The internet is awash with news of the filing by five members of the U.S. women’s national soccer team of a complaint with the Equal Employment Opportunity Commission . It turns out that the members of the vastly successful women’s team are compensated at a significantly lower level than their male counterparts on the decidedly less successful US men’s national soccer team.

The question I want to tackle is whether or not the fact of lower pay for the women’s team is indicative of gender discrimination. While I don’t pretend to give an exhaustive or singularly authoritative answer, I will make the argument that it is likely not indicative of the type of discrimination alleged.

Let’s think of an occupation with a clear wage differential but perhaps on a margin other than gender. In the market for computer programmers the wages are much higher in Silicon Valley or Seattle than say Fargo, North Dakota. But hey, the ND programmers are every bit as productive as their West Coast counterparts. It turns out that many occupations have regional labor markets with their own market wages. The market for programmers on the West Coast is very different than that in the Upper Midwest resulting in wage differentials for similar work. Thus, one relevant question is whether or not the market for male soccer players is the same or different market as that for female soccer players?

Let’s turn to a more controversial market, the market for surrogacy. Some individuals find themselves unable to start the family they desire for any number of reasons. One solution is to hire a surrogate to carry a pregnancy for the intended parents. Surrogate mothers are typically paid generously for their services. Is there a gender wage gap in this market? Sure there is; males aren’t employable in this market so the gender wage gap technically favors females. Of course, I am yet to see news of a male suing parents to be over having not been selected as surrogate. This is obviously an absurd example but it drives home the inability to make a claim of gender discrimination if there is, legitimately, a separate market for employment based on gender. Unless we start having women playing on the men’s team or men playing on the women’s team I don’t see how a claim can be made that males and females are participating in the same labor market.

To see why, then, such large wage differentials might arise for seemingly similar employment we need to think about how compensation is for employment is determined in the bargaining and negotiation process.
There are two sides to any employment negotiation. A firm will not hire a worker unless the labor provided by the employee produces a revenue in excess of the cost (wages). Likewise, an employee will not agree to an employment contract unless the wages and non-pecuniary compensation exceed an individually determined threshold (which could come from the next best available employment alternative). When a worker’s threshold is less than the revenue produced for their this creates the possibility of an employment contract being negotiated. Whether the wages contracted are closer to the individual threshold or the revenue brought in by the worker’s labor is a function of the negotiating abilities of the two parties. Regardless, when the two parties agree to the contract one thing is certain. Both parties are better off with the contract than without it.

In the case of men’s versus women’s soccer the key issues are: whether or not there is one market for soccer player’s or two markets distinguished by gender, and the determinates of individual thresholds and revenue generation of males versus females.

While there are likely potential revenue differentials for members of the US women’s national team compared to their male counterparts, I focus on differentials in individual employment thresholds. As it turns out, the U.S. national soccer teams are not the primary employers of either male or female players. Almost all of the players are primarily employed by a club team mostly in either Major League Soccer (MSL) or the National Women’s Soccer League (NWSL).

Salaries for women in the NWSL range from a minimum of $6,843 with a maximum salary of $37,800. That’s hardly enough to make rent let alone live on. Men’s salaries in the MLS range from a minimum of $50,000 per year all the way up to the $7,115,555.67 salary of Sebastian Giovinco. Clearly the women playing in the NWSL would be in a position of weak bargaining power with a clear need of additional income. If the women of the US national soccer team want higher pay, perhaps they should start by working to guarantee the commercial success of the NWSL.

Given the wage differential’s present in NWSL vs MLS, perhaps the 40% pay differential for the US national teams isn’t just fair, but generous. The gender pay gap here is not likely the result of discrimination but is tied to the dynamics of two completely separate labor markets.