Equal Pay For Equal Work?
For quite some time, my position regarding the concept of “Equal Pay for Equal Work” has been that two people with identical experience, aptitude, responsibilities and performance should receive the same compensation. After having thought about it more over the last few days, I’m not so sure I still hold that viewpoint.
What follows is my train of thought on this subject. I’m particularly interested in my readers’ feedback on this one, so please email me with your comments at 
While I disapprove of discrimination based on any unlawful means, I’m not certain if I think this is a discrimination issue. Simply put, the market for jobs is fundamentally the same as the market for any other good or service. An individual places a certain value on their time and skills, and an employer places a certain value on having certain tasks completed. While “equal pay for equal work” is a catchy slogan, if you believe in the efficiency of markets, then you can’t accept that idea.
Two people hired to do the same job only makes one side of the market equal between the people. It means that the company is, in theory, willing to pay the same amount for each person. There is still the other side of the equation to consider, however. If one person is willing to do the work for less, then according to market principles, they can, should, and generally will be paid less.
While a company may be willing to pay $50,000 for an employee, if the employee is willing to accept $42,000, then the employer has no reason to pay the employee more. There is a bit of a snag though. If there is one available position, and two people with identical qualifications apply for it, and one is willing to accept less money, then in theory, the person willing to accept less money should be the one the company hires. If that were actually the case, however, wages would tend to even out as people who value their time comparatively higher than their competition would be forced to lower their expectations in order to get hired. So, how can the disparity be explained?
I call this explanation “implied quality”. If two people with identical qualifications are hired to perform the same job, at the same time “equal pay for equal work” suggests that they should be paid the same amount, but at least some of the time, the more expensive employee will be hired over their less expensive counterpart. If the market is operating efficiently, then the only explanation is that something differentiates the employees, besides their qualifications.
Consider this example: I’m at the store looking for a new webcam. I see two webcams that display identical techncal specs on the box, but one is $25 and one is $50. As a consumer, I’ll probably buy the $50 webcam, particularly if other webcams are also in the $50 range, because the question is worth asking, “why is this particular webcam being offered at a discount?”.
Likewise, when two employees vying for the same position are willing to sell their time to a company for different rates, there may be some tendency for an employer to favor a more expensive employee, based on an assumption that there are elements not “printed on the box” that make the more expensive employee worth more.
I don’t approve of unlawful discrimination, but I also don’t approve of only looking at one side of the labor market to decide that two employees should be paid the same amount.
What do you think? Please email me at
