What Was the Wal-Mart Decision?

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To read feminists' reaction to the Supreme Court decision in Wal-Mart Stores, Inc., vs. Dukes, one would think that women were being sent back to the 1950s, when newspapers advertised positions with one salary for men and another for women.

National Organization for Women president Terry O'Neill declared, "With this decision, the Supreme Court has assisted Wal-Mart in its efforts to systematically dole out promotions and pay raises on the basis of sex. The law calls that illegal discrimination, but this Court has turned its back on the more than [one] million women who only sought simple justice."

Marcia Greenberger, co-president of the National Women's Law Center , called it "a devastating decision undoing the rights of millions of women across the country to come together and hold their employers accountable for their discriminatory practices."

The feminist leaders are disappointed and agitated because the biggest gender-discrimination suit ever filed, against the country's biggest retailer, has been sent back to the starting line.

As feminist leaders and some of the lawyers for the plaintiffs said, they intend to bring new class action suits, more narrowly drawn, either against individual Wal-Mart stores, or by local areas or regions.

What was the decision?

Wal-Mart is America's largest private employer. On Monday the Supreme Court threw out the class action suit alleging sex discrimination filed by three current and former employees on behalf of all 1.5 million current and former female Wal-Mart employees. The plaintiffs claim Wal-Mart violated Title VII of the 1964 Civil Rights Act.

In a 5-4 decision, reversing a Ninth Circuit Court of Appeals decision, the Supreme Court ruled that the 1.5 million women and the 3,400 Wal-Mart stores-all Wal-Mart stores in the United States-had too little in common to allow a class action suit to proceed.

The Supreme Court said that there was no proof that Wal-Mart, which has a stated non-discrimination policy, had a general policy of systemic discrimination. Individual managers made their own decisions as to promotion, and plaintiffs had not proved that a culture of discrimination existed at the company.

Justice Antonin Scalia, in the court opinion for the majority, wrote, "Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members' claims for relief will produce a common answer to the crucial question why was I disfavored."

The plaintiffs brought a sociologist, Dr. William Bielby, to testify that there was a systematic policy of discrimination at Wal-Mart. However, Dr. Bielby's district court testimony was unconvincing to the high court majority because he could not say what percentage of employment decisions were determined by stereotypical thinking against women.

The Supreme Court decision does not mean that large establishments are free to discriminate against women. It does mean, however, that individual women-including the plaintiffs in this case-or groups of women under one supervisor, or possibly in stores in one city or area or region, have to prove each case on its merits.

Justice Scalia emphasized commonality. Plaintiffs' lawyers will seek to establish commonality for the largest number of stores and employees possible. The fees of plaintiffs' lawyers typically are a percentage of the damages awarded, and so the larger the class, the larger the probable attorneys' fees.

It's unclear that two of the three Wal-Mart employees who brought the case could have won sex-discrimination suits on their own.

Betty Dukes, the lead plaintiff, who worked in a Pittsburg, California store, had been promoted to manager, but then demoted to cashier and greeter after admitted disciplinary violations.

Edith Arana, who worked in a store in Duarte, California from 1995 to 2001, was dismissed for violating Wal-Mart's timekeeping policy. Prior to her dismissal, she was told to apply to her district manager when she complained that her store manager was being unfair, but she never pursued the complaint.

The plaintiffs' complaints were not on these individual cases, but on regional comparisons of women's average salaries with men's, and of percentages of women promoted compared with men. The plaintiffs submitted data showing that men were managers in far greater proportion that their representation among employees.

The Court did not find these averages convincing, because the averages did not prove that all stores within a region show the same disparities.

However, writing for the minority, Justice Ruth Bader Ginsburg said that delegating decisions to managers could result in unconscious biases, especially if managers are all one sex "and are steeped in a corporate culture that perpetuates gender stereotypes."

This is the essence of the feminists' complaint, namely that discrimination is the product of decisions by unconsciously-biased men, and so can be measured in averages.

That's why feminists are pushing for the Paycheck Fairness Act, which would require practically all firms to submit to the government information about the race, sex, and earnings of their employees, so that the government could check as to whether discrimination is occurring.

The justification underlying this legislation is the feminist mantra that women are paid 77 cents on a man's wage dollar, even though this is a nationwide average that does not account for differences in jobs, education, time in the workforce, or hours worked over 35 per week.

If we compare wages of men and women who work 40 hours a week, without accounting for any differences in jobs, training, or time in the labor force, Labor Department data show the gender wage ratio decreases to 86 percent. Marriage and children explain some of the wage gap, because many mothers value flexible schedules.

Presumably, a few of these considerations explain some of the male-female differences between average pay and numbers supervisors at some Wal-Mart stores. If more women work part-time, they may not be eligible to be promoted to manager, nor may they want to assume the responsibilities of a full-time position.

A 2009 study by the economics consulting firm CONSAD Research Corporation, prepared for the Labor Department, shows that women make around 94 percent of what men make. The remaining six cents are due to unexplained variables, one of which might be discrimination.

Contrary to what feminists say, the Supreme Court decision is not a step backwards for women. Rather, it shows that women have to be treated on a case by case basis, the same as men.


Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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