> the last is purely market driven (no matter how much companies wish it weren’t)

Why would companies wish it weren't? It lets them underpay people because "the market" broadly underpays them.

I've talked about this dynamic with leaders like that, who opposed salary transparency because they underpaid people who they knew the market would undervalue, where the actual contribution of the person in question is irrelevant. As they put it (grossly), if you're a minority that would be paid less elsewhere, I'm going to pay you less here because I can. Not because you're a minority, but just because that's the way the market works.

I've been in situations where the "market forces" are stupid enough that I've been paid more than someone nominally one level up from me (senior eng. vs junior). It's immoral as hell but what are you going to do? The company is always going to pay every worker as little as they can, and not a cent more.

It's not immoral, any more than you bidding lower as a house buyer is immoral. Your individual circumstances as buyer and seller are different, and you need to make a free agreement that fits those. If you can't, you walk away. If you can, great. The same forces (and morality) applies to salaries.

The immoral part is where a senior employee was being paid less because she was "less valuable" on the open market due to her gender and ethnicity.

Edit: see also the recent stories about home values varying wildly based on whether the current owner is white or black. This is based on perceived 'market value', is this fair? https://www.cbsnews.com/news/freddie-mac-home-appraisal-hous...

What you're describing is illegal. If there's strong evidence, then the legal system should be brought to bear on discriminatory practices. I don't think that ascribing morality to the general case of people being able to freely enter into agreements at different prices is a good idea.

Is it illegal? The discrimination isn't based on anything other than the "free market" - if she could get a better offer elsewhere, they'd pay her more. The fact that she can't get a better offer elsewhere due to discrimination isn't evidence of discrimination on the part of the company that employs her, under your framework.

It's illegal if the reason is as you say. You're arguing the wrong thing. The mechanism by which things are priced and agreed is a good thing. There are certain protected categories which cannot be used to set a price/offer except where they are directly relevant to the job. Whether you think that's good or bad is your prerogative, but that's how it works.

However, having evidence that that is the reason such that we can be confident it is that, rather than assuming it, is difficult.

Here's the situation. The market is biased against an individual such that the competing offers she receives are less than those of her coworkers. Therefore, the company pays her less. Is that legal?

The market isn't biased. That's a category error. Individuals might be biased. Individuals en masse might even be biased. But the market in general is not the thing that is biased.

You might say that it amounts to the same thing, but attributing the problem to the correct cause is important.

It's important because it means that if the correct cause is bias, it's actually bias in every potential employer somehow, but how do you know? How do you know it's not something with the applicant or the application?

Saying it's just a biased market means you don't even think of other things it could be, such as a badly presented CV or a missing key skill, or a difficult interviewing manner. Those are more likely to have every future employer reject you than something insidious. It's unlikely that every potential employer has such a large pool of candidates that bias is the thing that means you don't get a decent enough offer to even beat your current salary.

But if it is a cabal of horrible biased people, then that's illegal and should be challenged as such. It's horribly unfair, but that's probably the best course.

If your comp is at fair market value, your are not being underpaid, by any honest and reasonable definition of “underpaid”.

The problem is when "fair market value" differs between two people for reasons other than their work productivity - including protected classes such as race, gender, etc.

Is it illegal? No. Immoral? I'd argue yes, if the only reason you get to pay them less is that the broader market is biased against them for reasons outside of their control.