The Ethics and Economics of Discrimination

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Last October the Supreme Court agreed to hear the
case of Clackamas Gastroenterology Associates v. Wells, which
will clarify the issue of when companies are small enough to avoid
compliance with the 1990 Americans With Disabilities Act (ADA).
The case arose when Deborah Anne Wells, then an employee of an Oregon
medical clinic, claimed her former employer had discriminated against
her by not installing wheelchair ramps to accommodate her debilitating
tissue disorder. The clinic is fighting the case on the grounds
that it is too small to fall under the umbrella of the ADA.

When the ADA was passed over a decade ago it was
lauded as a milestone in civil rights legislation. Advocates for
the handicapped claimed that disabled persons would finally take
their rightful place next to blacks, women, and other historically
"oppressed" groups in terms of getting special, oops,
"proper" treatment under the law. As the law was written,
employers would no longer be allowed to discriminate "against
qualified individuals with disabilities in job application procedures,
hiring, firing, advancement, compensation, job training, and other
terms, conditions and privileges of employment."1
In order to avoid litigation for "discriminatory" hiring
practices, companies not only must have handicapped persons on their
payroll, but they must also oblige those employees in every manner

However, the law allows for an arbitrary exemption
to its anti-discrimination objective: companies with fewer than
16 workers fall outside the law's reach, and Clackamas Gastroenterology
Associates claims to have just 15 people on its staff. Of course,
if the goal of the law is to end discrimination, then the number
of employees should be irrelevant. Never mind. In an era of ever-increasing
assaults on private property rights, advocates of limited government
sometimes have to take what they can get when it comes to winning
a victory for freedom in the federal courts. Let us wish the folks
at Clackamas our best.

Ideally, a private business wouldn't have to rely
on a legal loophole to exercise its basic right to manage its own
affairs, to hire or fire whomever it wants and for whatever reason
it chooses. Nor should a company be compelled to make alterations
to its private property for the sake of a handicapped employee.
Contemporary views on the subject notwithstanding, no one owns his
position at work – people have jobs solely at their employer's
convenience. Opponents of this position will agree that, yes, private
property such as personal residences should not be subject to ADA-style
micro-management, but that the workplace is a different matter –
regardless of the fact that it is still private property. This approach
is nothing more than a legal fiction – a rationalization, not
a competent rebuttal of sound property rights theory.

This isn't to suggest that discrimination in hiring
is a good thing. It is an illogical and spiteful way for a business
to behave. What anti-discrimination activists fail to realize, though,
is that it can often be as harmful to the perpetrator as it is to
the victim. To disqualify someone for a job solely because
of some physical characteristic means eliminating an entire block
of potential applicants. An employer who wants to hire from only
certain groups of people will run the risk of disqualifying highly
qualified people in the process. The person discriminated against
misses out on a job opportunity, true, but the employer's entire
business is at risk when he prefers fully mobile morons over wheelchair-bound

Nevertheless, "civil rights" advocates
will claim that the "economic power" of employers is so
great that they can evade the consequences of discriminatory behavior
and "cheat the market". For example, if every company
agreed to keep blacks out of the workforce, then no one would notice
when the skills of individual blacks were taken off the market because
they wouldn't be snapped up and put to use by a competitor. This
same flawed thinking is used to justify laws against price-fixing.
The trouble is, some member of the conspiracy can always be counted
on to secretly break the covenant and profit at his fellow-conspirators'
expense, until his compatriots find out and the entire scheme breaks
down. Thus, an environment of free market competition would tend
to undermine discriminatory practices.

The ADA itself could actually encourage discrimination
against people with disabilities. As indicated above, it isn't in
the interests of a businessman to discriminate – all things
being equal. Yet the ADA imposes costs on an employer that he cannot
recoup. With all other applicants, the boss must calculate the general
price of labor (including regulations and benefits). But when someone
who is "disabled" comes looking for a job, the employer
will have to factor in the massive expense of making his workplace
disability-friendly. To say the least, this adds tremendously to
the cost of hiring someone who is "protected," providing
a huge incentive for businesses to be prejudiced.

Something else to consider is that when a business
is forced to comply with ADA judgements requiring the installation
of wheelchair ramps, handicapped bathrooms, or elevators, the costs
of compliance for those businesses operating at the margin could
well mean the difference between staying afloat or going under.
If a company has to close its doors, then no amount of accommodation
will help someone like Deborah Anne Wells – she won't have
an employer left to sue. That is what's "seen". The "unseen"
consequences are the untold number of businesses that never materialize
for fear of government-mandated costs and obligations.

In light of the foregoing, doesn't it make more
sense for handicapped people to suffer the slight indignity of having
to ask a fellow employee or family member to help them up and down
the steps each day, rather than invite the inevitable problems and
frictions that accompany all such government edicts, and drive a
wedge between workers, co-workers, and employers?

In a laissez faire market disabled people could
pit their skills against every other applicant without any need
for special status and little fear of causeless discrimination.
It is unfortunate that irrational biases exist, but they are also
rare, and they are only exacerbated when the government attempts
to rectify what is ultimately a question of ethics by imposing its
own moral preference by force. With no outside forces interfering
in the terms of employment, workers and employers would easily negotiate
all of the conditions that were mutually beneficial towards satisfying
their respective needs.

11, 2002

McPherson [send him mail]
is a policy advisor at The Future of
Freedom Foundation
in Fairfax, Virginia.

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