Economists’ arguments in the comparable worth controversy, 1974-89

The low wages of “key workers” relative to the value of their work for society is one of the issues that have been thrown into sharp relief by the pandemic in various countries. How is the value of a job translated into wages? How are we to adapt wages when some jobs seem under-valued compared to their contribution to society?

These are old questions, to which contrasting answers have been proposed by social movements, intellectual and academic circles, and Parliaments. If labour merits more compensation, then how much more? Within the history of economics, explanations and justifications of differences in wages have varied between nature, bargaining power differentials, choices and differences in productivity. These explanations have produced an especially intricate discourse when it comes to women’s wages, and can shed light on the unpredictable uses of academic ideas in the policy-making process.

One key debate in the United States has centred on how to compare heterogeneous forms of labour and whether wage-setting practices follow a rational method. Many academic discussions have been divorced from the concrete observations of employers’ practices. However, some economists contributed to a movement started in the 1970s aimed at fighting for wage readjustment.

The “comparable worth” principle – a call for a general readjustment of wages according to a measure of the worth of an occupation – gained policy momentum in the United States in the early 1980s. Even if general in its scope, the argument targeted the gendered aspects of value formation based on the idea “that occupations traditionally dominated by women, such as nursing, are underpaid relative to occupations traditionally dominated by men, such as driving a truck” (as one of its opponent describe it, Posner 1989, p.202). How to assess the undervaluation and compare work in different occupations became the focus of tense analytical and legal debates.

Should female prison guards (‘matrons’) be paid the same as male prison guards (‘sheriffs’)? Are they undertaking comparable work? In this specific case, the answer seems obvious but in the 1970s in the county of Washington, Oregon, matrons received much lower pay. In 1974, four of them sued the county over alleged wage discrimination. The case went to the Supreme Court, and the subsequent decision enlarged the interpretation of the principle “equal pay for equal work” to encompass “equal pay for comparable work”. Settled in 1981, the case was the first victory for the “comparable worth” movement.

Many legal battles were launched during the 1970s in relation to the implementation of equal opportunity laws. In the wake of the emblematic Washington case, comparable worth claims became a central demand of the National Committee on Pay Equity, a coalition of labour, women and civil rights organizations created in 1979. Its first conference discussed a series of advocacy ‘instruments’ which were published a year later as the Manual on Pay Equity by Joy Ann Grune. An ‘action guide’, one of the main tools proposed was the use of ‘job evaluation methods’.

Job evaluation methods involve a systematic review of the worth of jobs within a firm and have been used since the post war period. Their aim was to rationalize the structure of wages within companies and began to be used to check gender biases in the 1970s. The approach consists in describing the content of an occupation using a scoring method. “Points” are associated with the skills and tasks required for the occupation, and a score is then defined for each occupation. The second step is to compare the relative scores of each occupation to their corresponding relative salaries. If scores are superior to the wage, the occupation is undervalued.

In the context of the national pay equity campaign, Eleanor Holmes Norton, head of the Equal Employment Opportunity commission (EEOC), commissioned research from the National Academy of Sciences (NAS) on comparable worth. Two committees published seven reports between 1979 and 1989. They dealt with a comparative analysis of different job evaluation scoring methods, and reflected on the uses of the Dictionary of Occupational titles, as well as on the concrete implementation of comparable worth claims.

Whilst the principle was clear, the policy was not. The main conclusion of the NAS reports was to use job evaluation methods to detect discrimination and change the wage structures within companies accordingly. The authors emphasized that these methods did not measure the ‘intrinsic worth’ of a job, but were rather a way to systematize a relative comparison. No scientific measure of worth was advocated as, according to the authors, it would incorporate value judgements.

In the same period of time, the efforts of social, legal and policy movements were successful in putting the debate on the political agenda. Between 1983 and 1984, six bills were introduced in Congress to implement Federal legislation in line with the principle of comparable worth. The U.S. Commission on Civil Rights in 1982, and three Joint Economic Committees on women’s work had to evaluate the proposal.

The NAS committee included economists, sociologists and legal scholars. One of the reasons why the analysis of the value of jobs was controversial can be found in the different and sometimes conflicting methodologies used by these scholars. At the same time, economics  had transformed into a tooled discipline: a technical and applied field, based on the use of a core set of models, turned towards providing a basis for policy evaluation and decision via the provision of “tools”. These disciplinary changes were both a cause and a consequence of the the “analytic revolution in government.” The expression refers to rise of knowledge as a basis for policy making. The creation of offices for research and planning in federal administrations and agencies, staffed by social scientists, has started in the progressive era, but, in the 1960s, the staff was increasingly made up of economists and the knowledge was increasingly quantified. The practical significance of economics has been rising in relation to its professional authority, proximity to power and use of quantification in policy – the so-called evidence-based movement of new public management.

