Fresh Market is a small grocery chain in New Zealand. A former employee has gone to the press and told them that Fresh Market pays its female employees less than the male employees: particularly, female junior managers make less than male junior managers.
You are consulting for Fresh Market. Senior management and the head of human resources are shocked by the accusation, since they have had non-discrimination policies in place for years. They give you the data that they believe the former employee had access to, and ask you to analyze it and uncover whether there is any validity to the former employee’s claims.
You decide to approach the problem in the following way:
> Obtain summary statistics about salary, for men and women separately; do the men indeed earn more than the women?
.You should find that on average, the men are paid around $3,000 more than the women; this is the claim the former employee made.
.You have racial classifications as well: White, Maori, or Pacific Islander. You should obtain summary statistics broken down by race also.
>Build a regression model for salary using the data given:
.Salary is measured in thousands of dollars.
.Age and Experience are measured in years.
.HighSchool, College are Y (1) if the junior manager completed High School or College respectively, N (0) otherwise.
.Race and Gender are categorical variables
.DexScore is a measure of manual dexterity that forms part of an on-boarding test for the employees.
>You should find that Gender is not significant in your regression; that is, Gender is not useful for predicting salary, taking into account the other variables in the model.
.You need to reconcile these two pieces of information: men are paid more than women on average, but gender is not a significant predictor of salary.
.Hint: are men and women identical in your data, or is there some observable difference between the men and women that explains the observed difference in salary.
As always, write up your process and findings as a case report.
>Be very clear in your Executive Summary about what upper management needs to know. Does it seem that Fresh Market is discriminating, or does some other factor explain the former employee’s claims.