Best New Ideas in Money

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Cindy Parlow Cone: I kind of thought naively that, "Okay, I'm for equal pay. I am going to get this done really quickly." But it didn't happen that way, unfortunately.

Stephanie Kelton: Welcome to the Best New Ideas in Money, a podcast for MarketWatch. I'm Stephanie Kelton. I'm an economist and a professor of economics and public policy at Stony Brook University.

James Rogers: And I'm James Rogers, a financial economist at MarketWatch.

Stephanie Kelton: Each week we explore innovations in economics, finance, technology, and policy that rethink the way we live, work, spend, save, and invest.

James Rogers: Today, we're starting the show back in 2019.

Speaker 4: For the fourth time, the United States of America are crowned champions of the world, and for the very first time they've done it on European soil.

James Rogers: That's the sound of the US women's national soccer team winning the last World Cup. After a month long tournament in France, the defendant champion US team defeated the Netherlands 2-0. As FIFA president Gianni Infantino began to award the medals, a chant broke out.

Stephanie Kelton: The US women's national team players have won four world cups and four Olympic gold medals. This year, right now, you can tune in as the team goes for a record three consecutive World Cup wins. The men's team hasn't managed a victory in a top competition yet, but where they had always come out ahead was in compensation. That's what led five players on the women's team to file a complaint against the United States Soccer Federation over pay. Here's one of those players, Carli Lloyd, speaking on the Today Show after the filing.

Carli Lloyd: I think that we've proven our worth over the years just coming off of a World Cup win and the pay disparity between the men and women is just too large and we want to continue to fight.

James Rogers: That was back in 2016, and the legal action didn't stop there. It continued up until last year when the federation agreed to pay a $24 million settlement and a new collective bargaining agreement that included equal pay for the men's and women's teams.

Stephanie Kelton: This episode we're diving into how the world's most winning women's soccer team scored a different kind of victory and the impact their fight for equal pay made off the field.

James Rogers: Naturally, the best way to introduce our guests for this episode is with a goal. It's the 1999 World Cup. The US is playing Nigeria in their second game. Brandi Chastain meets Tiffeny Milbrett's cross with a dive in header, sending the ball back across the face of the goal where Cindy Parlow Cone meets it with another diving header into the back of the net.

Stephanie Kelton: The team won that World Cup and Cindy Parlow Cone went on to a long career in soccer when she's continued after her retirement as a player. In 2020, the National Soccer Hall of Famer became the first female president of the United States Soccer Federation. When she took on the role, Cone's priorities included improving US soccer's efforts to take meaningful action in the diversity, equity, inclusion, and belonging space with equal pay as an important component. But back when she made her debut as a player in 1996, pay equity wasn't quite on her radar.

Cindy Parlow Cone: I was still playing college soccer, so I wasn't allowed to be paid regardless at that time. So for me, it was a little bit different situation. Obviously, I was aware. We had veteran leadership and veteran players in Michelle Akers, Mia Hamm, Julie Foudy, Carla Overbeck, and many more. And so I was able to really just focus on what I needed to do to play because they really took the reins in terms of leadership on that front.

Stephanie Kelton: At the time, Cone says the team's focus wasn't on equal pay.

Cindy Parlow Cone: Actually, we were fighting for equal treatment more so than actual equal pay. It was more around programming, having the programming that we needed on the women's side of the game because at that time we didn't have a women's professionally where the men did an MLS, and so we did what we call a residential camp. So basically we all flew together and lived together for several months so we could train and play because we didn't have a pro league to play in. That's one example of trying to figure out a way to have equal treatment and to be able to perform at the level we needed to perform at at the Olympics and World Cup. So the evolution of the equal treatment to equal pay has been really cool to see and has taken us over two decades to get where we are. But I'm really proud of where we are with equal pay with our US women's national team and our US men's national team.

James Rogers: But how did the US women's team go from that first complaint in 2016 to equal pay in 2022? A quick highlight reel. As we mentioned earlier, in March 2016, five of the team's top players, Carli Lloyd, Hope Solo, Alex Morgan, Megan Rapinoe, and Becky Sauerbrunn filed a complaint with the Equal Employment Opportunity Commission. The group asserted that the US Soccer Federation was engaging in wage discrimination, saying that the women's team was paid nearly four times less than their male counterparts. That was despite generating almost $20 million more in revenue the previous year.

Stephanie Kelton: It wasn't just the US Soccer Federation where the players had an issue with pay. Their 2015 World Cup win came with a $2 million prize from FIFA. Meanwhile, in the 2014 World Cup, the US men's team, which was knocked out in the second round, had been awarded $9 million.

