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Researchers Find Gender Pay Gap at Uber, But No Discrimination

Researchers Find Gender Pay Gap at Uber, But No Discrimination

Men drive faster, take routes in better locations, and stick with Uber longer, providing them the benefit of experience

A gender wage gap exists, that much is hardly disputed. Whether or not the wage gap is a product of sexism is the point of contention.

A new study conducted by five economists surveyed close to 2 million Uber drivers found a 7% gender pay gap, but, the study also found that pay gap was present even in the absence of gender discrimination.

The study found a handful of factors that contributed to the rideshare wage gap:

The growth of the “gig” economy generates worker flexibility that, some have speculated, will favor women. We explore one facet of the gig economy by examining labor supply choices and earnings among more than a million rideshare drivers on Uber in the U.S. Perhaps most surprisingly, we find that there is a roughly 7% gender earnings gap among drivers. The uniqueness of our data—knowing exactly the production and compensation functions—permits us to completely unpack the underlying determinants of the gender earnings gap. We find that the entire gender gap is caused by three factors: a) experience on the platform (learning-by-doing), b) preferences over where/when to work, and c) preferences for driving speed. This suggests that, as the gig economy grows and brings more flexibility in employment, women’s relatively high opportunity cost of non-paid-work time and gender-based preference differences can perpetuate a gender earnings gap even in the absence of discrimination.

In the simplest of terms, men drive faster, take routes in better locations, and stick with Uber longer, providing them the benefit of experience:

We can explain the entire gap with three factors. First, hourly earnings on Uber vary predictably by location and time of week, and men tend to drive in more lucrative locations. The second factor is work experience. Even in the relatively simple production of a passenger’s ride, past experience is valuable for drivers. A driver with more than 2,500 lifetime trips completed earns 14% more per hour than a driver who has completed fewer than 100 trips in her time on the platform, in part because she learn where to drive, when to drive, and how to strategically cancel and accept trips. Male drivers accumulate more experience than women by driving more each week and being less likely to stop driving with Uber. Because of these returns to experience and because the typical male Uber driver has more experience than the typical female—putting them higher on the learning curve—men earn more money per hour.

The residual gender earnings gap can be explained by a third variable: average driving speed. Increasing speed increases expected driver earnings in almost all Uber settings. Drivers are paid according to the distance and time they travel on trip and, in the vast majority of cases, the loss of per-minute pay when driving quickly is outweighed by the value of completing a trip quickly to start the next trip sooner and accumulate more per-mile pay (across all trips). We show that men’s higher driving speed is due to preference as drivers appear insensitive to the incentive to drive faster. Men’s higher average speed and the productive value of speed for Uber and the drivers (and, presumably, the passengers) enlarges the pay gap in this labor market.

The biggest contributing fact? Men drive faster than women:

First, driving speed alone can explain nearly half of the gender pay gap (48%). Second, over a third of the gap can be explained by returns to experience (36%), a factor which is often almost impossible to evaluate in other contexts that lack high frequency data on pay, labor supply, and output. The remaining ∼20% of the gender pay gap can be explained by choices over where to drive. Men’s willingness to supply more hours per week (enabling them to learn more) and to target the most profitable locations shows that women continue to pay a cost for working reduced hours each week.

Reserachers were interviewed in a Freakonomics podcast (you can listen here):

From the podcast (as transcribed by AEI):

STEPHEN DUBNER: So you write in the paper that unlike previous studies, you were able to, “completely explain the pay gap.” So can you unpack that just a bit?

REBECCA DIAMOND: Sure. Uber pays drivers based on a relatively simple, transparent formula that takes into account how long your ride is in miles, how long the ride takes, and potentially, a surge multiplier where sometimes there’s, excessively high demand.

JOHN LIST: So the fare itself is determined by an algorithm, which is gender-blind. The dispatch itself is gender-blind. And pay structure’s tied directly to output and not negotiated.

DIAMOND: That transparency and that simplicity of pay is what makes this environment so interesting for studying a gender pay gap.

HALL: Because we were able to work with such excellent, detailed data, we believe this is a first-of-its-kind study, insofar as it can actually fully explain the gender pay gap.

….

DUBNER: So let me just make sure I’m clear. You’re saying there’s no gender discrimination on the Uber side, on the supply side, because the algorithm is gender-blind and the price is the price. And you’re saying there’s no gender discrimination on the passenger side. So does that mean that discrimination accounts for zero percent of whatever pay gap you find or don’t find between male and female Uber drivers?

LIST: That’s correct.

The myth of the gender pay gap as a result of discrimination is one perpetrated by leftist partisans as a means to support their contention that sexism is a prevalent problem in every facet of American life. Those arguing the gap is derived from sexist employment tendencies frequently overlook basic data points. So prevalent is the myth that it’s infiltrated Super Bowl viewing and even the ideology of Supreme Court Justices.

Christina Hoff Sommers on the issue:

…the idea that women are paid less for the same work is taken for granted. Everywhere we hear that for the same work, women only make 77 cents for every dollar a man makes. Think about that. If it were true, why wouldn’t businesses only hire women? Wages are the biggest expense for most businesses. So, hiring only women would reduce costs by nearly a quarter — and that would go right to the bottom line.

