Statistical issues arising in the Office of Federal Contract Compliance’s recent notice on nondiscrimination obligations’ of contractor’s and the concerns raised in the comments submitted by the U.S. Chamber of Commerce

• Published in: Law, probability and risk probability and risk, 2020-03, Vol.19 (1), p.109-117
• Main Author: Gastwirth, Joseph L
• Format: Article
• Language: English
• ISSN: 1470-8396; 1470-840X
• DOI: 10.1093/lpr/mgaa007

Abstract A proposed rule announced by the Office of Federal Contract Compliance describing the way statistical tests will be used in compliance reviews led to the Chamber of Commerce filing a formal Comment. The comment raises several statistical issues, including the proper analysis of stratified data and the effect of large samples on tests of significance. The Chamber correctly pointed out that simple pooling of the data into one large sample can lead to misleading conclusions, so an appropriate analysis, combining the results of statistical analyses of the individual strata into an overall estimate and statistical test is described. Both the proposal and Comment state that practical significance should be considered but do not provide a clear definition of the term, although various definitions are referred to. Two alternative approaches to evaluating the practical significance are described. One assesses the financial impact of the disparity on a typical wage earner, while the second considers the number of employees affected by the disparity and estimates the effect of the disparity on their earnings during their expected time of employment.