The Effect of Gender and Race Differentials on Public-Private Wage Comparisons: A Study of Postal Workers

Abstract

This study argues that the aggregative specifications often used to examine wage diferentials fail to control for important demographic variations in wage patterns. In testing how postal wages compare to wages in the private sector, the authors therefore introduce interaction terms to control for gender and race differentials by industry. Their analysis of data from the May 1979 Current Population Survey indicates that average wages are higher in the Postal Service than in many private sector industries because the Postal Service pays nonwhites and women wages similar to those it pays comparable white men, whereas gender and race differentials are common in the private sector. The findings also indicate that the postal wage for white men is about the same as the average wage paid to comparable white men in other sectors of the economy, a relationship that the authors argue should be the key criterion for wage comparability in any public agency that follows a nondiscriminatory wage policy.