Robert Frank: A British reader posted the following query on my UK publisher’s web site: “Why do tube drivers get paid so much more than bus drivers?”
An American economist trying to field questions about markets in the UK operates at an obvious handicap. Market outcomes hinge on myriad facts on the ground, and having never lived in England, I’ll often be completely ignorant of many of the most relevant ones. But since the spirit of the economic naturalist exercise is to come up with plausible hypotheses suitable for further testing, I’ll forge ahead, taking inspiration from the retired American tennis legend Jimmy Connors.
If Connors had a glaring weakness, it was his serve. Even his first serve would be considered a weak second serve by the standards of today’s men’s game. Connors knew it wasn’t an offensive weapon, so he just rolled it in, hoping that good things would happen once the point got under way. And that strategy worked well enough. I’ll try a similar one here.
I have no idea why tube operators earn more than bus drivers. But the general question of why some jobs pay better than others is one that economists have studied extensively. So I’ll make a few general observations about some of the most important sources of wage differentials and invite others to share their views.
The price of labor, like the price any good or service, is determined by the interplay of supply and demand. On the demand side, the employer’s rule of thumb is to hire an additional worker if that worker will generate at least enough extra revenue to cover his salary. On the supply side, the worker must decide whether accepting a particular job at a given wage would be at least as attractive as any other available alternative, including the option of not working at all. These general observations suggest several possible explanations for wage differentials between seemingly similar jobs.
One is that potential employees may regard working conditions as less attractive in one job than the other. In that case, the first job would have to pay more or else no one would choose it. For example, when all other relevant factors are equal, risky jobs tend to pay more than safe ones.
But the higher wage for tube operators is unlikely to reflect compensation for risk, since driving a bus is actually much more risky. Many studies, for example, document the stress-related health problems that are common among bus drivers whose routes entail heavy urban traffic. If the observed wage differential is rooted in some difference in working conditions, a more promising candidate might be that jobs in dark underground spaces are considered generally less attractive than those that can be performed in broad daylight.
Another possibility is that for every job opening in each category, there are fewer potential candidates qualified to be tube operators than there are to be bus drivers. This explanation also sounds promising, since most people who can drive a car could be trained to drive a bus relatively quickly. A final possibility I’ll mention is that wages would tend to be higher for tube operators if for some reason they were represented by a stronger union. I look forward to hearing your thoughts about which, if any, of these possibilities seems most promising.
Robert Frank’s latest book, The Economic Naturalist’s Field Guide: Common Sense Principles for Troubled Times, was published last month.