The Uber Pay Gap

August 31, 2019
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Author: Tyran Saffold Jr

The gender pay gap has been an issue ever since the early 20th century, but chief financial officers have taken steps to create greater gender parity. In 1980, for example, women ages 25-34 made 67 percent of what their male counterparts made. There has been a slow and steady decrease since then. In 2017, women made 89 percent of what men did for that year. Even with the improvement, it would still take almost a month and a half for women to equal what men earned for the year.

Uber Wage Disparity

Uber attempted to use artificial intelligence to eliminate the pay irregularity—but the results were not what they hoped for. Although the gap closed by 5 percent, the study found that female drivers still ended up making 7 percent less than their male co-workers—even with gender-blind algorithms in place.

A Closer Look

The study, led by economists, scrutinized data from more than 1.8 million drivers and 740 million US Uber trips between January 2015 and March 2017. It found that AI somewhat decreased the gender pay gap but could not eliminate it altogether.

The five economists, including three employed by Uber and two Stanford professors, came up with three factors that influenced the pay gap:

• Experience. The lack of it, for female drivers, accounts for 33 percent of the gap. Drivers with more trips earn more than those with fewer trips. Generally, since men have longer tenures on the Uber platform, on average, they receive more driving experience than women. In addition, 77 percent of women quit the platform after 6 months, compared to 65 percent of male drivers.

• Driving speed. This makes up 50 percent of the difference. Men drive faster and that, in turn, equates to more trips per hour.

• Work time variations and routes. Work shifts and driving routes make up the final 17 percent of the gap. Men generally work shifts when surge pricing is in effect. This allows men to earn more per trip. Uber automatically institutes surge pricing when there are more riders than drivers in a given area.

One of the economists, John List, spoke during a Freakonomics podcast, “I thought the findings would show equal, or close to equal pay,” he said. “If there was a difference, I think the pay gap would slightly favor women for two reasons: I knew they had worked fewer hours per week so they had a chance to cherry-pick the better hours and two, I was thinking that riders would prefer female drivers to male drivers.”

The gender pay gap continues to be a difficult issue. However, if progressive companies continue to employ different methods to close the discrepancy, the market should eventually provide a viable solution for all.