Uber’s Pay Gap Questions the Legitimacy of the Pay Gap Debate in the Gig Economy
As we all know, the gender pay gap is a heavily debated and discussed topic in the labor force, with more and more people calling for a fairer income distribution between the two genders. As heavily debated as the topic is, there is plenty of grey area surrounding it – making it a difficult issue to unpack and understand the extent of.
Uber exists in a unique economic ecosystem, unlike other traditional industries, allowing 5 economists to conduct a first of its kind study – unpacking the ins and outs of the pay gap within Uber. Uber operates in the gig economy, which is a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. Up to 15% of America’s labor force is full time employed and 30% working part time in the gig economy. Of those working in the gig economy about one third are female, and Uber shows the same statistics as well.
The economists writing this paper picked one city to go deep on the data: Chicago, and later saw the same trends when studying Detroit, Houston, and Boston. Their data was recorded from January 2015 until March 2017 and comprised of 1.8 million drivers and over 740 million rides.
They found that men earned a substantial 7% more on average per hour than women. In a traditional industry, such a gap would more than likely be attributed to some form of discrimination and other factors such as inflexible hours and maternity leave; however, that is far from the case here.
Uber’s algorithm for fare calculation is based on the length of the trip, how high or low the demand for Ubers is at the time, and the type of vehicle available, thus making the algorithm wholly gender-blind. On the customer’s end, the rejection rate for drivers male or female is proportionate, and the data shows no preference of either type of driver. As we can see, discrimination accounts for 0% of the pay gap.
The economists found three factors that contributed to the gap:
1. The where and the when: accounting for 20% of the gap
Data shows men targeting more lucrative neighborhoods that pay better whilst women driving in familiar areas. Male drivers are also more likely to take the Friday night shifts to popular bars and night hotspots.
2. Average tenure: accounting for 30% of the gap
The average tenure is heavily tilted in men’s direction. Since men complete about 50% more trips than women per week, their experience as Uber drivers increases substantially faster than the female drivers, leaving them with better knowledge of the most profitable routes and the best hours to work. It was also found that women’s tenure ship as drivers lasts about six months while male drivers average tenure lasts about two years. This larger pool of experience contributes to higher profitability per hour.
3. Number of rides completed per hour: accounts for 50% of the gap
Men are completing more trips per hour. By driving faster, they complete more trips in less time making their hour THAT much more profitable than their female counterparts. How much faster? Data calculated that men drive a measly 2% faster than women – that much can make the difference. Having that in mind, nationwide data confirms that not just Uber drivers but male drivers in general drive faster than female drivers. While this is a good thing in terms of profitability, it is important to note that while females get in more car accidents than men, men get into more fatal car crashes than women.
As a society, we are so used to associating the words “gender pay gap” with the idea of corporations believing that women have a lesser capability than men. We see here that this is not the case, as no level of discrimination is involved at any step of the ride. Instead the pay gap is attributed to gender specific choices that contribute to a lower average pay per hour for women. Instead of pointing the finger and getting angry at large concepts that are heavy to unpack, we should seek the firms in which discriminatory based gender pay gaps exist and work together to break them down. Only through knowledge can we become more progressive and ignorance, in this case at least, is not bliss.
WRITTEN BY @SARA SARHAN FOR BESA
PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT