The Ethics and Economics of Discrimination

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 possible.

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 braniacs.

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.

December 11, 2002