Equal Pay at Wimbledon?

There is a controversy over the fact that the men's champion at Wimbledon will receive more prize money than the women's champion. However, the economic arguments behind the discussion of calls to equalize the prize money are based upon a labor theory of value, an economic argument that was discredited long ago:

Wimbledon, Women Test Equal Pay for Equal Play, by Scott Soshnick, Bloomberg: Odd as this might seem, it would be easier to cheer on female tennis players demanding equal prize money at Wimbledon if things were actually equal.

As things stand, however, I must disagree with Serena Williams, her sister, Venus, and Lindsay Davenport, who are among those demanding the same reward for the Gentlemen's and Ladies' champions... Equal pay should stem from equal work. Call me old- fashioned or worse, but fair is fair.

This year's men's champion will receive $1.2 million. The women's winner will get about $1.13 million, about $70,000 less... For some reason, those who support the idea of equal pay are quick to discount the fact that women play best-of-three-set matches while the men endure best-of-five sets.

It can make a difference. Hours of difference, hours of sweat equity, really. Though seven-time Grand Slam singles champion John McEnroe favors equal pay, he agrees with the assertion that men do more work. ''There are amazing men's matches that can be so long you say, 'How in the world can you say there should be equal pay,''' the NBC broadcaster says. ...

Here's the counter argument:

''We work just as hard as the men,'' says Kim Clijsters, the world's No. 2-ranked women's player and U.S. Open champion. ''There is a big strain on the body.'' ...

What's Fair?

''I don't think that it's fair the women get paid the same as the guys,'' says Andy Murray, Britain's No. 2 player. ''If you look at it, the guys have the potential to play a 5 1/2-hour match.''

Advocates of equal pay are fond of citing television ratings to buoy their argument.

Yes, it's true that last year's Venus Williams-Davenport Wimbledon final drew more viewers in the U.S. than the Roger Federer and Andy Roddick championship match. More British TV viewers also chose to watch the women.

Such an argument is shortsighted because, among other reasons, the game's popularity is cyclical. There was a time, and it will come again, when the male players are the bigger television draw.

One year Federer is all the rage and then it's tennis player-Sports Illustrated swimsuit model Maria Sharapova, some of whose audience is only marginally interested in her backhand.

Three Versus Five

Not only that, but female players can't discount the number of commercials a television network shows during a five-set match compared with three sets. More commercials mean more revenue...

So let's get this straight. ... The women are on par with the men. They're on par in every meaningful way. They pack stadiums. They draw a TV audience. They sell the game. The only difference is how long they play.

When that changes everyone should stand alongside the Williams sisters and clamor for equal pay.

The idea that equal hours justifies equal pay is wrong. I could spend months working on a painting, an actual artist could spend an hour, and when we were done my hours and hours of work would surely be less valuable than a few strokes from the artist unless someone had a curious taste for really bad art. Are grades based upon how much time you spend studying? Students sometimes make that argument (I worked really hard for the test) but the grade is based upon the output of the process, the score on the exam, not the amount of input (for fun, try answering the student with: you're an economics major, why should inefficiency in the form of long hours on the input side with little to show for it on the output side be rewarded? Similarly, why should McEnroe get paid more than women if he works harder like he says but has less viewers to show for it?). The value of inputs - laborers, plastic, wood, tennis players in tournaments - is determined by the demand for the product they produce. When demand for the product increases, the demand for inputs increases, and compensation rises. Compensation is not based upon how much time and effort goes into production - if nobody wants the product, then nobody will pay for the labor.

What is the product here? They are selling entertainment and compensation to inputs is based upon the added entertainment value provided by men and women players. It doesn't matter if people come to the stadium or tune in on TV to watch tennis or a swim suit model, all that matters is that they watch. The argument that tournament sponsors can sell less adds during women's matches stated above is relevant as that affects revenue, but if the ads are more valuable because of higher viewership, its not necessarily the case that compensation should fall. It's interesting that when confronted with higher viewership for women's matches, the writer argues that men should be paid more because "There was a time, and it will come again, when the male players are the bigger television draw."

In a competitive market, this wouldn't be an issue. The reason there is any dispute at all is because the players have monopsony power on the input side, and tournament organizers have monopoly power from their side of the prize money negotiation. When a monopsonist meets a monopolist (e.g. GM versus unions), there is no necessary outcome since both sides have negotiating power. The outcome will depend upon the relative power of each side in the negotiation and that, it seems, is really what is at issue here.

