How is a Pay Equity Study Conducted?

There are some situations where a full study may be necessary, especially if the employer or local legislators are unwilling to make pay equity adjustments without the results of a large-scale study.

Before beginning a study, the union should reach agreement with the employer on several key elements of the pay equity initiative. This agreement may be included in contract language which sets up a joint labor/management committee to oversee the study. The agreement should include:

• A clear, strong commitment to pay equity for female-dominated and minority-dominated jobs, and an equally strong commitment that equity will not be achieved by downgrading or red-circling (or freezing the wages of) any jobs. 
• Use of a “single yardstick” (one job evaluation system) which is gender-neutral to measure the skill, effort, responsibility and working conditions of all of the employer’s jobs. The job evaluation system should be used both for the pay equity study and then for other personnel functions such as reclassifications so that a consistent, fair system will be in place. 
• Definition of female-dominated, male-dominated and balanced jobs. This is commonly set at 70 percent but may vary a little (for example 60 percent or 65 percent) depending on the workforce. Job classifications dominated by minority group members can be defined as those in which the percentage of minority employees significantly exceeds their percentage in the local labor market. 
• Use of market data in salary setting only for male-dominated and balanced classes; to achieve and retain pay equity, internal equity should determine pay for female-dominated classes. 
• Recognition of the union as an equal partner in the pay equity study. 
• Commitment of funds to complete the pay equity study. 
• Clear statement of the right of unions to bargain over the pay equity process and implementation. 
• Appeals process through the contract that gives employees and the union the right to appeal the results of the pay equity study. 
  
  

The following items may be addressed at this time or during the implementation phase:

• Timeline to phase in pay equity adjustments over a period of time, typically two to four years. This item may be addressed at the completion of the study. 
• Fund for pay equity adjustments which is separate from funds for any other pay adjustments. 
• Ongoing process for determining if pay inequities have crept back into the system and for allocating funds to correct these inequities. Information should be available in a timely manner to assist in bargaining and the state budget process.

A full study usually consists of the following components:

1. Job segregation analysis

In a sex segregation analysis, data is collected (generally this is supplied by the employer) on the number of men and women currently in each job classification. Then, the percent of employees in each job who are women is calculated. Generally, jobs that are 70 percent or more women are considered to be female-dominated. Those between 31 percent and 69 percent women are called “balanced,” meaning that there is a balance of men and women in the occupation. Jobs that are 0 to 30 percent women are called “male-dominated.” Sometimes, lower cutoff points for female-dominated classifications, such as 60 percent or 65 percent, are used if there are clear examples of jobs traditionally held by women that fall in the 60 percent range.

Most sex segregation analyses show that the workforce is highly sex-segregated. And despite the fact that some women have moved into non-traditional jobs, sex segregation is still very strong. For example, women were 98 percent of all secretaries in 1970 and are still 98 percent of the occupation today. Nurses have increased from 91 percent female to 94 percent female in the last 20 years.

An analysis of segregation by race should also be conducted. In this type of analysis, the percent of minority group members in each classification is calculated as a percent of the total number of employees in the classification. Job classifications in which the percentage of minority group members significantly exceeds that of the local labor market are considered minority-dominated and should be examined further for evidence of race discrimination in pay.

2. Choosing a job evaluation system

In order to determine if jobs held by women or people of color are paid less than they are worth, job classifications are analyzed using a job evaluation system. Most mid- and large-sized employers already use a job evaluation system for many human resource functions, such as assigning individual jobs to classifications or reclassifying jobs. The employer’s system or another system chosen specifically for the pay equity study may be used. If you are working with a consultant, the firm may have a system they prefer to use.

It is important to keep in mind two basic points about job evaluation:

• Job evaluation is an internal process. Job evaluation allows you to compare jobs or job classifications within one employer, not with those of other employers. Though a market survey will show how one employer’s pay rates compare to those for other employers, job evaluation shows how the different jobs within one organization compare to each other. 
  
  
• Job evaluation looks at job classifications, not employees. Job evaluation examines the duties and responsibilities that are assigned to a job, but does not look at how well or poorly an employee performs these duties. Job evaluation also does not look at the qualifications that an individual employee who is currently performing a job may have, but rather focuses on the qualifications required to do the job.
  
  Although there are a number of different job evaluation methods, by far the most commonly used one is the point-factor method. This type of system got its name because it consists of a number of factors with points assigned to each factor. The elements of a point-factor system are: 
  
  
• Factors (or compensable factors): Factors are measurable features or requirements that are common to many different kinds of jobs. They are sometimes called compensable factors because the elements should reflect the various components for which the employer pays employees.
  
  Here are the four basic job evaluation factors and their definitions.
  
  
  • Skill: the experience, training, education and ability required to do a job. 
    
    
  • Effort: the physical or mental exertion needed to perform a job. 
    
    
  • Responsibility: the extent to which employees are accountable for the work they do. 
    
    
  • Working conditions: the physical surroundings and hazards of a job.
    
    

Although some job evaluation systems have more than four factors — some have as many as 15 — all of the factors are derived from these four basic factors.

• Factor levels: Each factor is broken down into factor levels. Each factor level is defined beginning with the lowest possible level and proceeding step by step to the highest level which is applicable to jobs in the organization. For example, a hazards factor may start with a level which describes jobs in which employees do not face hazards and end with a level pertaining to jobs in which employees encounter life-threatening situations on a regular basis. Each level is assigned a number of points, which increases at each level. 
  
