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Wage discrimination refers to paying women, minorities, or other culturally subordinate individuals lower wages than comparably skilled men, whites, or other privileged groups. This can happen when women or minorities are hired or promoted into lower-paying jobs, or when they are paid less for performing the same work in the same workplace.
In general, past research has found that wage discrimination increases with the rank of the job. Thus, the term rank segregation is sometimes used to indicate that job segregation by status is associated with job desirability. Most common have been analyses that demonstrate race and sex wage gaps after controlling for legitimate measures of individual productivity, such as education, experience, or job skills. These studies typically find that most wage inequality is produced by job segregation, though in some contexts there may be additional discrimination in wage setting within jobs. The more desirable the job, the more likely it has within-job wage discrimination and the more likely that women and minorities are excluded from the job.
Employment discrimination and job segregation are the product of a series of well-recognized selection and evaluation mechanisms, such as prejudice, cognitive bias, statistical discrimination, social closure around desirable employment opportunities, and network-based recruitment. These mechanisms tend to be mutually reinforcing and lead to status expectations about the appropriateness of different types of people for different jobs, as well as to expectations as to the value of those jobs to the employer. Bias in evaluation processes, which in turn may lead to between- or within-job wage inequalities, can result from self-conscious prejudice, but it is often produced by subtle social psychological processes of cognitive bias, stereotyping, and in-group preferences. Employers, like everyone else, tend to use preexisting cultural categories such as sex or race to organize and interpret information. These cognitive processes can lead to more favorable evaluations and outcomes for high status individuals (males, majority race) and lower evaluations for others (women, minorities). The theory of statistical discrimination points out that employers are more likely to discriminate when jobs have more responsibility, longer periods of training, or simply pay more, because the cost of hiring an unqualified worker rises in these situations. Economists tend to describe this process in terms of explicit cost-benefit calculations. Sociologists and psychologists see this as a more subtle social psychological process of cognitive bias and stereotyping.
The term social closure refers to discrimination around the preservation of group privilege. Social closure processes are consistent with the discriminatory mechanisms already outlined—prejudice, cognitive bias, and statistical discrimination. They are not merely conditioned by individual psychology or the profit motive, however, but also by both social accountability to one’s status group and the elaboration of cultural stories that explain and justify status-based inequalities. Because social networks tend to be formed around friendship and family ties, employee recruitment procedures that rely on professional or current workforces will also tend to produce social closure-based opportunity hoarding.
Discrimination and job segregation can be moderated by organizational practices that reduce the influence of personal biases or social expectations. Recent research suggests that control systems that hold managers accountable for equal opportunity outcomes are more effective than those that target unconscious bias processes.
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