Wage differentials and wage discrimination

Wage Differentials

We might conclude that many women choose to be teachers, perhaps in order to be with their children after school and during vacations. If you do not include the words, the email will be deleted automatically.

Send email to thismatter. This means, regardless of job titles and other peripheral characteristics, when men and women are contributing equal work to a company, they must be paid equally.

If more group A than group B workers are willing to work in dangerous but highly paid jobs, on average, As may earn more than Bs do.

Establishment The prohibition against compensation discrimination under the EPA applies only to jobs within an establishment. Minimum Wage Most governments impose a minimum wage, which is the minimum that an employer may pay an employee.

Piece rates may result in sloppy work as workers rush to make more money. Similarly, if workers discriminate by requiring a premium to work with blacks, they will be employed in segregated firms, but wages will not depend on group membership. University of Chicago Press. Commissions are often paid as a percentage of sales, in such industries as real estate, insurance, securities, and retail sales.

When an employer decides to Wage differentials and wage discrimination against an employee by lowering wages because he or she belongs to any of the groups referred to in Title Wage differentials and wage discrimination, the law kicks in to trigger liability.

If employers paid as little as possible, then workers would continually search for higher paying jobs. Many localities also have their own licensing requirements for certain occupations, such as for beauticians or barbers.

Discrimination, Wage

Specifically, the EPA provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment.

However, most people are reluctant to move because they do not want to leave their friends, sell their house, be subjected to the cost and uncertainty of a new job in a new community, and the children may not want to change schools. The issue is what skills are required for the job, not what skills the individual employees may have.

Good employees also require less supervision and monitoring. This is why employment discrimination laws are in place to protect workers from wage discrimination and to ensure that all workers are compensated fairly for the work they do.

Once these similarly situated individuals are identified, the investigator is encouraged to determine whether compensation differences are due to discrimination.

What Do Wage Differentials Tell Us about Labor Market Discrimination?

People may also be unwilling to give up pension plans, health insuranceor seniority at their current job. On the other hand, much more money is spent to elect someone to the presidency of the United States than they will ever earn at the job, and many lawyers earn more than Supreme Court justices, yet few of those lawyers would turn down an appointment to the Supreme Court.

Stock options align the interests of executives of the company with those of the shareholders — if their shareholders profit, then they will too. Search This Site Privacy Policy for thismatter.

Working Conditions This encompasses two factors: For example, if an employer provides extra compensation to employees who are the "head of household," i. Differences in the earnings of black and white employed women are modest, but are much larger if we take account of the potential earnings of nonworkers.

But provided that wages are based on the nature of the job and not group membership, the wage differential need not reflect wage discrimination. Therefore, they also incur an opportunity cost equal to the amount of money that they could have earned had it not been for the educational or training requirement.

Similarly, if As are paid less because they are less skilled, there is no wage discrimination unless their lower skills reflect their expectation that their skills will not be rewarded. It requires that employers reward men and women equal pay for equal work.

Occupational Wage Differentials Obviously, certain occupations pay more than others. However, in areas such as professional sports, where workers have highly specialized skills and race is clearly visible, wage discrimination may persist. Sometimes, ability makes a very large difference in wage potential that far outweighs the differences in ability.

For example, suppose that men and women work side by side on a line assembling machine parts. If, for example, blacks are paid less than are equally productive whites, unprejudiced employers will hire blacks and make more profit than do employers who hire whites. What Happens in a Wage Discrimination Case?

wage differential

For example, firms that announce high wages to attract many applicants may deter black applicants who anticipate losing out to white applicants.Wage Differentials and Discrimination One key to wage disparities lies in the tremendous qualitative differences among peopletraceable to difference in innate mental and physical abilities, education and training, and experience.

Compensating wage differentials - higher pay can often be some reward for risk-taking in certain jobs, Employer discrimination is a factor that cannot be ignored despite over twenty years of equal pay legislation in place; Revision Video: Impact of Trade Unions on Wages and Jobs.

What Do Wage Differentials Tell Us about Labor Market Discrimination? June E. O'Neill, Dave M. O'Neill. NBER Working Paper No. Issued in April NBER Program(s):Labor Studies We examine the extent to which non-discriminatory factors can explain observed wage gaps between racial and ethnic minorities and whites, and between women and men.

Oct 20,  · Wage discrimination claims can also arise under the Age Discrimination in Employment Act (ADEA) for workers over 40 years of age experiencing illegal wage differentials or under the Americans with Disabilities Act (ADA) for workers with a legally recognized disability who experience wage differentials as a form of disability ultimedescente.comon: Santa Monica Boulevard, Suite, California.

Factors Affecting Wage Differentials.

Facts About Equal Pay and Compensation Discrimination

Chapter 30 the discrimination may affect the wage rates for years until it is brought to the attention of the administration or federal government. Discrimination, Wage MEASURING WAGE DISCRIMINATION [1] THEORY [2] POLICY [3] BIBLIOGRAPHY [4] Wage discrimination occurs when, due to the operation of the labor market, similar workers receive different wages on the basis of race, Male .

Wage differentials and wage discrimination
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