The UK’s Orwellian sounding Equality Act 2010 is incredibly Marxist. It requires equal pay for work of equal value where this is defined as:
A’s work is equal to B’s work if it is similar to B’s work, rated as equal to B’s work, or has the same value as B’s work.
A’s work is similar to B’s work if A’s work and B’s work are similar or broadly similar, and this difference between their work is of no practical importance in relation to the terms of their work.
…A’s job is rated as equivalent to B’s job if the job evaluation study— assigns equal value to A’s job and B’s job in terms of the worker’s desired needs.
…A’s work is of equal value to B’s work if it is not the same as B’s work or is rated as equal to B’s work, but is nevertheless equal to B’s work in terms of the demands made on A by reference to things like effort, skill and decision. – to do.
In short, the place of supply and demand has been replaced by judges and labor boards who have the authority to determine what jobs are “equal” and therefore should be paid equally. And labor boards do that based on vague and subjective assumptions that don’t change with changing circumstances. Consider replacing “jobs” with “condiments” and have the judges decide whether ketchup and mustard should be valued equally because they are similar, broadly comparable, or equally weighted in terms of the effort, skill, and decision-making that went into their production.
You think I’m kidding. I don’t. Here is an example of a case recently decided in the UK.
More than 3,500 current and former Next employees have won the final stage of a six-year fight for equal pay.
The labor court said shop workers, who are mostly women, should not have been paid less than warehouse workers, where more than half of the workers are men.
The court ruled that store workers and warehouse workers are “equal” and should be paid equally. Next they replied that they pay everyone market wages. Verboten!
Next argued that pay levels for warehouse workers were higher than for retail workers in the broader labor market, justifying the different rates within the company.
But the labor court rejected that argument as a reason for the wage difference.
According to the court’s decision, between 2012 and 2023, 77.5% of Next’s store coordinators were women, while 52.75% of warehouse workers were men.
The court accepted that the difference in pay levels between occupations was not down to “direct discrimination”, including the “conscious or subtle influence of gender” on pay decisions, but was caused by efforts to “reduce costs and improve profits”.
It decided that “the business need was not great enough to overcome the discriminatory effect of the low basic wage”.
No one suspects that male and female warehouse workers were paid equally or that male and female store workers were paid equally or that there was direct or indirect discrimination. The only claim is that warehouse workers, who are more likely to be women than store workers, earn more than retail workers. And since these jobs were judged to be “equal,” the company violated the Equality Act 2010.
Who would have predicted that such different occupations would be considered equal? But because Next failed to foresee that retail and retail operations could be considered “equivalent,” they now have to pay millions in back wages to their sales staff. Software engineers, especially in AI, are currently in high demand. A British company looking to hire them may be reluctant to raise wages, fearing that a future decision could alienate software engineers as “equals” from a larger, lower-paid group such as HR managers. Such a decision could easily put the company into bankruptcy.
Almost 50% (47.25%) of the warehouse workers were women. So women were not barred from high-paying jobs. The fact that 77.5% of retail workers were women suggests that retail work is more attractive to women compared to men and therefore there is a compensatory differential. Any of the three female plaintiffs could have taken a job at the warehouse. If the jobs are equal and the warehouse jobs pay more this is, in the plaintiffs’ theory, “confusing”. [Or, as Ayn Rand would say, blank out.]
In fact, the court case revealed that Next was struggling to fill warehouses and offered any retail employee—including the plaintiffs—the opportunity to transfer to store work. Under cross-examination, one of the plaintiffs admitted that, due to the poor conditions in the warehouse—described by the court as “wireless,… places”—warehouse work “did not seem particularly attractive” compared to the greater independence and more attractive environment of retail work. The complainant added that he would only look at the warehouse work if he paid “a lot of money.”