  
• Factor weights: Each factor is assigned a weight that reflects the relative importance of the different factors to the employer. In general, skill and responsibility factors receive the highest weight. A higher number of points is assigned to factor levels in the more heavily weighted factors.
  
  If you are reviewing a job evaluation system, look for the following qualities: 
• Comprehensive: Is the system able to evaluate all major aspects of all jobs in the organization? 
• Up-to-date: Is the system designed to evaluate the type of work that employees currently do? 
• Gender neutral: Does the system allow for a fair evaluation of all jobs? For example, some systems define working conditions in terms of lifting objects, which is more typical of jobs that men hold, but ignore lifting patients which is more typical in women’s jobs. Likewise, a hazards factor may mention dangerous machinery, but not communicable diseases. Although factors should not mention specific job duties or job titles, they should be written broadly enough to cover all applicable occupations. 
• A single system: Can the system be used to evaluate all jobs within the organization? Unless one system is used for all jobs, you will not be able to compare jobs. 
• Clear and logical: Are the factor and factor-level definitions clear? Do the factor levels progress logically from step to step? Are any levels missing?

3. Collecting job information

In order to evaluate jobs, it is crucial to have current, accurate information on each job classification. The importance of good job information can not be emphasized enough. Beware of employers who propose to evaluate jobs based on out-dated and incomplete job descriptions.

Usually job information is collected through a position description questionnaire (PDQ) which is sent to all employees or to a sample of employees in each job classification. On-site audits and interviews with employees may be used to get additional information.

Sometimes supervisors are also asked to provide information on the jobs that they supervise. However, we recommend that if supervisors are surveyed, they be given a separate questionnaire. Employees should not be required to submit their questionnaires to their supervisors for review. If supervisors review employees’ questionnaires, some employees may be afraid to list all of their duties — especially if they do some of the duties assigned to their supervisors.

When working with questionnaires, keep in mind the following points:

• The questionnaire should contain questions that pertain to each factor in the job evaluation system so the evaluators will have the information they need to evaluate jobs. 
• Questions should be clear, easy to understand, and at the appropriate reading level for the workforce. 
• Questions should be free of sex bias and written in gender-neutral language. For example, if a question asks what kind of machinery you use, examples should include items used in many types of jobs, including both typically male and female jobs, such as backhoe, computer, and microscope. 
• Employees should be given adequate work time to fill out their questionnaires. Preferably, they should have a quiet place away from their workstation where they can work without interruptions. 
• Employees should understand that this information cannot be used against them.
  For tips on filling out this type of questionnaire, see the appendix to this publication.

4. Evaluating job classifications

Once the job evaluation system is chosen and complete information on jobs has been collected, jobs can be evaluated. Job evaluation is generally done by a consultant, the employer’s human resources department, or by teams of employees and managers. Regardless of who evaluates the jobs, they should be trained in the job evaluation system and in techniques for fair, bias-free evaluation.

The evaluators study each factor and the relevant information about each job in order to pick the most appropriate level of each factor for each job. Then, the points for each chosen factor level are totaled up to arrive at the total job worth score for each job.

5. Identifying pay inequities

Once the job evaluation phase is completed, pay inequities can be identified.

A statistical technique called regression analysis is used for this purpose. In a regression analysis, a scattergram is created which plots a point for each job classification based on the job evaluation score and pay. Different symbols are used for the points representing female-dominated, male-dominated and balanced classifications, as well as minority-dominated jobs. Then, a “line of best fit” is calculated which shows the trend for each group of jobs. Generally, the analysis for sex-based pay inequities will result in two distinct lines — the higher line being the male-dominated jobs and the lower salary line for female-dominated jobs. Sometimes a middle line, representing balanced jobs, is also shown. The distance between the female and male salary lines represents the wage gap, and the amount of money needed to raise each female-dominated job to the male salary line is the amount of the pay inequity adjustment suggested by the study. On average, pay equity studies determine that jobs filled predominantly by women are paid 15 to 20 percent less than male-dominated jobs that received similar job evaluation scores.

6. Implementing the results

Once the pay equity study is completed, AFSCME recommends that implementation take place during bargaining, when-ever possible. Two rules of thumb apply to bargaining for equity increases:

• Try to negotiate money for pay equity adjustments separately from across-the-board increases. This strategy will help build unity when employees who aren’t eligible for adjustments see that they will still get their regular increases. 
  
  
• If the employer or elected officials think equity adjustments are too expensive, negotiate a plan which phases in adjustments over a number of years. The union can win support if it’s clear that it is willing to accommodate fiscal constraints, so long as the employer addresses pay inequities in a timely manner. Many AFSCME pay equity agreements have implemented adjustments over a period of two to four years.

During bargaining, the employer may argue that some jobs should be red-circled because they believe they are overpaid. In every pay equity analysis, there will be jobs that fall above the pay line. Such jobs are not overpaid; the pay for these job classifications simply illustrates the point that jobs are usually arrayed on either side of the pay line due to a wide variety of legitimate decisions, such as genuine market shortages, that have been made through past bargaining and/or human resource action. However, to minimize the employer’s attention to “overpaid” jobs, AFSCME recommends that the pay equity initiative keep focused on eliminating sex-based wage inequities. If the employer wants to re-examine the pay or classification of some male-dominated or balanced jobs, they can raise those issues at another time.