Were the members of the World Cup champion women's soccer team underpaid?

The top line numbers are hard to dispute: the women's team is much more successful than the men's team and they are paid a lot less.  If pay equity decisions revolve around the principle of "equal pay for equal work," this is an open and shut case.

I spent some time recently trying to dig deeper into the question to see if there is a rational economic explanation.  Here is a quick look at the key determinants of pay for the men's and women's national soccer team:

1) Performance: Easy comparison here because the men did not even qualify for the 2018 World Cup and received no prize money at all.  The women's team received $4m for winning the cup.

2) Pay method: Women earn a base salary plus bonuses for wins in qualifying and World Cup matches.  Men get per-match bonuses for being on the active roster but they receive no base annual pay.  WP did a simulation to see what would happen under a range of win-loss scenarios.  Under a median 20 game scenario, if they both won the same number and type of games, women would receive 11 percent less than men.   Pay would be equal in only one scenario: if both teams played 20 matches and lost every match.

3) Revenue: In pure economic terms, product demand has a critical role in salary determination.  That is why the Rolling Stones will make more money than Sleater-Kinney (an all-women's band for those not in the know) for playing the same number of concerts in the same arenas, even if Sleater-Kinney has made better music over the last 20 years.   If the women's team generates more revenue than the men's team in friendly matches and tournaments outside the World Cup, that will make the pay discrimination claims much stronger.  Half of the revenue for the US Soccer Federation comes from sponsorships.  It is impossible to determine whether the women's or men's team has been the main driver of this revenue source.  As for dollars generated by paying customers at matches, the answer depends on timing.  If you include 2014 (when the men participated in the cup), WP reports the men come out $11m ahead.  If you start in a later year and include 2019, the women have generated more revenue.  Lawyers on both sides will have lots of fun making arguments here.

4) Collective bargaining: The pay scale for each team is set through separate collective bargaining agreements.  Some have argued that the women would be well served by taking a stronger stand in the next round of bargaining.   Others would argue that they should not have signed off on an agreement where lower pay is basically baked in.

Bottom line: the women should not have to depend on winning the World Cup to obtain pay equity.  The disparity in the pay scales that is built into the collective bargaining agreements is the strongest argument the women's team has in its favor.  General Motors and the UAW could not legally have one pay scale for women and another for men doing the same jobs.  My guess is that US Soccer will either settle out of court or come up with a new collective bargaining agreement before this case appears before a judge.

Affirmative action in the news

This week the Supreme Court heard arguments in a reverse discrimination case brought by a white female who had been denied admission to UT-Austin.  No doubt because the issue is once again in the news, Weekend WSJ ran a lengthy piece on recent research on the impact of affirmative action by a UCLA law professor who also happens to be an economist. 

As someone who entered college at a time when there were very, very few African-Americans on campus, there is no question that affirmative action has literally changed the face of higher education.  But being admitted to a great school under special preferences often be a mixed blessing.  The WSJ piece focuses on "mismatch" issues where the admitted student is significantly less prepared than most other students at a school.  The key finding:

There is now increasing evidence that students who receive large preferences of any kind—whether based on race, athletic ability, alumni connections or other considerations—experience some clear negative effects: Students end up with poor grades (usually in the bottom fifth of their class), lower graduation rates, extremely high attrition rates from science and engineering majors, substantial self-segregation on campus, lower self-esteem and far greater difficulty passing licensing tests (such as bar exams for lawyers).

The authors call for more transparency in admissions decisions and a sharply curtailed role for affirmative action.  I am sure WSJ will get letters pointing out that colleges still have a way to go to truly represent the full range of diversity we have in our society.  Tough issues, no easy answers.