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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