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Unintended But Anticipated Effects Of Civil Rights Protection

Mickey Kaus, in linking to this post below (thanks, Mickey!), asks:

If a Hispanic who has performed as poorly and prominently as Patti Solis Doyle can?t be fired without her employer getting grief from Hispanic leaders, isn?t that a pretty big disincentive to hiring a Hispanic in the first place? Message: Stick to white males ? if they screw up, you can sack them and nobody will whine.

Actually, that disincentive and that ?message? have long been recognized as one of the costs of civil rights enforcement.

A classic example is the Civil Rights Act of 1991, which made it easier for disappointed job seekers to file ?disparate impact? claims based on statistical evidence and increased the money-damage awards to plaintiffs.

In this excellent 2003 article, Stuart Taylor Jr. discusses a study by a Stanford economist and a Northwestern management professor, among other evidence, indicating that the 1991 law made ?employers in traditionally white-male industries marginally less likely to hire minorities and women.?

How could the risk of high damage awards for discriminating against minorities and women make employers more hesitant to hire them? Because employers know that far more lawsuits are brought, and far greater damages are awarded, for claims of discrimination in firing than in hiring. So the risk of being sued for turning down a minority or female applicant is dwarfed by the risk of being sued later for firing the same applicant after giving him or her a try.

?The increases in potential damage awards,? write Oyer and Schaefer, ?coupled with a decades-long trend toward firing-based, and away from hiring-based, employment-discrimination litigation, means the main impact of the act was to increase the costs to employers of dismissing protected workers.... Because [an employer] feels firing-based costs only if it decides to hire, the costs act as an implicit tax on such hiring. Firing-based protections may therefore lead employers to hire fewer protected workers, not more.?

Nor, Taylor continues, were these results unanticipated.

.... In a Stanford Law Review article half a year before Congress passed the legislation, Stanford Law School professor John J. Donohue III and co-author Peter Siegelman documented a major shift in the nature of job-discrimination lawsuits?as well as a spectacular increase in their number?since 1970: ?While most cases formerly attacked discrimination in hiring, today the vast majority of all litigation suits challenge discrimination in discharge.? And although the 1964 Civil Rights Act was extremely valuable in breaking down the flagrant discrimination in hiring then practiced by many employers, the authors wrote, the ?dramatic shift to firing cases has greatly increased the likelihood that Title VII will create a drag on the hiring of protected workers rather than the positive inducement it originally provided.?

Note that Taylor did not recommend (and, for what it?s worth, neither do I) that Congress eliminate damages for discriminatory firing, ?[e]ven if the costs of such lawsuits to minorities and women, not to mention employers, have come to exceed their benefits....?

Racial discrimination is wrong, but that doesn?t mean we should refuse to see the costs of eliminating it. And it is always useful to be reminded that efforts to do good, especially when the power of the state is enlisted in the cause, often do both more and less than the good intended.

Full post as published by Discriminations on February 16, 2008 (boomark / email).