What Uber and the Ridesharing Industry Can Teach About the Gender Wage Gap Myth

Our economy is evolving in such a way where there is an increase of positions in which companies contract with independent workers and freelancers for short-term engagements. This phenomenon is known as the "gig economy." One of the main features of the gig economy is that these contracted positions give workers flexibility in their work-life balance. Economists were hoping that the gig economy could help eliminate the wage gap. However, that might not be the case. Last month, five economists released a study entitled The Gender Earning Gaps in the Gig Economy: Evidence from Over a Million Rideshare Drivers (Cook et al., 2018). 

Instead of the wage gap being non-existent, the study found that there was a wage gap of 7 percent. The other interesting part of the study was that the wage gap in the ridesharing industry had nothing to do with gender discrimination, which is all the more significant considering that the algorithm and the dispatch are gender-blind. The study found that the wage gap is due to three factors: experience on the platform (learning-by-doing), preferences of where and when to work, and preferences for driving speed. Male Uber drivers work more, they are more likely to drive in areas and times in which pay is higher, and they drive 2.5 percent faster than female Uber drivers.

The study is significant given that the sample size is 1.9 million Uber drivers and nearly 2 billion ride-sharing trips. This study provides statistical evidence that there is a wage gap without gender discrimination. However, these findings are confined to one market. As fascinating as these findings are, we cannot say that there is a lack of a wage gap based on gender discrimination....at least not with this study alone.

I wrote on this topic five years ago. Although it was five years ago, my general conclusion about the wage gap remains the same: there are other factors that account for the wage gap. Men work longer hours, men are more attached to the labor market, there's a discrepancy in occupational hazards, and there is a discrepancy in the choice that men and women in job selection. As the American Enterprise Institute pointed out in August 2017, when factoring these considerations in account, the gender wage gap is all but nonexistent (also see Blau and Kahn, 2016; Furchgott-Roth, 2016). These findings are not confined to the United States. A 2016 study from the Hay Group compared across 33 nations, and found that the when looking at an apple-to-apple comparison with the same level, company, and function pay gap, the wage gap on a global level is only 1.6 percent.

The Uber study is additional evidence that the gender wage gap is more myth than anything else. Let's just remind ourselves of that fact when Equal Pay Day comes around on April 10th.