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Thursday, April 4, 2019

Uber’s Gender Pay Gap: 3 Factors That Explain It

Equal Pay Day for female Uber drivers occurs on December 31, and not three months later on April 2.

Image Credit: Quote Catalog

In February 2019 I wrote a CD post “New research on nearly 2 million Uber drivers finds a gender earnings gap of 7% even in the complete absence of gender discrimination” based on the NBER research study “The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers.” My conclusion to that post:

We’re just several months away from the next Equal Pay Day on April 10, when we’ll hear lots of noise from the gender activists and feminists about a 20% gender pay gap and how that forces a typical woman to have to work until the second week of April to earn what her male counterpart earned in 2018. An underlying assumption behind Equal Pay Day is that the 20% gender pay gap is mostly due to gender discrimination in the labor market, which can only be “fixed” by some type of corrective action via government policies.

The Uber study above provides strong statistical support to challenge that assumption by uncovering empirical evidence of gender earnings differences among Uber drivers that have nothing to do with gender discrimination and everything to do with gender differences in work preferences and experience. And since the researchers suggest those gender differences in preferences are pervasive throughout the labor market, it’s likely that much of the overall 20% gender earnings gap nationally can be explained by those differences in gender preferences and not gender discrimination.

According to the Uber study, once you control for gender differences in preferences, men and women, at least Uber drivers (and by extension to the workforce at large), are paid exactly the same. And that means Equal Pay Day for female Uber drivers occurs on December 31, and not April 10. But that doesn’t make a very good story…..

That research on Uber drivers is being revisited today just in time for Equal Pay Day by Marketwatch in an article titled “The gender pay gap applies to Uber drivers too,” here’s the opening:

Men make more than women in their side hustles. On Equal Pay Day, April 2, the disparity between women and men’s pay doesn’t stop at the office or factory floor. Women Uber drivers earn 93 cents on the dollar compared to men, according to a recent study distributed by the National Bureau of Economic Research.

By featuring this study on a bogus holiday based on statistical inaccuracies and falsehoods about gender discrimination being the driving force behind gender differences in earnings, with a headline that implies gender disparities in the earnings of Uber drivers are probably the result of sex discrimination that exists in most labor markets, the article reinforces a statistical myth about “80 cents on the dollar” that just won’t die, see my recent posts here and here. Here’s the key takeaway and conclusion of the article:

The authors found that the gender gap is caused by three factors: How long they’ve been driving on the platform, preferences over where/when to work and 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,” the authors concluded.

To repeat what I said above, the Uber study finds that once you control for gender-based differences in preferences, there are no gender-based earnings disparities and there is no gender discrimination in the ride-sharing market. And that means Equal Pay Day for female Uber drivers occurs on December 31, and not three months later on April 2. But that doesn’t make a very good story…..

This article is republished with permission from the American Enterprise Institute. 

  • Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.