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COMPARABLE WORTH: CANADA’S EXPERIENCE MORLEY GUNDERSON and W. CRAIG RIDDELL* This paper discusses the design, implementation and administration of comparable worth legislation in Canada,focusing particular attention on the potential of compa- rable worth to close the malefernale earnings gap. The authors document the Canadian legislative initiatives, pwvide illustrative evidence on the impact of comparable worth, and identih the main policy lessons to be learned from the experience of Canada, where the comparable worth concept has evolved furthest. 1. INTRODUCTION Comparable worth legislation, in con- trast to that mandating equal pay for men and women performing the same job, re- quires equal pay for men and women per- forming jobs of equal value. Thus, compa- rable worth relies on complicated job eval- uation procedures rather than superficial job comparisons. From an international perspective, the analysis of Canada’s ex- perience with comparable worth (or “pay equity” as the Canadians say) is important for a variety of reasons. First, Canada has gone further than any other country in adopting and implementing the policy; it exists in some form in all jurisdictions ex- cept the three Western provinces. Second, the debate in Canada largely has gone be- yond whether or not the policy should be adopted to how best to implement it. Is- sues of design, implementation and ad- ministration are at the forefront of the pol- icy debate and in the minds of those re- sponsible for its application. Third, legis- lators in the province of Ontario have ap- plied comparable worth to the private sec- tor proactively, requiring employers to es- tablish a plan whether or not a complaint has been made. Fourth, in Canada, com- parable worth tends to be applied through the process of collective bargaining, which is prominent especially in the public sector and relative to the United States. Fifth, be- cause the policy has been in place in some jurisdictions for a sufficient time, some lessons are emerging. Sixth, Canada‘s ex- perience will test the viability of broadly applying comparable worth as the country increasingly faces global competition, es- pecially under free trade with the United States, which has put such policies “on hold.” Competitive forces from the prod- uct and capital markets may pressure gov- ernments to ”harmonize” their legislation so that domestic employers are not at a cost disadvantage relative to foreign petitOrS. draws out the policy lessons that can be learned from the Canadian experience. The intent is not to describe the Canadian *Director, Centre for Industrial Relations, and Pro- fessor, Department of Economics, University of To- ronto; and professor and Head, Department of Eco- This is a fevised version of a paper presented at the western Economic -iation International 66th nual Confefence, Seattle, Wash.. J- 3% 1% in a session oqM by Ross tions Center, Universitv of Minnesota. The authors nomics, University O f British Columbia, respectively. This paper expands on these issues and Industrial gratefully acknowwgeknancial support from the SO- cial Sciences and Humanities ReseaxhCouncil Of can- ada, as well as helpful comments from two anonymous refem. situation comprehensively, but to high- light those issues that best illustrate the area of active policy debate and that have contemponuy Policy Issues Vol. x, July 1992 85 @Western Economic Association International

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Page 1: COMPARABLE WORTH: CANADA'S EXPERIENCE

COMPARABLE WORTH: CANADA’S EXPERIENCE MORLEY GUNDERSON and W. CRAIG RIDDELL*

This paper discusses the design, implementation and administration of comparable worth legislation in Canada, focusing particular attention on the potential of compa- rable worth to close the malefernale earnings gap. The authors document the Canadian legislative initiatives, pwvide illustrative evidence on the impact of comparable worth, and identih the main policy lessons to be learned from the experience of Canada, where the comparable worth concept has evolved furthest.

1. INTRODUCTION

Comparable worth legislation, in con- trast to that mandating equal pay for men and women performing the same job, re- quires equal pay for men and women per- forming jobs of equal value. Thus, compa- rable worth relies on complicated job eval- uation procedures rather than superficial job comparisons. From an international perspective, the analysis of Canada’s ex- perience with comparable worth (or “pay equity” as the Canadians say) is important for a variety of reasons. First, Canada has gone further than any other country in adopting and implementing the policy; it exists in some form in all jurisdictions ex- cept the three Western provinces. Second, the debate in Canada largely has gone be- yond whether or not the policy should be adopted to how best to implement it. Is- sues of design, implementation and ad-

ministration are at the forefront of the pol- icy debate and in the minds of those re- sponsible for its application. Third, legis- lators in the province of Ontario have ap- plied comparable worth to the private sec- tor proactively, requiring employers to es- tablish a plan whether or not a complaint has been made. Fourth, in Canada, com- parable worth tends to be applied through the process of collective bargaining, which is prominent especially in the public sector and relative to the United States. Fifth, be- cause the policy has been in place in some jurisdictions for a sufficient time, some lessons are emerging. Sixth, Canada‘s ex- perience will test the viability of broadly applying comparable worth as the country increasingly faces global competition, es- pecially under free trade with the United States, which has put such policies “on hold.” Competitive forces from the prod- uct and capital markets may pressure gov- ernments to ”harmonize” their legislation so that domestic employers are not at a cost disadvantage relative to foreign petitOrS.

