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June 21 2011

Wal-Mart Decision is Good News for Our Economy

Carrie L. Lukas

The Supreme Court's ruling to not allow a class action lawsuit against the country's largest private employer, Wal-Mart, to proceed is good news for anyone concerned about our already suffering economy. A decision to allow this case to continue would have fundamentally changed the definition of what constitutes a class for litigation purposes and opened the flood gates for future class action suits - distracting businesses from their missions and drain resources away from productive uses, including hiring workers.

At its core, the massive sex discrimination case against Wal-Mart was always a stretch. The retail giant operates more than 3,000 stores throughout the country and currently employs around a million people. The three named plaintiffs worked in different stores in different positions in different parts of the country. They alleged that their supervisors passed them over for raises and promotions and generally mistreated them because they are women.

Yet by lumping their cases in with 1.5 million other current and former Wal-Mart female employees, this class action suit argued that all women working for Wal-Mart suffered similar mistreatment. For a group to constitute a legal class, they must show "significant proof that an employer operated under a general policy of discrimination." And the Supreme Court found that such proof was absent.

Wal-Mart's stated company policy prohibits discrimination based on sex. Instead of arguing that Wal-Mart had a policy of discrimination, the plaintiffs argued that granting local supervisors discretion over employment decisions created a culture vulnerable to systematic discrimination. But being vulnerable to discrimination does not mean that discrimination exists, particularly not uniformly across thousands of stores.

Let's hope this is a conclusion that reaches beyond just the legal realm and the public comes to appreciate the limits that anecdotes and statistics have in shedding light on how the world operates. Plaintiffs had hoped that statistical differences in pay would be accepted as smoking-gun evidence of discrimination. Politicians use the same logic when they tout the "wage gap," or the difference in the average earnings of working women and men, as evidence that the entire U.S. economy remains awash in sexism that short-changes women.

Yet careful analysis of these nationwide statistics shows that they tell us little about what role, if any, discrimination has on earnings, because so many factors - hours worked, specialty, years of experience to name just a few - affect how much people earn.

Plaintiffs highlight that there are more women workers at the bottom rung of Wal-Mart's employment chain than there are in top management. A similar charge could be made against the economy as a whole. Yet this is less likely a result of discrimination than the different choices that men and women tend to make about work. Women, for example, assume the lion's share of family responsibilities, which means they often cut back at work - resulting in lower earnings.

This may frustrate some who want men and women earning exactly the same and achieving the same professional goals. But that doesn't mean that it's discrimination and a problem for courts or governments to solve.

The Supreme Court's decision does not mean that no female employee has been treated unfairly in one of Wal-Mart's thousands of stores. Employees who believe their rights have been violated are still fully entitled to their day in court.

What this decision means is that businesses will not face a new barrage of ill-conceived class action suits brought on by lawyers looking for big settlement payouts. The ruling wasn't about favoring big business or having a callous disregard for the plight of workers. It was about justice, and ensuring that our judicial system will not be manipulated to torment companies with large pockets.

Carrie Lukas is the managing director of the Independent Women's Forum.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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