Chapter 12 Flashcards
What was the justification for paying different wages to men versus women working on the same jobs? What time period was this most prevalent in and what ended this?
> The presumption that people should be paid different wages based on “general sociological factors” was still evident in the 1960s
> The women’s movement and subsequent legislation ended such practices
In compensation, what is the Governments’ usual interests?
> Governments’ usual interests are whether procedures for determining pay are fair (e.g., pay equity),
> safety nets for the unemployed and/or those unable to work (e.g., pension, unemployment compensation, workers compensation),
> and protection for workers from exploitation (e.g., minimum wage, overtime pay, child labour).
Government affects demand for labour mostly in what way?
> Government affects demand for labour most directly as a major employer.
How does the government affect demand in private sectors?
> indirectly affect labour demand in the private sector through its spending and purchases (military aircraft, computer systems, paper clips), as well as through its public policy decisions (For example, lowering interest rates generally boosts manufacturing of everything from cars to condominiums.)
In addition to being an employer, governments also affect labour supply with what three components?
> affect labour supply through laws, legislation, and regulations.
> Ultimately, Legislation aimed at protecting specific groups also tends to restrict that group’s participation in the labour market.
Each of the 14 jurisdictions regulating employment across Canada (10 provinces, three territories, and the federal jurisdiction) has enacted legislation, usually known as what? Are there major differences?
> usually named employment standards acts/codes or labour standards acts/codes, which specify minimum terms and conditions of employment
> Although there are differences in specific requirements, these laws all specify a minimum hourly wage, paid vacations, paid holidays, standard hours of work and overtime pay, pay for employees who are terminated by the company, minimum age of employment, and equal pay for equal work by men and women.
Minimum wage laws are intended to do what?
> Minimum wage laws are intended to provide an income floor for workers in society’s least productive jobs.
In other words, a higher minimum wage, which is intended to help low wage workers, runs the risk of what?
> runs the risk of reducing employment opportunities for these very workers it is intended to help.
The minimum wage discussion is also relevant to the social good of the people who are not faring well in the market economy. What is the case that is often made?
> Some make the case that continuing a low minimum wage permits the continuation of boring, dead-end jobs that ought to be modernized.
The specific amounts of minimum vacation vary across jurisdictions, but the basic structure and philosophy of the laws regarding vacations are similar. In general, what is the minimum vacation time?
> In most cases, the minimum amount of vacation is either two weeks or three weeks per year.
Each jurisdiction recognizes that there are days of special significance that citizens celebrate together, as such, what is provided?
> recognizes that there are days of special significance that citizens celebrate together and provide for paid days off from work to observe these holidays.
> Employees are generally entitled to take the specific day off from work with pay. If employees, however, agree to work on that specific day, they should be allowed to take a substitute day off with pay or be paid at a premium rate for the hours worked on that day.
> It is important that employers are clear on the statutory holidays in the jurisdiction where their businesses operation.
Employment standards legislation sets out what?
> sets out the standard hours of work for employees and provides for overtime pay when an employee is required to work more than these standard hours.
What is the average of standard hours of work across Canadian Jurisdictions?
> Standard hours of work vary between 40 hours per week and 48 hours per week across jurisdictions.
What happens when an employee works over the prescribed number of hours? What is overtime pay?
> When employees work over the prescribed number of hours, they are eligible for overtime pay. Overtime pay is one-and-one-half times regular pay in almost all cases. And employees may choose to take time off in lieu of receiving overtime pay.
> Meal breaks and rest periods are also required during working hours, but do not have to be paid.
In most cases, standard hours of work and overtime do not apply to which employee groups?
> do not apply to supervisory, professional or managerial employees.
The original intent of overtime pay laws was to:
> was to share available work by making hiring additional workers a less costly option than scheduling overtime for current employees.
Is overtime a costly option?
> overtime pay is often the least costly option.
What factors make overtime not costly for the contemporary employer?
> Contemporary employers face (1) an increasingly skilled workforce with higher training costs per employee and (2) higher benefit costs, often a fixed cost per employee.
> These factors have lowered the break-even point at which it pays employers to schedule longer hours and pay the overtime premium, rather than hire, train, and pay benefits for more employees. Additionally, in times of low unemployment, hiring new employees is a difficult and expensive process.
