The Wider Picture: Basketball, Scandinavia & Gender Politics

12

October, 2018

  • Recent developments in basketball have highlighted the presence of the pay gap between men and women.
  • Are economic explanations sufficient? Or are there other factors at play? If so, what can be done about it?
  • Nordic countries have attempted to combat this with a number of initiatives, with both unexpected and expected outcomes.

‘There is even a case that WNBA players are actually overpaid relative to consumer demand, as the league is subsidised by the profits of the men’s league in order to provide the necessary revenue to keep it functioning.’

 

In the wake of basketball icon Lebron James officially signing a $154 million contract with the Los Angeles Lakers, the debate on gender pay inequality has been rekindled.

“154M… must be nice.” was a tweet sent by Women’s National Basketball Association (WNBA) rookie dynamo A’ja Wilson, who went on to describe how her colleagues struggle to earn one million dollars while their male counterparts continue to be given significantly higher salaries. Wilson was drafted as the number one overall pick in the 2018 WNBA draft, and will earn $52,564 this season, whilst the lowest paid bench player in the entire NBA will earn $582,180, over 11 times that of the likely future WNBA superstar.

The definition of “gender pay gap” is controversial in itself, but for the purpose of this article we will define it as “the average difference between the remuneration for men and women who are working”. The gender pay gap is not limited to the basketball microcosm. A 2017 Pew Research Center analysis of median hourly earnings of full-time and part-time workers found that women earned 82 percent of what men earned on average.

 

Source: Pew Research Center 2017

The debate instead lies in the possible reasons for the existence of this gap. Recently departed WNBA president Lisa Borders does not agree with the argument that this marked pay disparity is due to a large discrepancy in skill set between the genders but instead believes that the cause is rooted in sexism. “Let’s be clear, there is a lot of sexism that still goes on,” Borders told Forbes in an interview last month. “People do not believe that women can be superb professional athletes.

Analysis undertaken by the Pew Research suggests gender discrimination remains one of the most commonly reported causes of the gender pay gap. Pew Research Center in 2017, where 42% of women claimed to have experienced gender discrimination at work, compared to 22% of men who said the same. One of the most commonly reported discrimination was earnings inequality. One in four employed women reported that they have earned less than a man who was doing a similar job; just 5% of men said they have earned less than a woman doing a similar job.

While, Wilson, Borders and others question why earnings inequality exists, economic theory does provide an interesting explanation to events. Neoclassical economic theory suggests that wages are determined by supply and demand factors, and workers should be paid a wage equal to their marginal revenue product of labour (MRPL). MRPL can be defined as the additional revenue gained from employing an additional worker and is also equal to demand. To use the WNBA as an example. the revenue each player brings in is the basis of their wage, and the lack of demand for female basketball is why female players aren’t bringing in enough revenue to justify higher wages.  On the diagram below, D1 would represent the demand of the WNBA while D2 would represent the demand of the NBA. This leads to differing wages, W1 for WNBA players and W2 for NBA players.

 

Source: Economics Help

The WNBA playoffs averaged 224,000 viewers per game compared to the 17.7 million viewers per game the NBA playoffs averaged. There is a vast difference between the total revenue of the NBA ($7.4 billion) and the WNBA ($25 million) and this is reflected in the given wages. If the WNBA paid the same average wage to their players as the NBA does ($6.2 million per annum) then they would not be able to field a single team of five players without making a significant loss. In fact, there is even a case that WNBA players are actually overpaid relative to consumer demand, as the league is subsidised by the profits of the men’s league in order to provide the necessary revenue to keep it functioning.

Moving away from the sports sector, there are several economic arguments which provide explanations for the pay gap between the genders. According to the 2015 American Time Use Survey by the U.S. Bureau of Labor Statistics, on average, men work for longer hours than females and are more likely to hold full-time positions. Therefore, men will be paid for more hours of work and earn more as a result. Also, research released by the Chartered Management Institute shows there are more males in senior positions which have higher wages and women are more likely to enter low paying gender-typical occupations such as cleaning, caring and clerical roles.

However, these explanations raise further questions, such as why are these situations are so common? Why do fewer people watch female sports? Why are there more men in senior roles? Why do women opt for lower-paying jobs? A common answer is that gender roles mould the thoughts of most of us to the extent that both genders are subconsciously programmed to be more suited to certain positions while both men and women do not like to see women in unconventional roles.

Nordic countries have focused on changing numerous policies in order to alleviate these issues. Generous mandatory paternity leave in combination with maternity leave and post-maternity re-entry programmes have been brought into place. The combination of these policies has lowered the opportunity costs of procreation, led to rising birth rates, and eliminated the drawback of hiring young women who were likely to want to start families. These countries have also succeeded with policies which promote women’s leadership. In Norway, since 2008, public firms have been required to employ at least 40% of each sex for their executive boards.  Nordic countries achieved 99%+ literacy rates for both sexes, while females and males have equal levels of access to primary and secondary education. The education gender gap has been reversed and women now make up the majority of the high-skilled workforce which contributes to the reduction in the pay gap.

However, these initiatives have not been completely successful. Norway, described as the leading country for gender equality by the World Economic Forum, has experienced the phenomenon known as the “Norwegian gender equality paradox” where gender-segregated labour markets persist in gender equality-oriented welfare states. According to a 2016 study, in countries with higher levels of gender equality women still avoid high paying fields in STEM (Science, Technology, Engineering and Mathematics), despite the presence of the aforementioned policies. Curt Rice, the head of a government-appointed Committee for Gender Balance and Diversity in Research in Norway, suggested that issue starts at a much younger age. Rice said, “To change this, we have to start working toward better nuances in gender roles starting from kindergarten”

The Norwegian example shows the ingrained disposition society may have to accept conventional gender roles and practices. As the example of the WNBA showed, there are cases where economic reasoning can provide an explanation for gender pay gaps, however we must understand that there are deeper questions which must be asked to fully grasp why women are paid less in our economy and, as the Nordic countries have begun to, take prolonged meaningful steps to address this issue.

 

Written by Tale Ajerio. Edited by Abdi Buwe.

Warwick Congress Blog

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