Friday, June 16, 2006

Never mind the study 

The story of the Northern Arizona reverse discrimination case (some background) reached the WSJ today, and contains an interesting piece of information. It turns out the initial study used to create the pay equity arrangement at NAU didn't show very much pay inequity, a fact that administrators of the school chose to ignore.
In 1993, the university's then-president, Eugene M. Hughes, assumed there had been discrimination, based partly on a study he'd commissioned. The study used salaries at other schools to help determine a theoretical median wage that should prevail at Northern Arizona. A lot of white males there fell below the median, but the significant finding for President Hughes was the one that showed minorities and women under a "predicted" par.

As Judge Broomfield noted in 2004, the initial study ignored factors such as whether people held doctorates. At any rate, the study's own figures indicated that white faculty were earning only about $87 a year more than minorities, and men were making about $751 more than women. Mr. Hughes's solution: raises of up to $3,000 for minorities and $2,400 for women. White men got nada.

So here's Lesson Two and the winning issue in this case: If you want to pay "catch up" wages to some employees, don't overcompensate to the point where they draw ahead for no reason other than their race or gender.
These types of studies are common, including at least two I've seen here at SCSU. They are seldom done by economists, who know a thing or two about labor markets. They are usually done with an eye towards the particular conclusion brought. In one salary equity settlement here, one white male in my department received a small raise, much to the resentment of the minority and women faculty who had pursued the study and settlement.

Worth noting -- the NAU case began in 1993. Justice delayed...