What must employers do at an end of a leave?
> Employers must return the employee to their pre-leave position or a comparable one at the conclusion of the leave.
In the event that the company terminates the employment of one of its workers, certain payments are required if the termination is not considered what?
> not considered for just cause.
No notice period or pay is required if the termination is for:
> just cause.
Just cause includes:
> dishonesty, insolence and insubordination, or performance issues.
In the absence of just cause, employers must provide what?
> must provide a minimum notice of termination during which time the employee continues to be paid or else receives the same payment in lieu of notice. This notice period varies depending on the employee’s length of service, to a set of maximum.
What is the notice period in the absence of just cause in Ontario?
> or example, the Employment Standards Act of Ontario provides for notice that is roughly one week for every year of service, up to a maximum of eight weeks.
In situations where a group of employees are terminated, such as when a business closes or downsizes, employment standards legislation requires what?
> requires special additional notice (or pay in lieu thereof) to be provided to the workers affected.
What was one of the primary reasons for the creation of employment laws?
> Restriction of child labour was one of the primary reasons for the creation of employment laws, in recognition of the importance of ensuring that children have access to education, and of protecting their safe and normal development.
Under all jurisdictions, what is equal pay for equal work (what does it entail?)
> All jurisdictions require that men and women who are doing similar work be paid equally. The legislation also applies to men and women doing substantially the same work, based on an assessment of skill, effort, responsibility, and working conditions required in each case.
Canada is a world leader in the protection of what? How so?
> Canada is a world leader in the protection of basic human rights, with the Charter of Rights and Freedoms forming part of its Constitution.
The Charter specifically permits the development of what?
> The Charter specifically permits the development of programs to relieve the situation of historically disadvantaged groups.
Employment equity legislation requires what in terms of reporting?
> Employment equity legislation requires employers to report annually to the government, for each of the four designated groups, on their level of representation, earnings levels, promotions, and terminations.
Human rights legislation has been enacted in every jurisdiction in Canada and guarantees what?
> guarantees every person equal treatment in regard to employment and opportunity for employment regardless of race, colour, creed/religion, sex, sexual orientation, marital status, age, or mental or physical disability.
Enforcement of human rights legislation is considered what based?
> Enforcement of human rights legislation is complaint based.
> Employees who believe they have been discriminated against must make a complaint to the appropriate human rights commission/tribunal, which will then launch an investigation and assess penalties if discrimination is deemed to have occurred.
Across North America, Europe, and Australia, what remains the best predictor of wages?
> gender remains the best predictor of wages, a factor surpassing in importance education, experience, or unionization.
In Canada, what is the gender wage gap?
> Overall Canadian women, on average, earned slightly over 70% of the amount that Canadian men earned in the last decade.
> This 30% difference is called the gender wage gap.
When is the wage gap smaller?
> Estimate of this gap is smaller if the sample is restricted to women and men workers who work full-time and full-year. For example, considering workers between 25 and 54, the gender wage gap was around 18.8% in 1998.
Has the wage gap shrunk since 1998?
> This gap has shrunk about five percentage points, to around 13.3% in 2018
Does the wage gap vary? If so, what does it vary by?
> The wage gap also varies by age cohorts.
When does the wage gap increase across cohorts?
> The relatively small wage gap among younger cohorts (i.e., recent university graduates) tends to increase as the cohort ages.
A study that followed three cohorts of university graduates from bachelor’s degree programs in 1982, 1986, and 1990 for the first five years of their careers found what?
> found that the gender wage gap had decreased to an almost negligible level by 1990 for new graduates.
> However, the gap widened as time went on, and female earnings quickly began to trail behind those of their male classmates, returning to virtually the same gap as for prior cohorts after five years in the workforce.
A variety of factors contribute to the wage gap, some of which have already been mentioned. What are 6 key factors?
1) Differences in qualifications and experience;
2) Differences in work or occupation;
3) Differences in industries and firms;
4) Differences in work-related behaviours, including hours of work and career/life tradeoffs;
5) Differences in union membership; and
6) Presence of discrimination.
What are the 2 primary factors that determine wage levels?
> Level of schooling and work-related experience appear to be two of the primary factors that determine wage levels.
