Friday 8 July 2011

A real pay equity challenge

The New Zealand unions have been pushing hard for pay equity: that people doing equivalent jobs are paid equivalent amounts. Here's their Pay Equity Challenge website, highlighting the gender wage gap.

Three years ago, Waikato University economist Professor John Gibson released a paper (ungated) showing another pay gap: public servants earn a lot more than folks in the private sector doing equivalent jobs. And where the gender pay gap gets smaller once you start controlling for characteristics that vary by gender and also affect pay, like education, work experience and the like, the private-public pay gap gets bigger when you adjust for confounds like education and on-job satisfaction.

What did the unions say at the time about that pay gap?
But Public Service Association national secretary Brenda Pilott said the study had "no value".

"He calls public servants fat cats because a surgeon working at a public hospital earns more than a teenager working at McDonald's," she said.

"Of course the surgeon earns more because society places a higher value on saving lives than selling hamburgers."

Ms Pilott said the biggest pay increases in the state sector in recent years had been for doctors, nurses and teachers.

"Why? Because our society can't function without them and because we've struggled to hold on to them because they've been able to earn more overseas.

"I note that Professor Gibson is a public sector worker. Does he include himself in the fat-cat category?"
So Gibson's careful study, adjusting for confounds, is of "no value", but differences in average wages across genders, with no controls for confounds, demands legislative action? Interesting.