draws out the policy lessons that can be learned from the Canadian experience. The intent is not to describe the Canadian

*Director, Centre for Industrial Relations, and Pro- fessor, Department of Economics, University of To- ronto; and professor and Head, Department of Eco-

This is a fevised version of a paper presented at the western Economic -iation International 66th nual Confefence, Seattle, Wash.. J- 3% 1% in a session oqM by Ross tions Center, Universitv of Minnesota. The authors

nomics, University Of British Columbia, respectively. This paper expands on these issues and

Industrial

gratefully acknowwgeknancial support from the SO- cial Sciences and Humanities ReseaxhCouncil Of can- ada, as well as helpful comments from two anonymous refem.

situation comprehensively, but to high- light those issues that best illustrate the area of active policy debate and that have

contemponuy Policy Issues Vol. x, July 1992

85

@Western Economic Association International

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86 CONTEMPORARY POLICY ISSUES

most relevance for the lessons to be learned.’

Section I1 briefly discusses the magni- tude of the male-female earnings gap in Canada and the determinants of that gap. Section I11 describes the main features of the Canadian legislative initiatives and briefly discusses the rationale for the evo- lution of those initiatives. Section IV ana- lyzes emerging issues with respect to ap- plying the legislation. Section V presents some evidence on its impact. Section VI concludes with a discussion of the main policy lessons to be learned from the Ca- nadian experience.

11. MALE-FEMALE EARNINGS GAP

In Canada, the ratio of female to male earnings has increased slowly but steadily in recent decades. For full-year, full-time (FYFT) workers, that ratio increased from 58.4 percent in 1967 to 65.8 percent by 1989. Categorizing full-year, full-time does not fully control for differences in hours of work, since within that category the average workweek was 40.9 hours per week for males and 35.6 hours for females in 1988. This implies that female hourly wages were about 75 percent of male wages, and possibly as high as 80 percent. (Gunderson and Riddell, forthcoming, give calculations.)

Unfortunately, no systematic Canadian evidence exists indicating what has hap- pened to the earnings gap after controlling for changes in the composition (for exam-

1. Consult Weiner and Gunderson (1990) for such a description. Gunderson (1985a) traces the evolution of the legislation from conventional equal pay to com- parable worth. Conventional equal pay legislation re- quires equal pay for equal work (or at least substan- tially similar work), allowing comparison only within the same occupation. Comparable worth requires equal pay for work of equal value. A job evaluation scheme that determines value must evaluate a job’s characteristics such as the skill, effort, responsibility, and working conditions. In doing so it allows com- parisons across different occupations. Both equal pay and comparable worth restrict comparisons to jobs within the same establishment.

ple, age and experience) of the male and female workforces. Shapiro and Stelcner (1987) attribute the decline in the earnings gap that occurred between 1970 and 1980 equally to women’s improved potential for productivity and a decline in discrim- inatory instances of unequal pay.

Econometric studies that decompose the earnings gap in Canada tend to find that similar patterns prevail in the United States and other countries (Robb, 1978; Gunderson, 1979; Shapiro and Stelcner, 1987). (Gunderson, 1989a, and Gunderson and Riddell, forthcoming, review and compare these and other studies with the results from other countries.) Regarding the potential for comparable worth, the studies find that controlling for differ- ences in productivity related factors and other wage determining characteristics does reduce the overall earnings gap, but that a discriminatory component still re- mains. Occupational segregation accounts for a larger component of the gap than does wage discrimination within the same occupation and, especially, within the same establishment. The gap is also smaller in the public sector than in the private sector.

