.
McGill says it can’t say how much the pay-equity program has changed the salary landscape for its employees. It hasn’t conducted an analysis to determine what impact the program has had on median pay for women or for its employees overall.
“There’s something to be said for forcing us to think about the problem,” said McGill University Provost Anthony C. Masi. “I’m not convinced that we’ve found the right statistical formula to do this, or that we’ve had a full and honest discussion.”
Salary adjustments for members of the McGill University Non-Academic Certified Association, a union for nonacademic support staff that covers about 20% of the university’s workers, show how things have changed for some workers.
Office clerks, which are classified as level-one employees, received a pay equity adjustment. This year they are earning between C$17.75 and C$24.47 an hour, according to salary scales the union and university agreed upon.
Other level-one employees who didn’t receive pay adjustments are earning between C$17.36 and C$23.95 an hour.
Nurses, classified as level-14 employees, also are getting a pay-equity bump. They can earn as much C$39.11 an hour. Most level-14 workers can earn as much as C$34.20 an hour.
Lina Naso, a McGill research technician, is bringing home a paycheck that is 15% to 20% larger than it was before the adjustment. “I’m happy with the outcome,” Ms. Naso said, but “I thought an employer would step up and not wait until things were imposed on them. I guess that’s naive of me.”
Inequalities persist, university and union administrators say, and McGill’s Mr. Masi adds that the Quebec law’s rigid requirements make it more difficult to poach talent in high-demand fields.
While some men received raises along with women workers, there hasn’t been an effort to determine whether some male-dominated professions are underpaid, university and union officials said.
The university expects a smaller price tag for future pay adjustments; it is required to evaluate disparities every five years and expects to spend less than C$1 million on each future adjustment.
In the U.S., equal-pay legislation has stalled in Congress, even as politicians vie to win over female voters, and prominent women, such as Sheryl Sandberg, the chief operating officer of Facebook Inc., FB +3.53% push for more pay equity. A key reason for the gridlock: there isn’t a broad agreement about the size, source—or even the existence—of the gender pay gap.
By one measure—median weekly earnings for all full-time wage and salary workers—women in the U.S. earned 81% of men’s pay in 2012, according to Labor Department data. But Mercer LLC, a consulting firm that offers advice on pay parity, says it has found an average pay gap of just 2% to 6% at its client companies.
Plugging such gaps typically costs clients about 0.5% of their payroll, said Brian Levine, a partner in Mercer’s talent business.
Academic research attributes salary inequalities to several factors—from outright bias to women failing to ask for raises. Some research suggests that employers put a premium on working long hours, which puts women at a disadvantage because they are often responsible for more housework and child care.
Others contend that women choose less-lucrative fields. When Harvard University economist Claudia Goldin tested various theories, she found that pay disparities between men and women in the same occupation were a bigger factor than their choice of profession. That led her to conclude that the gap stems more from women making less in the same jobs as their male colleagues.
That’s the kind of disparity Boston-based Suffolk Construction is trying to root out. The company employs 1,250 people, and is comparing pay, position by position, for equally qualified workers across its three regions. Then, with an outside consultant, Suffolk is comparing those salaries to industry rivals in each market. The company expects to have the study’s results by the Aug. 31 end of its fiscal year to budget for any pay adjustments the following year.
The construction company was one of dozens that signed a compact last year pledging to close Boston’s gender pay gap. A 2011 report from the city estimated that women who worked there earned 85% of the income for men.
“I don’t anticipate a huge gap inside Suffolk,” said Kimberly Steimle Vaughan, the company’s chief marketing officer and chief people officer. “But I’m more focused on ensuring I can say that with complete certainty.”
Many companies still shy away from disclosing whether they are conducting salary surveys to identify inequalities, partly because they fear lawsuits, experts said.
When Nancy Gibbs became the first female managing editor of Time TIME +1.38%magazine last year, she said she planned to evaluate how women’s salaries at the Time Inc. unit stacked up against those of their male counterparts. A spokesman said that initiative is continuing as Ms. Gibbs expands her staff.
Companies who do business with the federal government—which employ some 20% of the U.S. workforce, by government estimates—will soon have to face the issue head-on. President Barack Obama signed an executive action earlier this year requiring federal contractors to report pay data by gender and race.
The proposed rules for doing so are expected to be released later this summer.
Contractors are already required to collect such pay data, but, “I couldn’t tell you how many contractors actually do that,” said Patricia Shiu, director of the Labor Department’s Federal Contract Compliance Programs.
The government periodically reviews contractors and can bring lawsuits against them when it identifies discrimination issues, including gender pay gaps. In recent years, drug maker AstraZeneca AZN.LN -0.01% and uniform-provider G&K Services Co.GK -0.33% each agreed to pay settlements of roughly US$250,000 after the government sued them for gender discrimination.
AstraZeneca declined to comment. A spokesman for G&K said the company improved its pay-rate transparency and has trained managers in nondiscrimination practices.