James Rogers: The women's team kept playing and filing lawsuits. In March 2019, three months ahead of the World Cup, all of the players filed a gender discrimination lawsuit against the federation. They said it had violated the Equal Pay Act and Title VII of the Civil Rights Act. This lawsuit was about more than just pay. The players also noted inequality in playing, training, and travel conditions, promotion of games and support and development for games. While the suit was underway, the team won the World Cup in France, which we heard at the start of the show. Here's player Megan Rapinoe on the support fans showed for pay equity.

Megan Rapinoe: I think the fans said it all. They're with us wanting more, but it's pretty special to have that total transcendent moment outside of sport, outside of soccer, outside of anything, it's so much bigger.

Stephanie Kelton: It all came to a head in March 2020. In legal filings, the US Soccer Federation said it required more skill and responsibility to play on the men's team. The documents immediately sparked an outrage with protests from players and conflict within the organization. The federation's president Carlos Cordeiro apologized, saying, "The documents did not reflect the values of our federation." Megan Rapinoe, captain of the team, had this to say at the time.

Megan Rapinoe: I know that we're in a contentious fight, but that crossed the line completely. You want to talk about hostility. Every negotiation that we have, those undertones are in there that were lesser, every mediation session that we had, anytime we meet with them, and obviously the reason that we filed this lawsuit.

James Rogers: Three days after the filings, Cordeiro resigned. Cone, who had been vice president, rose to the top role.

Cindy Parlow Cone: I became president literally overnight because my predecessor resigned. And I kind of thought naively that, "Okay, I'm for equal pay. I'm going to get this done really quickly." But it didn't happen that way, unfortunately. It took us a couple of years to really get everything in place that we needed to get in place. And there was a lot of blood, sweat and tears, a lot of sleepless nights trying to figure out how we were going to do this.

James Rogers: Coming up, the US Soccer Federation and the players negotiate. Plus, how the men's and women's national soccer teams work together to get a fair deal. That's after the break.

Stephanie Kelton: Welcome back to the Best New Ideas in Money. Before the break, we heard about the origins of the US national women's soccer teams battle for equal pay.

James Rogers: Stephanie, before we dive back into the story, let's talk for a moment about equal pay more broadly in US society. Can you walk us through a bit of the history of efforts toward pay equity here?

Stephanie Kelton: So the Equal Pay Act is passed in 1963 and back then women who were working full-time jobs were earning only 56 cents on the dollar on average compared to their male counterparts. Today, that number is closer to 84 cents on the dollar. And remember, this is what they're being paid for doing the same work. We've made enormous progress, but there is still this pretty big gender pay gap.

James Rogers: From an economics perspective, what are the benefits of equal pay?

Stephanie Kelton: Well, at the micro level, for the worker who ends up getting paid more, it's obviously a good thing, right? You have more money, higher lifetime earnings, more economic security. But I think you're asking what about at the macro level, is equal pay good for the economy as a whole? And there's actually a lot of research on this, and a lot of economists say that the gender wage gap is actually a drag on the economy, which means that narrowing it or closing it all together would benefit the economy overall. In fact, some studies estimate that it would add hundreds of billions of dollars every year to the economy. So boosting economic growth and employment and driving down the poverty rate for working women and their families. Now, back to our story. In May 2020, a judge dismissed a number of claims in the women's team's lawsuit, including the wage discrimination claim. Players appealed the decision, and the US Soccer Federation settled with the team on working conditions. For newly installed federation president Cindy Parlow Cone, reaching an agreement on pay equity was at the top of her to-do list, but despite her commitment, it wasn't an easy road.

Cindy Parlow Cone: Most of the stuff in the women's national team litigation was solved early on. But the one thing that was really challenging to solve for was the difference that FIFA awards for the World Cups, where the Men's World Cup, they give a lot more money and the prize money than the Women's World Cup.

James Rogers: Cone says the biggest question and obstacle was how to equalize that prize money.

Cindy Parlow Cone: Because US Soccer wasn't in a position to make up that difference. The FIFA World Cup prize money difference was absolutely the biggest challenge in trying to figure out how we were going to find a way to equalize it without bankrupting the federation and being able to continue to invest in our youth national teams and our extended national teams and grassroots programming, which is obviously the feeder system for our senior national teams. Trying to figure this out, we came to this moment in time when the men's national team was out of contract and our women's national team was about to be out of contract. So to my knowledge, it was the first time that both teams were going to be out of contract at the same time. So it presented us this opportunity to negotiate with them at the exact same time. And I eventually put a line in the sand and told both teams that there would not be a new CBA unless we found a way to equalize World Cup prize money. I don't know how many of your listeners have negotiated of collective bargaining agreement, but it's a pretty complex document. And so we weren't just negotiating one, we were negotiating two at the same time. One for the men, one for the women, and trying to be fully transparent with both groups on what we were negotiating with the other group. And then hanging in the balance was the settlement that we had agreed to in the women's national team litigation. So the litigation for all intents and purposes solved equal pay looking back, but the CBAs would solve equal pay forever.

