For many years, federal equal

For many years, federal equal employment opportunity laws have prohibited compensation discrimination. However, according to the U.S. Equal Employment Opportunity Commission (EEOC), pay disparities continue to exist in various demographic groups. According to the EEOC website (visited on January 13, 2013), Section 10 of the EEOC Compliance Manual describes the standards and suggested steps for investigating a charge of compensation discrimination. In the statistical analysis section, Fisher’s exact test is recommended as the test of choice. The following is based on the example found in the EEOC Compliance Manual.

Suppose the employees of a particular company can be classified into one of two groups (1 and 2). There are 14 members in group 1 and 17 in group 2. Eight members of group 1 and three members of group 2 earn salaries greater than the company median salary. Use Fisher’s exact test at significance level .05 to investigate whether group affiliation has an effect on salary status. (The previous exercise identifies a website that will carry out the calculations.)

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