TRIANGLE CONSTRUCTION COMPANY 03 22 2005 The Triangle Construction Company specializes in building upscale homes in the greater Piedmont area Founded in 1963 the company has prided itself on its progressive hiring and promotion practices and on its generous fringe benefits In particular TCC has employed a significantly higher proportion of women and minorities than comparable construction companies in the area Recently TCC has been accused of sex discrimination with respect to the wage rate it pays its hourly employees A local activist group managed to take a random sample of fifty hourly employees at TCC For each employee in the sample they recorded the hourly wage rate the number of years employed in the construction industry and the gender They then did a bit of analysis using Excel The Excel output is given below As the group suspected the thirty men in the sample made an average of 13 75 per hour while the twenty women were paid an average hourly wage of only 11 60 TCC studied the data and acknowledged that the sample constituted a reasonably typical set of its employees TCC even agreed that on average its male employees probably did make more maybe even significantly more than its female employees But the company argued that the picture was much more complicated TCC pointed out that every spring it conducted a performance evaluation of all its hourly employees The skill set of each employee was carefully evaluated and monitored and this information was used to determine the hourly wage for the coming year Since hourly construction workers learned most of their skills on the job the company argued that looking at how long each employee had been working in the construction industry was important Looking at the sample the men had worked an average of 9 90 years but the women had only worked an average of 6 65 years TCC argued that this difference in experience level explained most of the discrepancy in the wage rates Also looking at a scatterplot of wage rate versus years employed there were a number of instances where a woman made more than a man even though the man had comparable work experience 2005 by the Kenan Flagler Business School University of North Carolina Chapel Hill NC 27599 3490 Not to be reproduced without permission All rights reserved This case was prepared by Alan W Neebe and David S Rubin as a basis for class discussion rather than to illustrate the effective or ineffective handling of an administrative situation 1 Run a regression predicting WAGE using YEARS and MALE as drivers where MALE 1 if the employee is male 0 if the employee is female a Estimate the hourly wage for a woman with 10 years of work experience in the construction industry A woman with 10 years of work experience would make 12 63 an hour based on the estimates from the regression model b Estimate the hourly wage for a man with 10 years of work experience in the construction industry A man with 10 years of work experience would make 14 56 an hour based on the estimates from the regression model c How much is a year of work experience worth for men For women A year of work for men is worth around 31 1 15 36 but for women it is just 31 d How much more do men make than women Is this figure significantly greater than zero Men make on average 1 15 on a woman s dollar which means they make 15 more than women for every dollar which is significantly greater then zero 2 Run a regression predicting WAGE using YEARS and FEMALE as drivers where FEMALE 1 if the employee is female 0 if the employee is male a Estimate the hourly wage for a man with 10 years of work experience in the construction industry The hourly wage of a man with 10 years work experience would be 13 78 b Estimate the hourly wage for a woman with 10 years of work experience in the construction industry The hourly wage of a woman with 10 years work experience would be 11 67 c How much is a year of work experience worth for women For men A year of work for men is worth 0 31 while for women it is worth 0 31 85 0 26 d How much less do women make than men Is this figure significantly smaller than zero Is this result different from that in question 1d Women make 15 cents less on the dollar then men and this result is not different then 1d