What would you think if I told you that the key to making more money is to work faster? You’d probably say that in a post-industrial, over-supplied economy, quality is more important than quantity, right? Right… and also wrong.
Economists at Uber, the University of Chicago, and Stanford Graduate School of Business were surprised to discover that, on average, the rideshare platform paid female drivers 7% less than it paid male drivers.
Harvard’s Professor of Economics Claudia Goldin had claimed that the gender pay gap is heavily influenced by women’s preference for what she’d called “temporal flexibility.” That effect, the researchers thought, would disappear in the gig economy, which allows people to work when they prefer – and their analysis of Uber data would prove it.
But it didn’t. Something else had to be at play.
Gender discrimination was out of the question, since the algorithm that matches drivers and riders and pays for completed trips doesn’t take into consideration whether a driver is female or male. So, the researchers weighed out all the other potential factors causing the pay disparity.
They looked at how drivers make money at Uber and identified the three variables that most strongly influence revenue generation: where and when the driver picks riders up, how many trips the driver has completed, and how fast the driver drives. ‘When-and-where’ was found to account for 20% of the gender pay difference, ‘driver experience’ for 30%, and ‘speed’ for 50%.
Where and when
The researchers found that certain rides were more profitable than others, and, on average, men were doing more of these than women. For example, men completed more trips to the airport and started their shifts in neighborhoods where more profitable trips where likely to occur.
In sum, male drivers were more strategic about where to drive, which led them to complete more trips that generated higher revenues for themselves.
Although the ‘when’ did have an impact on revenue generation, the study found that female drivers were also making smart choices in this aspect. For example, the data revealed that there are fewer drivers available on Sunday afternoons, and those drivers tend to be female. A shorter supply then triggers the price surge that allows drivers to earn more money.
The researchers therefore concluded that the ‘when’ didn’t affect the pay gap, proving that “temporal flexibility” is not penalized in the gig economy. But the ‘where’ did.
Returns to experience
The data revealed that drivers kept learning until they’d completed 2,500 trips–the equivalent of driving 8-hour shifts, breaks excluded, five days a week for seven months.
In every position there are certain things you can only learn by doing. Some critical skills you’ll only acquire once you’ve done whatever it is that you do a number of times. It all comes down to exposure and repetition: the actual number of hours flown, classes taught, phone calls made, pitches delivered, or M&As completed, matter. And not only because through repetition you hone and master your flight, teaching or advising skills, but because you’ll generate insights that’ll make you more strategic in your approach to work.
For Uber drivers, the skills learned went beyond learning how to drive. With experience, drivers became more efficient: they better chose where and when to drive and were more selective about the trips they accepted.
They also became more effective: they were able to take the riders to their destinations quicker–which surely increased rider satisfaction, and, potentially, led to higher ratings.
That job-performance savvy, or know-how, was at the root of their making $3 more per hour than a beginner made.
The researchers also realised that male drivers drove, on average, 20% faster than female drivers. That extra speed, they found, accounted for 50% of the pay difference between men and women.
For cab drivers, driving faster means collecting more base fares in the same period of time, which results in more money at the end of the day. And because drivers finish each trip in less time, they’re able to complete more trips per hour, which entails more experience and hence, accelerated learning.
Having learned more in less time, faster drivers become more efficient and effective sooner and hence, their revenues spike up earlier. For this reason, they’re more satisfied with their job, and stay on the platform longer, which in turns makes them more experienced and savvy over time. And the cycle goes on.
Work faster, learn more, make more money
When the economists looked at the attrition rates at Uber, they found that turnover is higher among women, resulting in a larger pool of experienced male drivers. As a consequence, the two groups whose earnings were being compared were that of more experienced drivers – incidentally, male – against that of less experienced drivers – incidentally, female.
Both male and female Uber drivers pick up, transport, and drop off riders, true, but we can’t say the work is 100% equal.
The difference, the study showed, lay in three aspects:
- Productivity: faster drivers completed more trips in less time, generated insights that made them 1) develop better strategies and 2) become both more efficient and effective
- Level of proficiency: more experienced drivers earned up to $3 more per hour–not because they got a salary raise but because they were more efficient and effective in their work
- Strategy: where each group chose to work determined the fares collected per trip
And productivity, derived from working fast, is at the top.
Lessons for women in other work environments
Striving for perfection will only hinder you. Instead, strive for progress. Produce quickly, get feedback, generate insights, and produce again.
Amass mistakes, rejections, and criticism, and learn from them. And then draw your own conclusions and design your strategies.
Choose where you want to work and then put in all the effort to succeed. And persist until you do – quitting will only slow down your learning curve.
Carolina Perez Sanz joined Templar in 2017, bringing with her 20 years of diverse, international experience as a communications consultant. Carolina is fluent in Spanish, Portuguese, and French. She holds a PhD in Linguistics from the Complutense University of Madrid as well as an MS in Public Relations and Corporate Communication from New York University.