Thank goodness for the men and women who were willing to take such jobs to earn just a little extra money! It should come as no surprise that different people have different preferences for jobs, just as they have different preferences for ice cream. In particular, it will probably surprise the judges only to learn that men tend to be more focused on money and “women are more attracted to employers with low wages but high rates of non-payment symptoms (NBER 32408).” The court, however, reserved this view, noting that if they were to take the expressed preferences seriously this would be tantamount to using the “unfettered free market model of supply and demand.” Fear.
Now consider how jobs were considered “equal”. On the left is the work evaluation report for plaintiff Amanda Cox. Certain categories and numbers are not important; what is important is that the activities are rated in 11 categories, and the points are added to get the total score below.
Thankfully, testers insist they use it equal weight in all categories. Yes, they do—because “equality” is synonymous with fairness, right? Unequal weighting would certainly be discrimination!
I don’t do this:
Any program that starts with – “This qualification is very important” or “This skill is important” is likely to remain biased or at least open to charges of bias or discrimination.
So, if you think that skill is important in a job, that is discrimination!
(Also note that proportional scaling is simply another method of scaling. Given the subjective nature of both categories and assigned points, proportional scaling has no inherent dimension or objectivity.)
But it doesn’t matter—we have to get to the best part. The testers selected three warehouse workers and evaluated them using the same metric. For example, Amanda Cox was compared to warehouse worker Calvin Hazelhurst, leading to the table on the right.
Can you spot something surprising in this table? I’ll give you a moment.
The obvious conclusion any reasonable person can draw from this table is that the duties are clear not equal. Amanda’s total score is 440, and Calvin’s is 340. 440 ≠ 340. Not even close! In almost all categories—except (not surprising!) physical demands and working conditions—the sales job requires additional points, called “skill and responsibility”.
At this point, most people would stop and ask critical questions. If jobs vary widely in many areas, isn’t it clear that they are not equal? And why do jobs that seem to require less “skills” pay more? Could it be that our scoring system has been oversimplified? Maybe the market is telling us something this scoring system isn’t picking up on? Is it time to check out our locations?
But not the inspectors! Oh, no. The testers are happy–because the fact that the tasks are not equal proves that they are equal!
War is peace, freedom is slavery, ignorance is strength. INEQUALITY IS EQUAL.
Adam Smith had a better understanding of wages in 1776 than UK judges today.
The wages of labor vary according to the ease or difficulty, cleanliness or impurity, respectability or dishonorability, of the work. So in many places, if you take a whole year, a journeyman tailor earns less than a journeyman weaver. His job is very simple. A tripman weaver earns less than a journeyman smith. His work is not always simple, but even more pure. A blacksmith, though he is a master, seldom earns so much in twelve hours, as a collier, who is only a workman, earns in eight. His work is less dirty, less dangerous, and is done during the day and beyond. Honor forms a large part of the reward of all noble deeds. On the point of pecuniary interest, all things considered, it is often underpaid, as I will try to show shortly. Shame has the opposite effect. The butcher trade is a cruel and tedious business; but in many places it is more profitable than most of the common trades. The most abhorrent of all occupations, that of public murder, is equal to the value of the work done, which is better paid than any ordinary trade.
Today, the UK will convene a labor board to decide whether tailors and weavers should be paid equally because DO WORK OF EQUAL VALUE. Case closed.
Labor boards will inevitably lead to a misallocation of labor, reducing both wealth and fairness. A very inappropriate allocation may lead to continuous intervention, in the worst case, even allocation of workers by fiat. Politics breeds division, the need for accommodation, and a stagnant, unhappy society.
In general, it pains me that there is no recognition that the market is a process of discovery, including the discovery of the importance of different skills and preferences of people over different jobs. There is no recognition that the market includes private information and knowledge of specific conditions of time and place – information that is difficult to measure, communicate, or communicate in time – and that “the economic problems of society are mainly related to quickly adapting to changes in these conditions.” There is no recognition that price is a signal wrapped in stimulus.
I despair when I think that these basic ideas are the foundation of our free, global, and prosperous civilization. In economics, as in free speech, the UK has slipped into deep oblivion.
Addendum: A special hat tip to Bruce Greig who brought this to me and with receipts.
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