This article was originally published in the autumn 1998 issue of the Expert Witness.
On October 5, the Alberta court released its decision in the case of MacCabe v. Westlock RCSSD #110 et al (action: 9303 05787). The judgment is important for many reasons, though the most important aspect from an economist’s point-of-view is that it recommended the use of male earnings statistics to estimate the future earnings potential of a female. In particular, it was found that Ms. MacCabe would have followed a career path similar to that of the average male. That is, the court concluded that she would not have taken significant amounts of time out of the workforce for child rearing, and she would not have worked part-time. Therefore, it found that earnings statistics for males should be used to predict what her income would have been.
Some of the most important sections from the decision (related to the male/female income statistics issue) are reproduced here:
[para468] Clearly the evidence establishes that the exceptional individual characteristics of the Plaintiff are such that her abilities would have commanded the equivalent salary of her male counterparts. She would have established a strong attachment to her career. The use of male wage tables is justified. In any event, I am of the view that any award which I grant to the Plaintiff should not and cannot be solely determined by her gender.
[para469] It is entirely inappropriate that any assessment I make continues to reflect historic wage inequities. I cannot agree more with Chief Justice McEachern . . . in Tucker, supra, that the
courts must ensure as much as possible that the appropriate weight be given to societal trends in the labour market in order that the future loss of income properly reflects future circumstances. Where we differ is that I will not sanction the “reality” of pay inequity. The societal trend is and must embrace pay equity given our fundamental right to equality which is entrenched in the constitution. . . .
[para470] . . . The Court cannot
sanction future forecasting if it perpetuates the historic wage disparity between men and women. Accordingly, if there is a disparity between the male and female statistics in the employment category I have determined for the Plaintiff the male statistics shall be used, subject to the relevant contingencies. . . .
[para481] I agree with Dr. Bruce that absent
the accident, the Plaintiff would have been committed to her career and there would not have been a significant withdrawal from the labour force. . . .
So what does this imply about future cases involving injured or deceased females? It seems clear to us that if it is accepted that a young female would have followed a career path similar to that of the average male (in which she works full-time and does not take significant amounts of time out of the workforce for child rearing), then it follows that income statistics for males should be used to estimate her pre-accident income. (We discussed this issue in the Autumn 1997 issue of the Expert Witness.)
But what if it is found that a young woman would have followed a traditional female career path? In this case we suggest that using income statistics for females will still probably underestimate the true income path, but using those statistics for males will probably overestimate the true income. The reality likely lies somewhere in between the two alternatives. However, the MacCabe judgment appears to leave open the possibility that earnings statistics for males could be used even for female plaintiffs who would have followed “traditional” female career paths. It may be the case that the courts will choose to apply earnings statistics for males, regardless of the evidence about the woman’s likely career path – as a sort of “social justice” choice (Recall paragraph 469 of MacCabe: “I will not sanction the ‘reality’ of pay inequity.”)
However, the same argument could possibly apply to other situations in which a certain group of people earn less, on average, than the average male. For example, it is well-known that, on average, Natives earn less than non-Natives. From the MacCabe decision it may follow that one should use average income statistics for males to estimate the potential income of a young Native male (or female), with no adjustment to account for the reality that the average Native earns less than average non-Native. Conversely, perhaps the defense could argue that a person who has been disfigured in an accident should not be compensated for the “appearance-discrimination” component of his loss of income because that would be an endorsement of the “reality” of discrimination. If the court chooses to correct for the reality of pay inequity, then this could raise some difficult issues for those of us involved in loss of income cases.