Bill Dry DSC-502 May 06, 2012 XYZ Corporation Weekly Salary Gender Discrimination Case This paper

seeks to determine if the XYZ Corporation engaged in wage discrimination based on gender of the employee, as has been claimed in recent litigation. Several statistical tools will be employed in making this determination including the independent samples t-test, the F-Test (ANOVA), the Chi2 test and multiple linear regression analysis. It is important to note that the outliers have been removed from the sample data in order to provide a final analysis that is not skewed. The hypotheses to be tested are as follows: H0: There was salary discrimination based on gender; H1: There was no salary discrimination based on gender. The independent samples t-test allows us to evaluate two independent samples for equality of means. In this case, female salaries vs. male salaries will be compared. The output data (p-value =.01, where equal variances are assumed) suggests there is a significant difference between male and female salaries. The 95% confidence interval tells us that female salaries range from $15.83 to $109.05 less per week than male salaries. The mean difference is $62.44 per week. Unfortunately, this statistical tool is also somewhat limited in its ability to evaluate complex cases. These limitations include the inability to evaluate the additional independent variables that may be affecting the salary differences such as education level of the employee, employment duration, age and position within the company. It is interesting to note that if age is determined to have impacted wage, this too could be cause for litigation (i.e. age discrimination). Having identified the weaknesses in this testing method, it is necessary to

explore other statistical analysis tools. The F-Test (ANOVA) will tell us if there are significant differences between groups. It is used to compare the means of more than two groups against the mean of the dependent variable. In this case, the dependent variable, weekly salary, will be compared against the independent variable, job position with groups technical, managerial and clerical. The p-value .000 indicates that there are indeed significant differences between the groups but cannot tell us if they are based on gender. The Chi2 Goodness of Fit Test will contribute to the analysis. In order to isolate the nominal variables of gender and position within the organization, the Chi2 Goodness of Fit Test is employed. The hypotheses to be tested are as follows: H0: Gender is independent of position; H1: Gender and position are dependent. In laymans terms we are trying to determine if the gender of an employee helps them obtain or keeps them from obtaining certain high paying positions within XYZ Corp. The sample data set meets the requirements that it be randomly drawn from the sample (as supported in the scatter plot) and the values for each variable are mutually exclusive. The p-value of .001 indicates that the alternative hypothesis: gender and position are dependent, should be accepted and the null hypothesis: Gender and position are independent should be rejected. The Chi2 test helps us to pinpoint the fact that it is more difficult for women to get into the higher paying management positions with XYZ Corporation than it is for men and gender is the variable that makes it more difficult. It does not necessarily follow that a male clerk earns more than a female clerk. It does however, necessarily follow that men have a better opportunity to make more money than women because they have easier access to the higher paying management positions. Our final statistical evaluation test is multiple linear regression which will provide sufficient information to draw a final conclusion about the salary discrimination case.

In multiple regression analysis testing, the coefficient of determination (r2=.451) indicates that the changes in the independent variables are not directly responsible for the changes in weekly salary although errors in the prediction rate may be relatively higher at .451. Variance Inflation Factor (VIF) is the reciprocal of tolerance and when it approaches 5, multicollinearity exists. None of the independent variables have VIF scores that approach 5. Furthermore, there is no evidence of multicollinearity based on the fact that tolerance is >.01 for all independent variables. The unstandardized regression equation is Weekly Salary=145.39 +14.64x1 +1.16x2 +13.34x3+.157x4+40.40x5, where x1=gender x2=age x3=education x4=employment and x5=job position. Unstandardized coefficients make it difficult to compare predictors because the variables are weighed on different metrics. The standardized coefficients (beta) have a mean of zero and a standard deviation of 1 and thus are easily compared and standardized on z-scores. The standardized equation is Weekly Salary= .094x1+.26x2+.261x3+.298x4+.298x5 and it suggests that employment duration and job position are stronger influencers of weekly salary than any other variable. The p-value of the F-statistic (ANOVA), p=.003 dictates that we must accept H1. The sample data in this case has been evaluated using the four testing methods: independent mean sample t-test, F-Test (ANOVA), the Chi2 Goodness of Fit Test and Multiple Regression Analysis. Each of these tests builds on the last and indicates that XYZ Corporation did indeed engage in gender discrimination as it relates to job position (p-value=.001) but not as it relates to salary, therefore we reject H0 and accept H1.