Consumer Corner: Prof says emphasis on price allowed discrimination to flourish at Walmart

By MARCELLA S. KREITER  |  June 19, 2011 at 4:31 AM
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CHICAGO, June 19 (UPI) -- A University of Illinois at Urbana-Champaign law professor says Walmart is shooting itself in the foot if it is allowing sex discrimination to flourish.

The retailing behemoth is awaiting a decision by the U.S. Supreme Court on whether a class-action lawsuit filed by female employees charging sex discrimination can go forward. A decision is expected before the high court begins its summer recess.

Lesley Wexler said Walmart's decision to compete solely on price and de-emphasize the necessity of hiring quality employees -- especially in lower-status positions -- allowed sex discrimination to flourish.

"Many economists expect that an unregulated market will eliminate discrimination in a timely or decisive manner," Wexler said in a release. "In the abstract, a highly competitive labor market should provide Walmart with the financial incentive to hire the best employees and pay them commensurate with their worth. Unfortunately, that's not what happened with Walmart, and that reveals something about the limitations of the market to correct itself."

Walmart is the largest retailer in the world, generating $405 billion in net sales internationally in fiscal 2010, $258.2 billion in the United States alone.

It often is blamed for running small mom-and-pop competitors out of business in areas where it opens its megastores and regularly comes in for political bashing when it seeks zoning clearance in urban areas. The company has been accused of winning unfair pricing concessions from suppliers, allowing it to undercut competitors.

It's the retailer we all love to hate.

Wexler said it is unlikely any kind of anti-discrimination campaign would garner public support, especially if higher wages resulting from leveling the playing field were to translate into higher prices "because a lot of people can't afford to vote with their wallets and shop somewhere other than Walmart."

Wexler also noted Walmart has a firmly entrenched patriarchal corporate culture.

"In their pursuit of efficiency, the Walmart workers who make pay and promotion decisions may still hold pre-existing preferences for male workers that their corporate culture either reinforces or does little to counteract," she said. "Although such preferences are certainly not unique to Walmart management, their coexistence with the company's almost single-minded focus on cost-cutting and efficiency-generating measures is puzzling."

The Supreme Court is not considering the merits of the Walmart suit -- whether there actually was any discrimination. Instead it is deciding whether the women should be allowed to sue as a class -- which would include 1.5 million plaintiffs. The case started in 2001 in San Francisco when six women sued, alleging Walmart discrimination, in part because they were passed over for promotion in favor of men. One of the six says she was told, "It's a man's world."

"A lot of the debate in the litigation is about Walmart's corporate culture," Wexler said. "Scholars have firmly established that Walmart maintains a very strong corporate culture. What's debatable is whether that corporate culture explicitly engaged in widespread pay and promotion discrimination against female employees, and what could explain the persistence of such a practice in a company known for its devotion to efficiency."

Wexler said whether Walmart is forced to deal with the massive class or whether it will face myriad smaller suits, it's likely its corporate culture will have to be overhauled.

In fact, she said, some of those changes already have been made, albeit more on a cosmetic level than a substantial one.

"Even if Walmart ultimately wins, they've already lost by having two years of unflattering media coverage saying they're sexist discriminators," Wexler said. "They would likely be forced to undertake significant changes if they lost, but even at this stage Walmart is aggressively pursuing damage control."

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