Irrational Discrimination

A libertarian theory as to anti-discrimination laws is that they are unnecessary, because the market should in theory bid wages up to equality. (I.e., if an employer could get by with hiring blacks or women for 75 cents on the dollar, some would try to do so; then others would bid up the wages to 80 cents on the dollar, and so forth.)

The following passage tells us something about whether this theoretical argument is empirically accurate:

James D. Anderson, The Education of Blacks in the South, 1860-1935 (University of North Carolina Press, 1988), pp. 233-34:

In Atlanta, Georgia, as in many other places throughout the urban South, the economically rational principle of hiring the best-qualified workers at the cheapest wage was stood on its head. Atlanta's Sanitary Department discharged all of its black truck drivers and replaced them with white drivers. The experienced black drivers had been paid $60 per month; the new white drivers were hired at a minimum wage of $100 per month. Moreover, some of the displaced black workers were then rehired as helpers to the white drivers and paid $50 per month. Such patterns were consistent with the Chamber of Commerce's campaign to boost Atlanta as a haven for "satisfied, intelligent, contented Anglo-Saxon labor." The Jacob Drug Company, a chain of 120 stores in Atlanta, had for thirty years employed black youth as messengers. On 15 July 1929, however, the 230 black messengers were discharged and the white youth hired to take their places were given an increase in pay of $3 per week, plus a regulation uniform. Similarly, between 1919 and 1929, black truck drivers for the Hormel Company, Swift Company, Cudahy Packing Company, Wilson and Company, and White Provision Company were replaced by white drivers. The Georgia Baptist Hospital, one of the South's largest private hospitals, discharges its entire black work force and gave an increase in pay to the new white workers. The white patients, however, complained about the inexperience and inefficiency of the white workers and, after two months of trial and error, the black workers were called back. The black workers were given the same salary as before they were discharged even though the whites who replaced them were paid more during their short tenure.