This evidence suggests that by dealing with occupational segregation, compara- ble worth has the potential to reduce the earnings gap substantially. However, that potential is limited because comparable worth does not deal with the portion of the gap arising from women‘s being seg- regated into low wage establishments and industries. Nor does it deal with the por- tion of the gap arising from constraints outside the labor market. Comparable worth’s potential is likely to be greater in the private sector than in the public sector given the larger gap in the former. How- ever, the private sector’s greater likeli- hood of segregating women into low wage establishments and industries limits real- izing that potential. Additionally, the pri- vate sector may resist adjustments more strongly than would the public sector,

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GUNDERSON & RIDDELL: COMPARABLE WORTH 87

where cost constraints are less binding than are political constraints.

Table 1 illustrates comparable worth's potential scope for closing the wage gap, based on experience in situations where it has been applied, as well as on simula- tions of its impact in particular public sec- tor situations and for the economy as a whole. The results indicate that compara- ble worth has closed about 30 percent of the gap in public sector situations where it has been applied, albeit it could poten- tially close almost half of the gap. For the economy as a whole, U.S. studies suggest that comparable worth could close about 10 to 20 percent of the gap.

Comparable worth's potential scope is substantial because it can address wage effects of occupational segregation. But its ability to close the overall wage gap is lim- ited. Limitations arise because a signifi- cant number of women are employed in situations beyond comparable worth's scope: in low wage establishments and in- dustries, in situations having no male comparator groups, in mixed or predomi- nantly male occupations, or in situations having low job evaluation scores, perhaps because of constraints arising outside of the labor market.

111. FEATURES OF CANADIAN LEGISLATION

In Canada, labor and human rights is- sues are mainly under provincial jurisdic- tion, with only about 10 percent of the workforce under federal jurisdiction. As a result, labor and human rights policies often vary considerably across different ju- risdictions, providing opportunities for experiments to assess their impacts.

As table 2 indicates, all jurisdictions ex- cept the three western provinces have comparable worth. (British Columbia re- cently has committed to providing compa- rable worth for its government employ- ees.) The three western provinces do have conventional equal pay legislation, as do the other jurisdictions that also have com- parable worth. While bringing a compara-

ble worth complaint through conventional equal pay legislation potentially is possi- ble, this rarely if ever is done. Hence, in practice comparable worth, which rests on job evaluation procedures, clearly is dis- tinct from conventional equal pay, which limits comparisons to the same occupa- tion.

Most comparable worth initiatives per- tain only to the public sector, either legis- latively or in practice. In Quebec and the federal jurisdiction, where the legislation does apply to the private sector, almost all cases have been in the public sector, largely through union complaints. In most cases, the legislation pertains only to the public sector proactively; that is, employ- ers must initiate job evaluation procedures and provide wage adjustments to achieve comparable worth, whether or not a com- plaint has been made or any prior evi- dence of discrimination exists. Ontario is unusual among Canadian jurisdictions- indeed, in the world-in that comparable worth is both proactive and applicable to the private sector, although it exempts em- ployers with fewer than 10 employees.

Besides differing on whether the legis- lation applies to the private sector and/or is proactive or complaints-based, the leg- islation differs across the various Cana- dian jurisdictions with respect to other de- sign, implementation, and administration features. Definitions of gender dominance range from 55 percent to 70 percent of ei- ther sex, sometimes differing for the two sexes and sometimes employing a sliding scale, depending upon the establishment size. Differences also prevail in the num- ber of exemptions that allow pay differ- ences between work of equal value. These exemptions must reflect a factor that is a legitimate determinant of wages even though the job evaluation scores may not reflect it. The number of allowable exemp- tions range from zero to 10 and reflect such factors as: merit, seniority, red-cir- cling, temporary training assignments, re- gional wage differences, temporary skill

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88 CONTEMPORARY POLICY ISSUES

TABLE 1 Portion of Overall Earnings Gap Closed

by Comparable Worth Adjustments Ratio FemaldMale Earninm Percent of Gap

Actual Experience Before After Closed

Manitoba Government Minnesota State Iowa State, before amendments Iowa State, after amendments Estimated Potential Impact Iowa, Michigan, Minnesota, San Jose, Washington

0.82 0.87 28 %

0.74 0.82 31 4% 0.78 0.88 44% 0.78 0.83 22 %

0.76 0.87 45 %

Economy-wide, Johnson and Solon (1986) Economy-wide, Aldrich and Buchelle (1986)

8-20% 15-20%

Source: Computed from data on actual experience as given in Manitoba Civil Service Commission (1988) for Manitoba; Evans and Nelson (1989) for Minnesota; Orazem and Mattila (1990) for Iowa. Results for the combined Iowa, Michigan, Minnesota, San Jose, and Washington experiences are from Sorensen (1989), based on simulations from information on pay and job evaluation scores. Economy-wide studies estimate separate male and female earnings equations with the proportion of the occupation that is female included as an

variable. The potential impact of comparable worth is simulated by setting the coefficient on fl%L"="i% equal to zero and recomputing the earning gap.

shortages, relevant work experience, pro- ductivity or overtime premiums, and even bargaining strength once pay equity has been achieved.