Stephanie Kelton: In early 2022, the federation and the women's team announced that they had reached an agreement for $22 million in retroactive pay with an additional $2 million for an account devoted to players post-care endeavors and soccer related charity work. The federation also committed to equal pay for the men's and women's teams going forward. That included the contentious World Cup prize money, which under the agreement would pool tournament winnings and split the total among both teams and the federation.

James Rogers: We asked Cone what the negotiation process had taught her.

Cindy Parlow Cone: I think I learned a lot about myself in this time period because like I said, when I came on as president, I'm like, "I'm all for equal pay. We're going to get this done and it's going to be done quickly." I had to learn a lot of patience and try to think creatively on how do we get solutions to different challenges involved in the negotiation. And I had to get a little bit more comfortable with riding the rollercoaster because at one moment you feel like everything is coming together, everyone's on the same page, and the next moment you feel like nothing is coming together, everything is falling apart. And then things slowly start to come back together and they look good again, and then they feel like they're falling apart again. But I give a lot of credit to my team, to the women's national team, men's national team, and their respective players associations that throughout this entire process, the most important thing was that everyone kept coming back to the table to figure it out together.

James Rogers: The impact of the team's fight for equal pay has been seen more broadly across all sports.

Cindy Parlow Cone: I think we're starting to see it more and the impact on a number of other federations. They're taking steps to obtain equal pay or move towards it. You've seen the steps that FIFA are taking in this World Cup. I think it's great to see, and it's definitely in the right direction, and FIFA has made sure that a portion of the prize money is guaranteed to go to the players, which every federation wasn't doing that. But obviously there's still a lot more work to be done and we'll continue to work with FIFA on that. I think it's important to not let perfection get in the way of progress. The important thing is that we continue making progress towards equal pay, towards equal investment, whether that's starting youth girls teams or starting your women's national team, or increasing and improving the programming for those teams are closing the gap in pay between the men's and women's programming. And then on the non-federation slash club team side, we're also seeing sponsors committing more to women's sports media and broadcasters investing more in their coverage. And obviously more fans are coming to the games and showing up and watching it on television. So all of this progress is fantastic and we'll continue to push, but this really, I think is just the beginning for women's soccer. I think the men's game is going to continue to grow, but the women's game is really poised for exponential growth.

Stephanie Kelton: The fight for equal pay also resonates off the field.

Cindy Parlow Cone: I think this is one area that all of us that were engaged with this are really proud because we're starting to see the ripple effect of what we've done because no one thought it was possible that this would actually happen. And so to actually achieve it, and I've spoken to a lot of people that have similar challenges, and the progress that they're starting to make is partially due to what we have done here.

James Rogers: For Cone, whether or not the US women's team brings home the World Cup this year, the future is bright.

Cindy Parlow Cone: One of the things that really started us off on the trajectory that we continue on is we started early. We were one of the first federations that invested in the women's national team and actually had a women's national team. We had Title IX that really helped develop players at the collegiate level here in the US. And so we really got an early start and kind of started to build momentum and develop this winning mentality and that competitive nature. And I think that early start helped us begin on this journey. And then as the game has evolved and progressed in this country and the players have evolved and progressed, I mean, I look at this team now and I'm like, oh my God, they're so much better than we were.

Stephanie Kelton: Thanks for listening to the Best New Ideas in Money. You can subscribe to the show wherever you get your podcasts. If you like what you heard, please leave us a rating or review. And if you have ideas for future episodes, drop us a line at Best New Ideas in money at marketwatch.com. Thanks to Cindy Parlow Cone. To learn more about new ideas in pay equity, head to marketwatch.com. I'm Stephanie Kelton.

James Rogers: And I'm James Rogers. The Best New Ideas in Money is a podcast from MarketWatch. The producers are Michael McDowell, Mette Lutzhoft, and Katie Ferguson, who also mixed this episode. Melissa Haggerty is the executive producer. Tim Roston was our newsroom editor on this episode. The Best New Ideas in Money theme was composed by Sam Retzer. Stephanie Kelton is an economist and a professor of economics and public policy at Stony Brook University and not part of the MarketWatch newsroom. We'll be back next week with another new idea.