Nothing better reveals common misconceptions regarding the working of markets — in this case labor markets — than complaints of someone being “underpaid.”
To wit, the absurd controversy over the supposedly unfair compensation for the World Cup-winning U.S. Women’s Soccer Team, more precisely, the accusation that the male-female soccer pay disparity is evidence of sexism.
That people actually believe such twaddle tells us something about both human credulity and economic illiteracy.
First off, in market economic systems, wages (and prices) are determined by supply and demand. Your labor in the labor market is worth what others are willing to pay for it, nothing more, nothing less. And what they are willing to pay for reflects an assessment of how easy you and your skills are to replace.
Although just about everyone thinks they’re paid less than they should be, the truth is you are only underpaid if there’s someone other than your current employer who is willing to pay you more for doing what you’re currently doing. If so, you can either take your labor to that other employer or use their offer as leverage in negotiations for a pay increase with your current one. If not, you more than likely earn what your expertise and effort suggests you should be earning and should be thankful to be gainfully employed in that fashion.
For my part, I think political science professors at small private liberal arts colleges should be paid a lot more than they are, perhaps two or three times more, given the presumed importance of higher education. Alas, the market in its superior, more objective wisdom disagrees. Which is another way of saying that what you or I think about such matters doesn’t matter; we aren’t the one cutting the checks.
Point two, and more directly relevant to the U.S. Women’s Soccer Team, compensation levels are directly tied to the generation of profits for the employer. The wage we are paid is the result of a continuing estimation of the value we bring to the enterprise, defined as addition to the profit margin thereof. If we add little or nothing to the bottom line, our own bottom line becomes imperiled by a pink slip; if we continue to add more over time, we are rewarded with raises and promotions intended to keep us happy where we are.
In the case of women’s soccer, the central factor influencing compensation levels is the revenue generated by women’s soccer, which by all accounts is a minuscule percentage of what men’s soccer generates (The 2018 men’s World Cup generated $6 billion, this year’s women’s an estimated $130 million, with prize money for the players coming out of this pool).
Within this context, it was amusing to see those arguing that women soccer players are underpaid because of sexism actually mention in passing this revenue disparity only to then file their grievance as if they hadn’t already said everything about the topic that needed saying, as if that revenue disparity was only a tiny asterisk rather than the central explanatory variable.
In short, female soccer players earn a great deal less than male soccer players for the same reason female basketball players in the WNBA earn a great deal less than male basketball players in the NBA — the massive difference in the levels of popularity of women’s and men’s versions of the sport.
Finally, what the women of the U.S. Women’s Soccer Team earn is a direct consequence of the contract negotiated by their representatives to whom they gave their voluntary legal consent, with that contract the best deal they could get given the revenue pool from which compensation comes.
As John Hirschauer succinctly put it, “If the women’s team is unhappy with this arrangement, it is not the fault of the United States, the American flag, Donald Trump, or some distant cabal of sexist white men scheming to stick their thumbs in the face of Megan Rapinoe. It is the fault of both the women’s union representatives and the women themselves for signing an agreement that they were unhappy with. If they didn’t like the terms of the agreement reached by the collective bargaining process, the women’s team was well within its right not to sign it. However, alas, they did sign it. Doesn’t that matter?”
It is entirely possible that women’s soccer will continue to gain in popularity vis-à-vis men’s soccer, particularly if the American women continue to be more successful in international competition than their male counterparts. In which case the revenue generated by women’s soccer will likely go up and the players union will have the ability to increase player compensation by getting a more lucrative collective bargaining agreement, thereby further reducing the male-female pay disparity.
But the key point in all this is that it will be a consequence of market forces, in the same way that current pay scales are, not sexism or any reduction thereof.
So a suggestion: The next time you hear some pundit or pandering politician bemoan the unsatisfactory pay for women’s soccer players, ask them how many tickets they bought to women’s soccer games last year.
There you go.
Freelance columnist Bradley R. Gitz, who lives and teaches in Batesville, Arkansas, received his Ph.D. in political science from the University of Illinois.