What is the single strongest factor affecting income of university graduates?
> The choice of major is the single strongest factor affecting income of university graduates
> Men are more likely to enroll, graduate, and continue working in engineering and scientific specialties. A study of women in science and engineering professions found that women scientists and engineers are almost twice as likely as males to leave these occupations.
Important sources of the wage gaps may reside in other productivity-related factors such as
> factors such as type, level and quality of education, work-life/career tradeoffs, and occupational choices.
One of the most important factors in the pay gap is what differences?
> One of the most important factors in the pay gap is differences in jobs held by men and women.
> v
Relative to the wage gap, what is a persistent phenomenon?
> Occupational segregation has been a persistent phenomenon.
> Female-dominated jobs are often undervalued and are therefore lower-paid jobs.
> Women also face barriers to advancement as they climb the organizational hierarchy—“The Glass Ceiling” effect!
> Therefore, they are also less likely to attain senior leadership positions, which are generally highly remunerated.
Differences in the firm’s compensation policies and objectives within a specific industry are another factor that accounts for some of the earnings gap - how so?
> Some firms within an industry adopt pay strategies that place them among the leaders in their industry; other firms adopt policies that may offer more employment security coupled with bonuses and gain-sharing schemes.
> The issue here is whether within an industry some firms are more likely to employ women than other firms and whether that likelihood leads to earnings differences.
Does the size of a firm affect the gender wage gap?
> It is also known that the size of a firm is related systematically to differences in wages.
> Female employment is more heavily concentrated in small firms. Wages of men in large firms are 54% higher than wages of men in small firms. That gap was only 37% for women in small versus large firms.
Other studies report that employees in some jobs can get about a 20% pay increase simply by doing what? Is this simple change different for men and women?
> simply by switching industries in the same geographic area while performing basically similar jobs
> Nevertheless, a recent study concludes that this pay premium associated with changing jobs is enjoyed primarily by white males. Women and minorities who were MBA graduates from five different universities did not obtain the same pay increases as their white male classmates when they switched jobs.
> The authors speculate that the reason that women and minorities did not receive a comparable premium is that they lack the well-developed social networks that provide “inside information” on job opportunities.
Do men work more than women?
> On average, male full-time workers put in 6% more hours per week than female full-time workers.
> By the time men and women have been out of school for 6 years, women on average have worked 30% less than men.
> After 16 years out of school, women average half as much labour market experience as men.
There is also evidence that women are more likely than men to do what with their working hours?
> There is also evidence that women are more likely than men to work part-time and that they are more likely than men to interrupt their careers due to family responsibilities.
Why do women have a lower total accumulated work experience?
> Women are more likely to choose or need to leave and re-enter the workforce in order to meet family caregiving responsibilities, resulting in a loss of seniority, advancement opportunities, and wages.
> Together with the higher likelihood of working part-time, women’s total accumulated work experience may be much less than their male counterparts.
Belonging to a union does what to one’s compensation?
> Belonging to a union increases wages, and the wage gaps in unionized work environments tend to be smaller.
Finally, a study of MBAs found that 10 to 15 years after graduation, in addition to a pay gap there is also a gender-based chasm in what?
> there is also a gender-based chasm in such subjective measures as career satisfaction, boss appreciation, and feelings of discrimination.
It was found that the gender wage gaps in both 1998 and 2018 were due to what?
> were due to the distribution of men and women working in different industries, and that women were more likely to be working part-time. The reduction in the gender wage gap between 1998 and 2018 was largely explained by changes in the distribution of men and women across occupations, higher educational attainment by women, and fewer men working in unionized workplaces.
What percentage of the gender wage gap cannot be explained?
> Further, two-thirds of the gender wage gap cannot be explained, which can potentially be attributed to differences in work experience between men and women, and gender biases in pay levels
Pay equity legislation has been introduced in many Canadian jurisdictions. The laws are intended to address what?
> The laws are intended to address the effects of occupational segregation and the historical undervaluing of work done by women.
Is pay equity complaint based? What about Ontario specifically?
> Pay equity legislation is mostly complaint-based, which means the onus is on the employees to file a complaint if they believe they are being paid unfairly.