Hence, the transformations of economics are closely linked to the evolution of expertise in the post-war period and the rise of the demand for quantification of social phenomena. In the particular case of comparable worth, the measurement of value and the underlying wage determination theory in the new mainstream approach was in direct contradiction with both the principle and its proposed tool, job evaluation. Instead, the market (via the use of market surveys) was becoming the new benchmark. Opposition to comparable worth within the field of economics came from ‘modern labour economics’, a perspective that emerged at the Universities of Columbia and Chicago. Modelling wage relations was based on the idea that employers were profit-maximisers and that market competition determined pay according to productivity, as long as individual workers had free entry.

The first economists involved in the NAS committees were proponents of the principle of comparable worth, while critical about the major challenges to its implementation. One of the main limitations explicitly stated was that there was no scientific method to establish value. Starting in the 1980s, during the U.S. Presidential race, the comparable worth principle was reframed by its opponents as “a medieval argument” in favour of the measuring of intrinsic worth that contradicted scientific “modern labour economics”. The reference was increasingly found in labour economists’ testimonies to congress, in right-wing think tanks’ pamphlets, and in politicians’ speeches. The “medieval” aspect of the argument was a direct reference to the theory of ‘just price’ by Thomas Aquinas, according to which one can determine the intrinsic value of a commodity.

In the long history of value in economics, Aquinas’ theory has been replaced by the ‘labour theory of value’ developed by Classical economists – value is based on incorporated labour – itself replaced by a theory of value based on exchange – market forces determined price, hence value. Value being reflected in prices that individuals were willing to offer or to take, there was no need for a theory of intrinsic value, just a need for a theory of price.

In the case of the value of labour and its price (in other words, the wage it could command), the application of unified price theory produces a unified “human capital theory.” Developed in the 1950s and incorporated in the mainstream of economics from the 1970s, the basic idea is that individuals possess a stock of skills (human capital) that they invest in and trade on the labour market. Hence the creation of economic value depends on individuals’ characteristics and the demand and supply of these characteristics, rather than on the definition of a job.

The idea that one can measure the intrinsic value of a job without reference to market wage became conflated with claims of comparable worth. This framing of the argument gained traction in the public debates. Meanwhile, in sections of subsequent NAS reports, in literature produced by conservative and pro-market think-tanks, as well as in newspapers, human capital arguments became the focus of the debate.

One element in the rejection of comparable worth claims derived from longstanding scholarly commitments to scepticism about the limits of knowledge. The first economists within the NAS committee, especially Heidi Hartmann, insisted on how far models could be applied to the real world, and what academics could know about determinants of value. Their underlying conception of science was pluralistic and, crucially, dependent on different disciplines. Other economists, however, used this recognition of limited knowledge to dismiss these arguments as un-scientific: one example is economist June O’Neil, who was the first to make the reference to Aquinas in a testimony before Congress in 1983.

While both positions were based on a reference to ‘science’, the more self-reflexive, sceptical approach to the relationship between science and policy was ultimately less effective than the self-proclaimed ‘scientific’ approach, once the debate became political. The politicisation of the scientific discussions, however, was not the sole responsibility of economists. In the very specific context of 1983 - a Presidential race with high stake on the “women’s vote” - political calculations transformed the debate: it became about the future of capitalism at large, away from the technocratic, careful call for a readjustment of wages in specific institutions that the advocates of comparable worth had pitched to the previous Carter administration. The assumption that wages are determined by profit-maximisers with no need to readjust value became aligned with Reagan’s political agenda.   

What does this episode tell us about the role of academics and intellectual in policy changes? In this case study, some academics supported a national movement in favour of readjustments of wages. Once comparable worth was on the agenda, it became drawn into a battle over theories in labour economics at the time. In addition, a process of politicisation enlarged the policy debates and ultimately, political decisions halted the implementation of comparable worth claims. In 1985 under the second Reagan administration, all government agencies, from the Civil Rights commission to the EEOC condemned comparable worth as an unsound and unscientific principle. The process of how ideas influence concrete policies is not linear but highly dependent on a variety of contextual factors, crucially politics both within and external to the academy.