March 15, 2002
The economics of discrimination

Jon Jerome has a long post about racism which stemmed from a conversation with a coworker. (Note: Jon's been having some hosting problems, so try hitting Refresh if you get a "this page cannot be displayed" error.) He lays out a case for why "hidden" racism (as opposed to the overt, codifed racism of the Jim Crow era) is not necessarily why nonwhites don't get ahead in the workplace, citing among other things economic factors:

Systematic workplace discrimination on irrelevancies like race is unprofitable - it’s just bad business practice. If blacks could really be paid less than whites for “the same work,” such an arrangement would create high unemployment for whites and low unemployment for blacks, as firms competed to snap up the same quality labor at cheaper rates. (This simple economic truth also demolishes the idea of the “glass ceiling” for women.) Similarly, if the owner of a firm refuses to hire candidates on the basis of productivity and instead hires on the basis of irrelevant factors, he provides a larger pool of available talent for his competitors, reducing his competitiveness in the market, said uncompetitiveness in the end being fatal to the business. If the best man for the job is a black woman, and you won’t hire her because of that, your competitor will get her, to his benefit and your detriment. Businesses that make consistently irrational decisions don’t last very long - the market weeds them out in favor of those that are more rational.

I don't have any quibbles with Jon's logic (though it won't surprise me if Ginger has something to say about the "glass ceiling"), but sadly the real world of business does frequently operate in this fashion. Take a look at how Rent-a-Center has treated its female employees for one glaring recent example.

You may say that this sort of practice cannot continue, both for the reasons Jon cites as well as the fact that this sort of behavior inevitably ends up with a large EEOC judgment against the offenders, but the point is that it does still exist today. When it finally disappears in a puff of logic, we'll all be better off.

Posted by Charles Kuffner on March 15, 2002 to Bidness