Welch Consulting’s labor economists have extensive experience helping firms ascertain fairness in company pay practices, ensure optimal utilization of a diverse workforce, and identify any potential problems so that they can be addressed proactively in avoidance of litigation (such as employment discrimination cases) and in advance of examination (EEOC or OFCCP audits).

We find that many clients do proactive audits, annually or as-needed; a well-conducted, proactive pay audit shows how a company would look to those interested in their compensation data, allowing an analysis of pay practices—current and historical—to determine “best case” and “worst-case” results from disclosure.

Practical Solutions Developed by Expert Economists

pay equity analysis

Simply put, a pay equity analysis is all about data.  A well-defined pay analysis makes comparisons among “similarly situated” employees—those with similar roles, whose pay is determined by the same factors—while looking at selected information, to include:

  • Time on the job
  • Time with the company
  • Prior experience
  • Education
  • Special skills
  • Responsibility levels
  • Pay changes over time

Over the course of the pay audit, our economic consulting experts will work to build data about current and past employees, as well as examining numerous data sources not originally designed for statistical analysis, such as hiring, termination, and reasons for pay change. Using statistical modeling, we help discover peer group pay differentials and non-discriminatory reasoning that might help to explain any discrepancies.

Pay Equity: Representative Engagements

The Assignment

Welch Consulting was retained by a national apparel chain to study the pay equity among its male and female management-level employees.

Our Findings

Our economists constructed multiple regression models to incorporate relevant experience and geographical factors, including competitive salary pressure to retain top performers to show that when all relevant skill and experience measures were proper, men and women in the stores showed no significant unexplained pay differences.

The Assignment

Welch Consulting was hired by counsel for a medical services provider to perform statistical analyses of pay decisions at their facility. Based on initial job classifications, several positions showed women being paid less than men even though they had been with the company, on average, at least as long as the men.

Our Findings

Welch Consulting experts assisted in identifying relevant, business-related factors that legitimately cause differences in pay, such as relevant years of prior experience and skills specific to the job being performed; once these factors were accounted for, remaining differences of pay within job were reduced below statistical significance and, in some jobs, showed women were paid more than expected based on all relevant job requirements and skills.

The Assignment

In anticipation of a potential employment discrimination case, a large retail company retained Welch to audit its pay practices, focusing primarily upon pay differences between male and female managers.  These data showed that females were paid 12.5% less than male employees in the same job and with the same number of years of experience.

Our Findings

Welch Consulting experts identified additional factors determining pay differences of male and female employees in different jobs throughout the company and included these factors in a series of multiple regression analyses.  We found that two of these factors—job assignment and prior work information—helped to explain a very significant fraction of the initial pay disparity, such that, after accounting for these individual characteristics, remaining differences slightly favored female managers and remaining race differences were not statistically significant.