1991 Civil Rights Act: Boon or bust for workers?
Professor Scott Schaefer investigates the impact the controversial
measure has had on women, minorities and the firms that employ
of the Civil Rights Act of 1991 called the bill crucial in
expanding opportunities for women and minorities. Critics
called it a "quota bill."
later, Associate Professor Scott Schaefer is finding out how
much of that heated rhetoric became true.
Fears that the law would lead to quota hiring appear unfounded.
But it does appear that employers have adjusted hiring, firing,
and wage policies in response to the law.
litigation arises after employees have been let go. The controversial
1991 bill, signed into law by President George Bush, amended
the Civil Rights Act of 1964 and expanded the damage awards
available to those who allege employment discrimination. As
a result, the law may have had a big impact on the cost of
dismissing employees, according to Schaefer, an associate
professor in the Management and Strategy Department.
terms of the effects on employer behavior, there's a big difference
between hiring-based lawsuits and firing-based suits,"
Schaefer notes. "If I fear that a minority job applicant
might sue me for discriminating in a hiring decision, then
I can reduce my exposure to litigation by hiring more minorities.
But, if most litigation arises from firing-based suits, then
I can reduce my exposure to litigation making sure I don't
hire workers who might end up suing me later on."
research partner is Paul Oyer, a former Kellogg professor
now on the faculty of the Stanford Business School. The two
analyzed data from the U.S. Census and the Equal Employment
Opportunity Commission for a series of articles exploring
the impact of the law on firms' hiring, firing and wage-setting
that firms that are more susceptible to discrimination litigation
tend to avoid workers who are protected by the law. The increased
threat of lawsuits apparently has done little to persuade
these firms to hire additional women and minorities.
it has become harder to fire minorities and women, the researchers
theorized that companies are more likely to dismiss them through
mass layoffs rather than individual firings. Indeed, their
analysis showed that more black men lost their jobs through
layoffs relative to white men after the law was passed.
and Oyer also figured that the increased threat of litigation
has boosted wages for older women and minorities, since it
has become riskier -- and therefore more expensive -- to fire
members of those groups. If that's the case, they reasoned,
the women and blacks most likely to be hired are the ones
employers have the most information about -- those with lengthier
résumés and more job experience.
this hypothesis was borne out more for women than for men.
"It seems men and women differ in their propensity to
sue," Schaefer says. Younger women appeared to be the
group most likely to go to court over alleged discrimination.
Older African-American men, meanwhile, evidenced a stronger
tendency to litigate than younger men.
management theorists, so we didn't come to this research with
a list of policy questions," Schaefer says. "We
were more interested in the effects of the changes in displacement
costs, and how they change the way firms manage their headcounts."
are policy implications here," the professor adds. "Policy-makers
should think hard about how individual firms will respond
to policy changes like this, and whether these laws will have
the desired effects."