During the beginning of November the New Zealand gender pay equity act kicked in. Different from equal pay for the same job, pay equity means equal pay for different jobs. But those jobs need similar value.
The details are daunting.
Pay equity means deciding where we have equivalencies. We have to start with identifying the skills a job requires. For social workers, primarily a female profession, that means recognizing skills that have no name like “emotional dexterity.” Then, knowing the skills, male dominated comparable jobs can be named. We could ask if a social worker’s stress levels were comparable to the pressure felt by air traffic controllers. Or, are the skills of mostly female nursing home aids like mostly male corrections officers?
Pay equity then necessitates wage and salary adjustments. In one New Zealand case, nursing aid representatives said their pay should rise by $10.25 NZD (approximately $7.08 USD). Citing prison guards, they described a job in which they coped with similarly aggressive behavior. The opposition countered by saying that male aids got the same pay as the women. The point was that jobs associated with women, whether done by men or women, tend to be underpaid. For that reason, pay equity advocates said you have to look at, “…what men would be paid to do the same work abstracting from skills, responsibility, conditions and degrees of effort.”
Meanwhile, other countries have passed pay equity laws. Iceland will be implementing one in 2021. Canada passed its pay equity act in 2018. Similar to Iceland’s, both will proactively require employers to prove their compensation reflects equal pay among different jobs. In Canada, it will begin with government regulated businesses identifying equity gaps and then showing that they are working to diminish them. Those that do not comply will be fined.
Our Bottom Line: Labor Markets
If the world worked like my textbook’s circular flow model, then supply and demand would determine wages in factor markets where households sell their labor to businesses. Below, in the lower loop, you can see that, in return, households receive wages and salaries:
My sources and more: Thanks to the NY Times for alerting me to New Zealand’s new legislation. From there, you can read more about Canada and Iceland, here and here. But then for 79 pages of much more detail, I recommend the World Bank’s Women, Business And The Law 2020.