The jurisdictions also differ with re- spect to the wage adjustment procedures used to achieve comparable worth. Differ- ent wage adjustment procedures include payline-to-payline, point-to-payline, and job-to-job comparisons. Differences also exist with respect to annual maximum wage adjustments and phasing periods. Maximums of 1 percent per year are com- mon, but some jurisdictions have no max- imum or have a maximum for the private sector but not for the public sector.

IV. APPLICATION lSSUES

Comparable worth literature has em- phasized the importance of technical fea- tures pertaining to design, implementa- tion, and application (Pierson, Shallcmss- Koziara and Johannesson, 1984; Gunder-

son 1989a; Abbott, 1989) but has recog- nized that remarkably little has been writ- ten on the subject (Treiman and Hartmann, 1981; Remick 1984; Pierson, Shallcross-Koziara and Johannesson, 1984; Gunderson 1989b). These practical appli- cation procedures are important because they are subject to policy control either di- rectly through changes in legislation or regulations or indirectly through every- day administration of legislation. Govern- ment officials can change procedures to make legislation more effective-or less effective, if that becomes the political in- tent.

Technical features of implementation also provide potential for flexibility. Hence, they facilitate trade-offs between comparable worth and other legitimate objectives. For example, the allowable ex- emptions make certain dimensions of mar- ket forces legitimate determinants of wages despite a conflict between compa-

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GUNDERSON 6r RIDDELL COMPARABLE WORTH 89

TABLE 2 Existence of Comparable Worth in Various Canadian Jurisdictions, 1989

Jurisdiction Year Private Sector Enforcement

Comparable Worth Quebec 1976 Yesa Complaints based Federal 1977 Yesa Complaints based Manitoba 1985 No Proactive plans Yukon 1986 No Complaints based Ontario 198F Yesd Proactive and complaints Newfoundland 1988 No Collective bargaininge Nova Scotia 1988 No Proactiveb Prince Edward Is. 1988 No Proactive and complaints New Brunswick 1989 No Proac tiveb N.W. Territories 1990 No Complaint based

b

b

Conventional Equal Pay British Columbia 1953 Yes Complaints based Alberta 1957 Yes Complaints based Saskatchewan 1952 Yes Complaints based

"Almost all cases have been in the public sector. bEmployers are required to initiate gender-neutral job evaluation plans and to adjust wages in fe-

male-dominated jobs to ensure equal pay for work of equal value, whether or not a complaint has been made or prima facie evidence of discrimination exists.

'The legislation was passed in 1987 to commence on January 3,1988. Wage adjustments are to com- mence no later than January 1.1990 in the public sector and no later than January 1,1991 in the private sector for larger employers. Smaller private sector employers must begin adjustments in subsequent years.

dPromised for the private sector in 1991 or 1992. 'bgislation has not been passed, but the government has committed itself to pay equity for its civil

Source: Updated from Morley Gunderson and Roberta Robb (1991). More detailed analysis is given service, through the collective bargaining process.

in Nan Weiner and Morley Gunderson (1990).

rable worth and market considerations. This feature may allay to a small degree concerns of economists who regard com- parable worth as akin to the search for a "just price" and who feel that worth is de- termined on the basis of value-in-use and not value-in-exchange.

From a political standpoint, flexibility also can ease adjustment consequences and, hence, reduce opposition to policy. Phasing through various dimensions can facilitate this flexibility: over time, across sectors (for example, government sector, quasi-public sector, private sector), and across private sector firms beginning with the larger firms that already tend to have

job evaluation systems in place (Robb, 1987). Phasing also enables employers and policymakers to make "mid-course" cor- rections as they learn more about the pol- icy through its successive application phases. An annual maximum cost ceiling of 1 percent of payroll per year also can reduce adjustment consequences and, hence, employer resistance to such poli- cies.

