This isn’t a blog post about pay equity, systemic sexism, or anything like that.
I’m just writing about why the frame often used in such discussions – “Equal Pay for Equal Work” – is simplistic at best, and probably sort of silly. The quality and quantity of your work doesn’t set your pay. It sets the ceiling of your pay.
Think about the way wages work. Barring extraordinary circumstances, and in simplified terms, the upper limit of a worker’s pay (including benefits) is the amount of value he adds to the company. If your boss thinks you will add $50,000 in value to the company each year, he’s not going to pay you more than $50,000 (benefits included) each year.
The lowest possible level of a salary is the amount of money that would make you quit, plus $1. Your salary is basically going to always be in the range between you quitting and your boss wasting money.
So if two workers produce identical widgets at the identical rate, and that work is worth $50,000 to the employer, neither will get paid above $50k if the employer knows what he’s doing. But the floor for these two workers might be different, because the floor is entirely dependent on the worker’s willingness to quit.
Maybe employee Jane is 65 years old, with a big IRA and Social Security checks coming. Jane’s a bit eager to retire, and so if the boss wants to keep her, he might have to pay her close to $40,000.
Meanwhile, employee Mary is not in a position to leave. She’s new in town and doesn’t have other connections. She is just as good as Jane at making widgets, but she doesn’t have any other skills that she could market to other employers.
This may seem unfair, but Mary is not going to make as much money as Jane, probably, because the boss is going to pay both of them what it takes to keep them there — and their willingness to leave is different.
Sometimes, the more desperate person gets paid more, though. Imagine Mark and Bob are both sports reporters for the local newspaper. Both guys produce “equal work.” They get equal pay, too, which is not much. But both guys love their jobs – going to baseball and basketball games every night – and that enjoyment is part of the compensation they feel they receive.
But then Bob’s wife gets pregnant. She wants to be a stay at home mom. Bob can’t feed three mouths at $20,000, so he starts looking for a less-enjoyable but higher-paying job in PR. His paper really likes him, though, and so they give him a raise to keep him from quitting. They really like Mark, too, but they don’t have to give him a raise – he’ll stay on staff, anyway.
Again, the above account doesn’t say why, or if, women get paid less for “equal work.” I’m just pointing out why the quality and quantity of work doesn’t determine your pay.
