Suppose an employer offers a base wage of $20/hr. for the first 40 hrs. and overtime pay of $30/hr. for any hours beyond 40 per week. The employer allows workers to choose their own hours of work.
Employee A: Works 36 hrs. per week.
Employee B: Works 42 hrs. per week.
Compute the average weekly earnings for both employees and the “earnings gap” (in % terms).
Does this observed earnings gap constitute discrimination? Justify your conclusion. What other factors could play into a wage gap?