A Look Farther Down the “Pay Equity” Road

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This news out of New Zealand is a little far afield, but because the country is a couple steps farther down the delusion of government’s ensuring total “pay equity,” it provides a good warning.

Twenty-six workers have been left jobless and 10 residents homeless after a Taranaki rest home announced its closure – partly blaming the decision on new pay legislation. …

The decision comes following last month’s proposal to close the Pukaka St rest home, which opened 25 years ago, because of the impact of Pay Equity Legislation and occupancy levels.

For the most part, companies set their pay rates for reasons that aren’t greed and bigotry.  If government forces them to increase pay, or makes regulations more expensive, something has to give. Either reductions in quality or reductions in employees.

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In New Zealand’s case, politicians have gone beyond even the insane proposal currently lurking in Rhode Island’s General Assembly.  Following the obvious logic of progressive thinking, when New Zealand observed that the so-called “pay gap” isn’t the result of individual sexism, but of broader factors, the government didn’t rethink its meddling, but doubled down.  Now, regulations seek to ensure pay equity between entirely different industries that tend to be dominated by one or the other sex:

Since its inception, it was commonly believed that the Equal Pay Act 1972 was limited to abolishing differences in pay rates between men and women within the same occupation. Nevertheless, in 2012 Kristine Bartlett brought an action against her employer, Terranova Homes, claiming her pay rate did not provide for equal pay within the meaning of the Act. Ms Bartlett had 20 years’ experience as an aged care worker but was only paid NZ$14.46 per hour, a mere 71c above the minimum wage. An inquiry by the Human Rights Commission led to a finding that low pay rates in the aged care sector were caused by historic undervaluation of a role which was traditionally considered “women’s work”. So this was not a claim of direct discrimination, as both male and female caregivers receive the same depressed pay rate. Rather, this was a claim that pay rates of all caregivers are discounted because the profession is predominantly occupied by women.

Section 3(1)(b) of the Equal Pay Act states that the court may consider the pay rate of a male comparator to determine whether gender discrimination is evident in pay rates of those in female-dominated occupations. The question before the Employment Court, and subsequently the Court of Appeal, was whether Parliament intended the comparator to be an actual male from within the same workplace, or if it extended to a hypothetical male from outside the industry. Both courts were in agreement that to select a male performing the identical role would simply perpetuate systemic discrimination, as both men and women in female-dominated occupations receive a depressed pay rate. Thus, it has been held that a section 3(1)(b) inquiry allows the court to admit evidence of what would be paid to a hypothetical male from outside the industry who performs a role equivalent in value to that of a woman in a female-dominated occupation. It therefore, recognises the right to “equal pay for work of equal value” through a modern interpretation of the Equal Pay Act.

We’d do better to control the impulse never to challenge our initial assumptions.  Markets account for much more than people’s pay, bringing into the equation so many, and such subtle, factors that no central bureaucracy or court could possibly make more-fair decisions for an entire community.

Some jobs are safer.  Some are more fulfilling.  Some require longer hours.  Some provide more flexibility.  Some take more education.  Some take more on-the-job experience.  Attempting to fine tune all of that through the very narrow lenses of sex and salary will inevitably make things less fair and cause people to lose their jobs and the services on which they rely.



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