What explains the appeal and staying power of a groundless claim about systemic pay injustice? For one thing, there is a lot of statistical illiteracy among journalists, activists, political leaders. There is also an admirable human tendency to be protective of women: stories of female exploitation are readily believed, and skeptics — especially men — risk appearing indifferent to women’s plight. But these are not the root causes.

The wage gap myth endures because it has the support of a passionate and effective lobby. An army of gender scholars and activists in our universities and women’s research institutes believes there is systemic gender discrimination in the labor market and they promote this myth in their classrooms, textbooks, and factsheets. They rarely engage directly with critics and skeptics outside of the gender equity universe, but they have forged an alternative route to success: Networking.

James Damore, a former Google engineer, was reportedly fired for circulating a memo, “Google’s Ideological Echo Chamber“, which discussed the gender wage gap and explained in great detail, why the wage gap was unrelated to sexism.

The facts continue to fall on deaf ears. Promoting a sexist wage gap myth is too lucrative a wedge issue to abandon anytime soon.

[h/t AEI]

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Comments

buckeyeminuteman | February 8, 2018 at 11:48 am

Why are you letting facts and statistics get in the way of a good victim story? Shame on you.

women only make 77 cents for every dollar a man makes. Think about that. If it were true, why wouldn’t businesses only hire women?

I wish people would stop using this particular argument to “prove” that sexist hiring and compensation practices would be so uneconomical as to be self-defeating. Anyone who has ever worked in any business, large or small, knows that hiring and compensation is often – possibly generally – based on family connections, cronyism, personal history, and a million other factors other than merit.

“Women can’t ahead in this company” (Pshaw! Uneconomical!) is no different from “Nobody who wasn’t one of the boss’ frat brothers/family members/drinking buddies can get ahead in this company” (Happens everywhere).

The wage gap doesn’t exist because it doesn’t exist. Trying to claim it couldn’t possibly exist “because economics” is a risible strategy.

There is only a gender wage gap when the parameters set up to measure and compare wages are set up to produce one. Every state in the Union has laws which make it illegal to pay women a different wage from men for the same work in the same job, on an hourly basis. To Timmy, in the typing pool, makes the same wages as Janice, if they have the same job responsibilities and the same seniority. Wages which are dependent upon sales, which usually include commissions and bonuses based upon the volume of sales made are usually equitable, though the monetary reward is largely dependent upon performance. The area where a gender pay gap does actually exist, is in the positions of CEO and senior VP. In these positions, experience can be a determinant of the pay offered. And, there exists the possibility, perhaps probability, that a woman would accept a lower wage to break into those jobs.

Whet the “gender gap” people use is a comparison between the median [not the average] wage of women and men. And, there are a number of reasons, beyond discrimination, for such a gap to exist. Where employers actively discriminate against women, by paying lower wages to women than to men for the same job responsibilities, such cases should be reported to the proper state agency and they should be vigorously prosecuted.

    Immolate in reply to Mac45. | February 8, 2018 at 1:59 pm

    Wage is not simply an intersection of job title and seniority in corporate America. It also reflects performance over time and prior work experience. A person who earns frequent “exceeds expectations” ratings will quickly outstrip a coworker who simply “meets”. A person coming from another company with relevant experience will often be hired on at a higher rate.

Of course they’re going to beat this old, dead horse.

The wymmin’s candidate, “La abuela en una pandsuit”, LOST the election for chrisakes!

But it was close, so they think they just need to drive that wedge a wee-bit harder.

The *normal* statistic of “Women earn X cents for every dollar a man earns” are not adjusted for age, education and marital status. Once you make those simple adjustments, the difference vanishes or becomes quite small. The truth is a man of X age with Y education and Z family life makes almost identical wages to a woman with (XYZ) stats.

Now, Uber stats would not need to use Y education as an adjustment factor, but I’m almost positive that adjusting for age and family status (i.e. single, married, with kids, etc) would give an almost flat line.

Then again, you don’t get attention when you publish a study “Uber drivers are paid fairly.”

“women only make 77 cents for every dollar a man makes BUT it’s not for the same work or even for the same amount of work” is a far more complete and accurate statement, yet not one you’re likely to ever see in the NY Times, USA Today, or any other mainstream publication.

And, yes, it’s partly because practically all journalists lack even the most rudimentary understanding of statistics. But, reporting “77 cents” also confirms their biases, and inflates their egos by playing to their “change/save the world” heroic fantasies. Against all that, what chance does mere evidence and logic have?

As for Uber, the hardcore answer would be “Yes, it’s facially neutral, BUT since it produces a disparate impact you should change the algorithm until it doesn’t.”

“Men drive faster, take routes in better locations, and stick with Uber longer, providing them the benefit of experience.”

This is not the definition of a wage gap. It’s an applied effort gap.

    Not sure if driving faster, which they admit is the Steele dossier of the variables, is an applied effort or just a biological reflection of how we’re wired for competitive aggression. Girls just wanna have fun. Guys just wanna win.

In other words. Men are better Uber drivers.

I want these statistics and facts further investigated. Behind the scenes it could be true that having a penis generates higher wages. But what I really must have someone answer is whether having a bigger penis means having a bigger wage. Enquiring minds just want to know the facts.

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