> There are some jurisdictions that have moved to a more proactive approach—Ontario is one such example. Under Ontario’s Pay Equity Act, pay equity aims to close the gender wage gap by requiring “equal pay for work of equal value.”
> It requires each organization to proactively assess all of their jobs and conduct an unbiased comparison of the work done by women to the work done by men in order to determine whether the women are being compensated equitably, irrespective of the title of the position.
Pay equity in the federal sector used to be covered under the Canadian Human Rights Act, what is covered under now?
> In December 2018, the Canadian federal government’s Pay Equity Act received royal assent. Rather than being complaint-based under the Canadian Human Rights Act, this new law sets out a more proactive, timely, fair, and collaborative approach to addressing pay equity issues in the federal public sector.
Most pay equity legislation requires that pay equity is to be what?
> Most pay equity legislation requires that pay equity be maintained over time
The pay equity process is detailed, technical, and complex, and varies to some extent between jurisdictions. However, the following steps are the basic components of a pay equity process:
> Identify the unit for which the pay equity plan will be developed.
> Identify job classes with similar duties and responsibilities.
> Identify male and female job classes.
> Assess the value of jobs using a gender-neutral (free of gender bias) job evaluation system based on the criteria of 4 components.
> Compare male and female job classes using one of the following (varies by jurisdiction):
> Identify where compensation adjustments are required due to disparities in compensation between male and female job classes of equal value.
> Develop a pay equity plan that sets out how the differences in compensation that were discovered through the pay equity process will be remedied, containing:
> Make compensation adjustments, up to limits prescribed in the legislation.
What are the four components of a gender-neutral job evaluation system?
1) Skill, including intellectual and physical qualifications acquired by experience, training, education, or natural ability, as determined by the performance requirement of a particular job;
2) Effort, including both physical and intellectual effort required in the performance of a particular job;
3) Responsibility, the degree of accountability for physical, financial, and human resources in carrying out the duties of a particular job; and
4) Working conditions, including both the physical and the psychological conditions, such as noise, temperature, isolation, physical danger, health hazards, and stress.
Compare male and female job classes using one of 3 methods (list all of them):
> The job-to-job method, in which each female job class is compared to each male job class of equal or comparable value.
> The proportional value/wage line method, for female job classes with no appropriate male comparators under the job-to-job system, in which the wage line for male job classes is applied when setting pay for female classes
> The proxy comparison method, when pay equity cannot be achieved through job-to-job or proportional value methods, in which female job classes are compared to similar female job classes that have achieved pay equity with another employer; this method has been quite controversial.
What 8 components should a pay equity plan contain?
1) A description of the unit for which the pay equity plan has been developed;
2) An identification of all the job classes that formed the basis of comparisons, including which were female and which were male;
3) A description of the gender-neutral job evaluation system used;
4) Where more than one method of comparison was permissible, the method of comparison used for each job class;
5) The results of the comparisons;
6) An identification of those job classes for which permissible differences in compensation existed;
7) For those job classes for which differences in compensation exist which are not permissible, a description of how the compensation will be adjusted to achieve pay equity, and
8) A schedule of the payout of compensation adjustments.
Differences in compensation between female- and male-dominated job classes are not allowed; however, they are permissible when?
they are permissible if the employer can demonstrate that the differences are the results of any of the following:
(1) a fair and formal seniority system;
(2) a temporary employee training or development assignment that is equally accessible by both male and female employees;
(3) a fair merit compensation plan based on formal performance ratings;
(4) red-circling, that is, maintenance of the compensation level of an employee whose job has been downgraded; and
(5) a skills shortage.
It is important to remember that pay equity only targets pay differences in what?
> It is important to remember that pay equity only targets pay differences between men and women.
The general factors affecting wages in unionized firms include the impact of the union on what 4 components?
(1) general wage and benefit levels,
(2) the structure of wages,
(3) non-union firms (also known as spillover effect), and
(4) wage and salary policies and practices in unionized firms.
What strategies are employed to see if unions impact wages?
> One alternative strategy adopted has been to identify organizations within the same industry that differ in level of unionization.
> Another strategy in estimating union impact on wages is to compare two different industries that vary dramatically in level of unionization. BUT - This strategy suffers because non-unionized industries (e.g., agriculture, service) are markedly different from unionized industries in the types of labour employed and their general availability.