Government officials also can imple- ment policy flexibly. If, for example, offi- cials implement the policy in a recession, employers may be required to increase wages at the very time they are least able to do so. This constraint may lead to lay-

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90 CONTEMPORARY POLICY ISSUES

offs and increase the employers’ resis- tance.

While flexibility in implementing and administering comparable worth can help the policy work in practice, such flexibility also can emaciate the policy. Issues of im- plementation and application also can lead the parties into endless and costly conflict concerning the appropriate tech- nical procedures. The fact that few right or wrong answers or even easy solutions exist only aggravates such a debate.

Questions about estimating paylines and appropriately adjusting wages illus- trate this conflict. Should evaluators sim- ply add separate job evaluation point scores for skill, effort, responsibility, and working conditions to get a total point score and estimate separate paylines for male-dominated jobs and female-domi- nated jobs? Or should evaluators estimate separate coefficients for each characteristic of male-dominated jobs, then use the sep- arate coefficients to weight points in fe- male-dominated jobs? This would provide estimates of pay workers would receive if they were paid according to the male pay structure for each job characteristic. Should evaluators test for equality of co- efficients across characteristics before im- posing equality?* That is, should one sim- ply add up the scores and estimate a single payline between pay and points, or should the job evaluation procedure be designed to imply an equality of weights (regression coefficients) across different characteris- tics? Should the paylines be linear or should evaluators use a more flexible functional form to estimate the relation- ship between pay and points? Should paylines have a constant term, implying that jobs of zero value should receive some pay, or should paylines be constrained to

2. Analyzing U.S. data from comparable worth cases, Ehrenberg and Smith (1987) found no significant differences across coefficients for different compensa- ble factors. The extent to which this finding is an em- pirical generalization is unknown.

pass through the origin, in which case they would not necessarily pass through the means of the data?

The debate over the appropriate wage adjustment procedure to attain compara- ble worth is fraught with equally compli- cated issues. Line-to-line adjustments- used in Manitoba, Prince Edward Island, and New Brunswick-involve raising the female payline to the male payline. This procedure has the virtue of eliminating systematic differences between male- and female-dominated jobs, as evidenced by differences in the paylines, while leaving random deviations intact, as evidenced by deviations about both the male and female lines. The procedure also has the virtue of yielding less variation in the magnitudes of adjustments within female-dominated jobs, since it eliminates only differences in paylines, not random deviations about a payline.

The point-to-line adjustment, used in the Federal jurisdiction and Newfound- land, involves raising the pay in each fe- male dominated job to the male payline. It removes systematic differences in pay (as evidenced by differences in paylines if a female-dominated payline had been es- timated) as well as removing random de- viations in pay (deviations around such a female payline). The rationale is that rais- ing the pay in each individual female- dominated position to the male payline is more likely to ensure elimination of indi- vidual discrimination. However, this pro- cedure raises the question of whether ran- dom deviations in pay about the female payline in fact reflect individual discrimi- nation. Such deviations in pay occur within female-dominated jobs, not be- tween male-dominated and female-domi- nated jobs where payline-to-payline ad- justment eliminates deviations. The proce- dure does not eliminate such random de- viations from around the male payline. The point-to-line adjustments also lead to more variation in the magnitudes of ad- justment within the female-dominated

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GUNDERSON & RIDDELL COMPARABLE WORTH 91

groups, because they also eliminate such random deviations in pay about the fe- male paylineS3 This may create problems of perceived fairness within the female- dominated groups as some receive large adjustments and others receive small ones.

Adjustments based on paylines give rise to other technical issues. Should the process allow for interpolation to find hy- pothetical male-dominated comparators within the sample range of the data? Should the process allow extrapolation of the male payline outside the sample range of data in order to yield hypothetical male comparators? This would be a distinct need if no male-dominated jobs exist at the low end of the job evaluation scores. (Extrapolation and interpolation implic- itly allow proportionate pay for work of proportionate value, rather than requiring equal pay for work of equal value.) Should evaluators use a composite male payline or should they estimate separate segments to correspond to points of female-domi- nated jobs? Should they allow averaging to yield a common wage adjustment within a group that has a common person- nel and wage policy that perhaps is influ- enced by a common set of supply and de- mand conditions?

