Question

Discuss the reasons why you think employment discrimination persists to exist in a free market economy such as ours. Why is the free market not driving discrimination down?

Answer 1

Employment discrimination in free market

It is true that discrimination persists in a free market but businesses may even discriminate without even realizing it.

Discriminatory practices may occur in many levels such as among workers, customers and even managers. For example: A Manager of a business ,say restaurant may not be biased against any particular section, but may have many workers or customers who are biased and in order to earn profit he has to act in a certain manner. If he treats a minority section or women fairly, he might hurt the emotions of workers or drive away the customers.

Another example can be that, suppose a business only hires Asian people, because of a connection between the staff and the customers or hires a family member instead of an outsider. If the business performs the same routine for employment it may make the business more popular among the customers.

The reason can be in such situations, a policy of non-discrimination can reduce a firm's profit earning capacity. Business is a part of society and a firm has to work on the societal norms in order to be successful.

Free market is not driving down the discrimination because an employee's or employer's bias and racism cannot be automatically eliminated in favor of money. An employer would do anything to make up the profits even if it includes certain discrimination. Market forces alone are unlikely to overcome the social attitudes towards discrimination. Free markets can allow the discrimination to occur, but on the other hand a threat of a loss of sale can also create benefit for the firm not to discriminate.