> Another situation in which unions affect general wage levels occurs when wage cuts are negotiated. This usually happens in extreme situations where the only other alternative is job loss.
Perhaps the best conclusion about union versus non-union wage differences comes from a summary analysis of 114 different studies. Two important points emerged:
> Unions do make a difference in wages. Union workers earn approximately 10% more than their non-union counterparts and in 1990m there was a 7.7% wage premium
> The size of the gap varies from year to year. During periods of higher unemployment, the impact of unions is greater. During strong economies, the union–non-union gap is smaller.During strong economies, the union–non-union gap is smaller.
Do unionized employees enjoy greater benefits?
> Employees in unionized settings also enjoy better benefits, as the goal of a union is to continually strive for a better total compensation package for their members, which includes not only better wages but also better benefits such as health, leave, and pension.
Unions also have impact on an organization’s wage structure. In unionized settings, the pay policy line is thereby considered what?
> is usually “flatter” than in non-unionized work settings. This means that the wage difference between the top earners and the lowest paid employees is smaller in a unionized setting than in a non-unionized setting.
> The second issue is the evolution of two-tier pay plans. Basically, a phenomenon of the union sector, two-tier wage structures differentiate pay based upon an employee’s hire date. Anyone who is hired after a certain date, as stipulated in the collective agreement, will receive lower wages than their peers who started their jobs before such date.
The impact of unions in general would be understated if we did not account for what ?
> account for what is termed the spillover effect.
> Specifically, employers seek to avoid unionization by offering workers the wages, benefits, and working conditions won in rival, unionized firms.
Perhaps of greatest interest to current and future compensation professionals is the role unions play in what?
> is the role unions play in administering wages.
> The role of unions in administering compensation is outlined primarily in the collective agreements. For example, collective agreements often require union representation on job evaluation committees.
What kind of rates can unions offer?
> Single rates are usually specified for workers within a particular job classification. Single-rate agreements do not differentiate wages on the basis of either seniority or merit.
> Alternatively, the agreement may specify different rates—the vast majority of collective agreements specify seniority as the basis for movement through the range. Hourly rates are higher for those with more years of experience. Automatic progression is an appropriate name for this type of movement through the wage range, with the agreement frequently specifying the time interval between movements.
Frequently, in multiyear contracts, some provision is made for a wage adjustment during the term of the contract. There are three major ways these adjustments might be specified:
(1) deferred wage increases,
(2) reopener clauses, and
(3) cost-of-living adjustments (COLAs), or escalator clauses.
what is a deferred wage increase? (unions)
> A deferred wage increase is negotiated at the time of initial contract negotiations, with the timing and amount specified in the contract.
What is a reopener clause? (unions)
> A reopener clause specifies that wages, and sometimes such non-wage items as pension and benefits, will be renegotiated at a specified time or under certain conditions.
What is a COLA clause? (unions)
> Finally, a COLA clause, as noted earlier, involves periodic adjustments based typically on changes in the consumer price index.
The vast majority of contracts specify what on the basis of pay (unions?)
> The vast majority of contracts specify that one or more jobs are to be compensated on an hourly basis and that overtime pay will be paid beyond a certain number of hours.
Furthermore, many collective agreements specify that a premium be paid above the worker’s base wage for what?
> for working non-standard shifts. Alternatively, collective agreements may specify a fixed daily, weekly, biweekly, or monthly rate. In addition, agreements often indicate a specific day of the week as payday.
Most contracts recognize that different occupations should receive different wage rates. Within occupations, though what occurs?
> Within occupations, though, a single wage rate usually prevails.
International competition causes a fundamental problem for unions. what is that problem? What have unions done to fight this problem?
> If a unionized company settles a contract and the company raises prices to cover the increased wage costs, there is always the threat that an overseas competitor with lower labour costs will capture market share.
> To keep this from happening, unions have become more receptive in recent years to alternative reward systems that link pay to performance.
Alternative reward systems include what for unions?
> Alternative reward systems include lump sum, piece-rate, gain-sharing, profit-sharing, and skill-based pay.
> In unionized firms that do experiment with these alternative reward systems, though, the union usually insists on safeguards that protect both the union and its workers. The union usually insists on group-based performance measures, with equal payouts to members.
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