In part because of the complications as- sociated with estimating paylines, Ontario’s legislation adopted a job-to-job comparator approach. This approach re- quires each female-dominated job to find a specific male comparator group of com- parable value. This procedure, while en- abling comparison of female-dominated jobs with well-defined male comparator

3. The overall magnitude or cost of point-to-line and line-to-line adjustment generally will be the same because deviations about the regression line sum to zero. The cost under point to line could be higher if some female points were above the male line, since the legislation prohibits lowering any wages. If such higher female wages were allowed to fall to the male line, then the overall cost of the two procedures would be the same. The costs would differ in that the variance of the settlements would be greater under the point to line procedure.

groups, has given rise to complications. Specifically, it requires decision rules when multiple male jobs of the same value exist (use the lowest paying male job), or when no male jobs of comparable value exist (use the highest paying male job of the next highest value). The procedure can give rise to manipulation by parties de- pending upon the implications of these al- ternatives, and it can give rise to adjust- ments that are sensitive to potentially un- representative comparators. Additionally, such job-to-job adjustments can vary con- siderably within the female-dominated oc- cupations. They do so because they elim- inate random variation in the relationship between pay and points, as well as the systematic differences that estimating dif- ferences in paylines would have captured. In fact, by adjusting to a specific male job rather than to a male payline, the adjust- ment also encompasses random devia- tions in the male pay structure.

Further, an implementation problem arises in situations when no male compa- rators exist, as is often the case in predom- inantly female establishments or in small establishments. Solutions have proven particularly elusive as Ontario’s experi- ence demonstrates. The 1987 legislation explicitly recognized the problem by call- ing for a solution to be found through sub- sequent amendments or regulations. (See Ontario Pay Equity Commission, 1989; Ontario Ministry of Labour, 1990).

These examples illustrate the difficult technical issues of implementation that Canadian officials currently are working out. Unfortunately, they are working out many issues as the issues arise in particu- lar cases, and thus the consequences to each party determine the parties’ posi- tions. Debate and analyses of these appli- cation issues independent of the particular cases where they arise are much needed. Officials should establish a set of princi- ples to guide discussion on important is- sues such as: having specific comparison groups versus hypothetical comparison

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92 CONTEMPORARY POLICY ISSUES

groups through wage lines, making com- parisons within the same establishment, adjusting pay similarly within a group that shares a common pay policy, and al- lowing consideration of market factors. Agreement on many of these issues would help develop standardized implementa- tion procedures and guidelines to direct the parties administering the policy. Con- sensus would also help delineate the inev- itable trade-offs that designing and imple- menting such policies require. Delineating trade-offs in turn may facilitate the parties’ ability to identify which proce- dure best fits their own particular situa- tion.

V. EVIDENCE ON THE IMPACT OF COMPARABLE WORTH IN CANADA

In spite of the prominence of compara- ble worth in Canada, economists have not yet conducted comprehensive analyses of the impact of comparable worth initiatives in part because the initiatives are rela- tively new. However, the limited informa- tion available does suggest some empiri- cal generalizations:

(i) Earlier conventional policies on equal pay for equal work (as opposed to equal value) had no impact on narrowing the male-female earnings gap, likely be- cause their scope was limited to com- plaints based on comparisons within the same occupation and establishment (Gunderson 1975,1985b).

(ii) The complaints-based comparable worth systems that have been in place in Quebec since 1976 and the federal jurisdic- tion that has been in place since 1977 have led to few awards so far.4 However, indi- viduals have received substantial awards,

4. In Quebec, fewer than 40 equal pay cases have occurred. Of these, only a few have been comparable worth cases involving job evaluation comparisons across otherwise dissimilar occupations. In the federal jurisdiction, slightly over 20 settlements have occurred directly involving less than 1 perrent of the federal workforce (Gunderson, 1989b).

often in the neighborhood of $4,000 per recipient. Typical adjustments based on estimating paylines have been around 10 percent or more.

(iii) In the proactive system of the Man- itoba civil service, which has been in place since 1985, comparable worth adjustments have been in the neighborhood of 15 per- cent in the female-dominated jobs, and this figure amounted to about 3.3 percent of payroll over a four-year period. The ad- justments raised the overall ratio of female to male wages from 0.82 to 0.87, thereby closing about 28 percent of the overall gap.

