From the Job’s Worth to the Person’s Price: Pay-Setting, Gender Inequality, and the Changing Understanding of Fair Pay

Abstract

How do employers set pay for job candidates? The idea that job candidates are paid their “market price” is now widely institutionalized but beliefs about the right way to set pay have varied over time. This dissertation traces the origins of the market-based approach to pay in the United States and its ramifications for gender inequality. In Chapter 1, historical publications reveal that the shift towards a market-based approach was prompted by legal decisions on comparable worth cases in the 1980s, which created an opportunity for employers to reduce their liability for discrimination by basing pay on data from the external market. Chapter 2 uses surveys, interviews, and experiments to show how recent legal efforts, known as salary history bans, put women in a double-bind: disclosing their salary history is disadvantageous, but obscuring that information leads employers to fill in the gaps with assumptions based on group status that also privilege men. Chapter 3 examines how employers meet employees’ expectations for fairness given widespread pay inequalities arising from market-based pay practices. Interviews reveal that employers use a narrative approach, justifying inequalities by highlighting individual differences to resist equity claims. Vignette experiments suggest that these narratives increase tolerance for inequality. Together these findings show how gender equity laws reshape pay-setting practices and how employer responses have hindered progress towards pay equity.