Comments

[Nelson]

If they were really equal then they wouldn't have to divide the tournament by gender.

[crack]

The problem is that the compensation isn't based on drawing power, its based on who wins. If an ugly no-name who plays a particularly repugnant brand of tennis beats the super-draw supermodel super star the no-name gets the money.

If every year you base the purse on receipts by gender (splitting the broadcast rights and such as necessary) that's the best you could hope for, but your then letting the value that a TV exec perceives become the most important factor. As long as that isn't a problem, then by all means go for it.

[realpc]

I agree, and the same can be said about low-skill wages. But I do feel compassion for those poor female players -- only $1.13 million! It breaks your heart.

[BAWDYSCOT]

crack,

The ugly no-name doesn't always get the money(though they do in tennis), I put forth boxing as an example. Many times the champion, and usually the big draw, will get the purse he was promised even if he loses to the no-name. In this case the no-name makes significantly less than the champ.

[realpc]

I don't understand why this same logic is not applied to minimum wage. You want to pay workers based on their time and their needs, rather than demand.

Maybe that explains the illegal immigration problem.

[BAWDYSCOT]

Isn't demand part of the supply/demand equation. Maybe the corner drugstore would care about the minimum wage clerk's needs, especially those kindly old pharmacists, but is it reasonable to expect a huge corporation to cater to all of it's employees many needs?

[tom s]

I'd never thought of what crack points out -- the conflict between the value of the entertainment and the winner of the competition. To follow up Bawdyscot, for a while I think Anna Kournikova got more money (albeit through sponsorhips) than those who beat her in tournaments.

As for the other stuff. Absolutely right - this is obviously nothing to do with who works the hardest. It's not even to do with whether men or women are better tennis players. And that's why the women will probably get their even pay, even at Wimbledon, sooner or later.

[Blissex]

«When a monopsonist meets a monopolist (e.g. GM versus unions), there is no necessary outcome since both sides have negotiating power.

Within a ''diamond'' area... there upper and lower limits on the feasible band for both. Now you are trying to simplify matters, but I believe that the ''diamond'' and ''band'' details are very very important. I remember the first time I saw a demand/supply curve diagram I could hardly contain my mirth, and I was a starry eyed naive little kid :-) (actually I never was ;->).

«The outcome will depend upon the relative power of each side in the negotiation and that, it seems, is really what is at issue here.»

But that is to some significant degree the story in almost all markets, there is nearly always a non-zero (and significant!) area of ''admissible price region'' where the demand and offer ''bands'' cross, and where the specific outcome is determined by negotiation and that is studied by game theory etc.

I have indirect proof! Years of careful observation have allowed me to discover that companies hire and compensate salesmen and hire and compensate buying agents :-). Even more amazing, if you walk over to the business school or whatever you got at UO they have courses on handling negotiation, and curiously not just for monopsony/monopoly cases. Fools or do they know something that economist don't? :-)

OK, I am being a bit unfair here to Mark -- I am being humorous about the whole scammy profession, and he gets collateral damage.

[johnchx]

Mark wrote: "The outcome will depend upon the relative power of each side in the negotiation and that, it seems, is really what is at issue here."

What troubles me about this formulation is that it borders on tautology: the side with more bargaining power will get more...and we can determine which side has more bargaining power by observing who gets more.

In this case, we are implicitly claiming that the women (by which I mean to include the individual players, the players' association, and -- if it takes a position on this at all -- the WTA tour) have less "power" than the men (by whom I mean the corresponding line-up) when bargaining with the All-England club. But for some reason, the two groups have *exactly the same* bargaining power when they bargain with the sponsors of the Australian Open, the French Open and the U.S. Open (because those tournaments pay the women and men alike).

My own view is a little different: the All-England club has a "taste" for discrimination. That is, it is willing to pay a price (a little bad publicity -- this issue comes up every year -- some ill-will, and perhaps a tiny risk of a player or fan boycott) in order to discriminate against the female players. But, of course, businesses don't really have "tastes" per se, but rather reflect the (perceived) tastes of their customers.

An important element of the "branding" of Wimbledon -- and a key differentiator from the other three majors -- is the All-England Club's emphasis on "tradition." That's why it still insists on the all-white dress code. It's only recently that players stopped curtseying to the royal box. And it's the only major tournament to pay women less. ("How quaint! Just like in olden days...")

Wimbledon is a chance to dress up and pretend that it's still 1922. Creepy.

[anne]

Well argued, John :)