(iv) Although systematic information on adjustments under the proactive On- tario legislation is not available, the mag- nitudes and diversity have been substan- tial in a number of cases.5 In approxi- mately 30 recent reported cases in Ontario, the overall (unweighted) average, after ex- cluding the extreme high and low adjust- ments, is approximately $4,000, or a 20 percent increase. However, extreme varia- tion occurs. Settlements range from $400 to $13,460, and settlements of almost $10,000 are not uncommon. Basing gener- alizations on so few cases is hazardous, but settlements were larger in the public sector than the private sector, and in the union sector as opposed to the nonunion sector, when those dimensions were re- ported.

(v) Information is not yet available on the key issue of the magnitude of adjust- ments throughout Ontario’s private sector, which were to begin January 1, 1991 for employers of 500 or more employees. Im- pressionistic evidence suggests that these

5. This is so in part because the pay equity plans must only be posted, not sent in to the Pay Equity Commission, which is the regulatory agency. Thus, no central depository of plans exists. This arrangement also highlights the fact that the Commission‘s basis of enforcement will be on complaints basis, not on audit- ing of submitted plans. The authors will provide on request an appendix illustrating adjustments that oc- cumd in approximately 30 recent reported cases in Ontario.

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GUNDERSON L RIDDELL COMPARABLE WORTH 93

adjustments will be smaller than those of the public sector.

(vi) Employers appear quite concerned about indirect costs that may result as pressure occurs to restore some of the old relative wage structures. Similarly, em- ployee groups not receiving adjustments have been concerned that the adjustments reduce the size of the pie remaining for bargaining or for individual wage deter- mination. Subtle effects also have oc- curred. For example, some hospitals have broken with their traditional pattern of centralized, province-wide bargaining be- cause particular comparable worth adjust- ments disrupted those patterns.

(vii) Selective evidence on the impact of comparable worth on recipients’ wages does exist. But no Canadian evidence exists on such factors as: the disemployment effect for recipients, the extent to which any dis- employment effect may be related to cover- age, the second-round effects on total em- ployment of men and women, the impact on occupational segregation as men enter the now higher-wage female-dominated jobs in response to the higher pay, and the impact on the collective bargaining process and its outcomes.

VI. CONCLUSION: LESSONS FROM THE CANADIAN EXPERIENCE

Although still relatively limited, the Ca- nadian experience does offer a number of lessons:

(i) Once a number of key jurisdictions such as Ontario introduce comparable worth legislation, political pressures cre- ate a snowballing effect that compels other jurisdictions to enact similar legislation.

(ii) Complaints-based systems are likely to lead to much smaller numbers of wage adjustments as compared to proactive sys- tems that require comparable worth plans.

(iii) Wage adjustments that do occur are substantial, typically in the neighborhood of $3,000 to $4,000 per recipient, equalling 10 to 20 percent pay increases. However,

even in proactive systems where larger numbers receive these adjustments, the cost increases tend to be less than 1 per- cent of payroll per year or a total of less than 4 percent.

(iv) Knowledge of the effects on indirect costs and on allocative efficiency are un- known at this stage even though the par- ties involved have raised questions re- garding these effects.

(v) No matter what comparable worth system is used, complexities abound and become apparent over time as the system confronts such issues as: collective bar- gaining, legal challenges (even from pro- active systems that were designed to be nonlegalistic), technical issues pertaining to estimating paylines and making wage adjustments, legislative design challenges to provide coverage when no male com- parators exist, and tribunal decisions with respect to interpreting and applying the legislation.

(vi) Technical issues pertaining to de- sign, implementation and administration become paramount once the legislation is in place. Such issues have incredibly im- portant implications for the policy and yet are not well understood or extensively de- bated, in part because of their complexity and in part because often no right or wrong answers exist.

(vii) What is most needed is debate and analyses of the technical issues, including principles that the parties want to incor- porate, independent of the cases in which the issues arise. This exchange of ideas would facilitate more standardized proce- dures and would increase knowledge re- garding the implications and trade-offs of alternative procedures.

(viii) While comparable worth is a stage in the evolution of equal pay legislation, it is not necessarily a final stage. Possible ex- tensions include: proportionate pay for work of proportionate value, extensions to situations where no male comparators exist, broadening the application beyond pre-

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94 CONTEMPORARY POLICY ISSUES

dominantly female occupations, and ex- tending to groups other than women.

The real lessons from Canada likely will unfold in the near future, as experience accumulates from proactive application in Ontario's private sector. The Canadian sit- uation merits continued watching.

REFERENCES

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