Where Equal Pay Cost £1.1bn

Birmingham, England cannot pay all its bills.

One reason is £1.1bn in equal pay claims.

Equal Pay Outlays

Because of a 2012 settlement, the Birmingham City Council owes back pay mostly to women. Working in positions that included food service and teaching assistants, those women did not get the bonuses that male-dominated jobs like refuse collectors received. Even now, owing £760 million, the Council said the inequities could remain.

Somewhat similarly, Goldman Sachs settled a class action gender bias lawsuit for $215 million. After favoring men with equivalent jobs. Goldman is compensating an estimated 2800 female associates and vice presidents. Involving more than pay, the agreement also covers promotions. And of course, at $24 million, we can look back at the U.S. soccer compensation that the women got last year.

In a long EEOC list of class action equal pay suits, I did find an Estee Lauder settlement where approximately 200 male employees were awarded past benefits. Here, the case focused on how men got less pay and parental leave time than their female counterparts.

Our Bottom Line: Opportunity Cost

Wondering why municipalities, sports teams, and firms could perpetuate unequal pay, as economists, we can use opportunity cost tables. Defined as the next best alternative, the opportunity cost of an equal pay decision is no equal pay. However, when we see the benefits, we can begin to grasp a seemingly illogical decision. After all, Birmingham did not know it would have to declare bankruptcy. Consequently, the bankruptcy was not a consideration initially.

Instead, they pondered the following Opportunity Cost table>

Indeed, all decisions involved what we knew when the decision was made. For that reason, these tables come in handy in our personal lives also.

My sources and more: Thanks to the Felix Salmon Saturday newsletter for alerting me to the Birmingham bankruptcy. Then, the BBC had more about equal pay outlays and  CBS detailed the Goldman settlement. Finally, to see more of an overview, you might want to see the EEOC facts sheets.