Beginning with the Civil Rights Act of 1964, the federal government undertook to eliminate labor market discrimination. The original idea was that no worker should be rejected from consideration for a job on account of his or her immutable characteristics. Over time, however, zealous officials backed by equally zealous interest groups have changed that mission, expanding it to a general quest for overall “fairness” in the labor market. Employers now have to worry about attacks from federal agencies if any employment decision might have a “disparate impact” on a protected group, if they haven’t done enough to recruit a sufficiently diverse workforce, or if they have employee preferences that government officials regard as somehow being inequitable.

Given the expanded mission of the anti-discrimination regulators, you might think that labor market discrimination must have grown worse since 1964, but this book shows that not to be the case. June and David O’Neill (both of whom teach at Baruch College) demonstrate in their heavily researched book that employer prejudice against minority workers and women has not just declined, but has almost disappeared.

The authors’ careful statistical analysis shows that the difference in average earnings for various groups is explained by their differences in productivity and the choices of individual workers. Moreover, they show that labor market discrimination was fading rapidly before the government got involved in its eradication and that the gains made by minority groups actually slowed after the federal campaign began.

Thus, the large and costly federal crusade against discrimination in the labor market seems unnecessary. It imposes substantial dead-weight losses on taxpayers as well as on firms, which have to devote resources to placating government officials. Yet the crusade continues and even shows signs of growing, giving us a perfect example of the Public Choice observation that bureaucracies will do all they can to remain in existence long after the problems they were supposed to address have diminished or even disappeared.

Pre–Civil Rights Era | The O’Neills begin by tracing the relevant history, focusing first on the fortunes of black workers after the Civil War. There was, of course, a huge gap between the average earnings of whites and blacks for decades, but that began to narrow substantially early in the 20th century as many blacks migrated from the agricultural South, where racial antagonism was strongest, to the rapidly industrializing North, where they encountered less prejudice and more opportunities for good employment. Improving education for blacks was also important in their advancement.

World War II further broke down racial barriers and by 1960 the black–white earnings gap was much smaller than it had been in 1940. In 1940, the average earnings for black men who were full-time labor force participants had been only 45 percent of average white earnings, but by 1960 that figure had risen to 61 percent. For black women, the gains were even greater, increasing from 40.5 percent in 1940 to 66 percent in 1960.

Another important datum is the high degree of black labor force participation that formerly prevailed. In 1940, 92 percent of black men ages 25 to 54 were working, compared with 95 percent of white men. That statistic shows that although black workers may have found some employment opportunities were denied them due to bias, they could and did find work in businesses that did not discriminate against them. Since 1940, black labor force participation has decreased, but that cannot be attributed to increasing racial discrimination.

Those data strongly suggest that economists are correct when they argue that labor market discrimination should be rare. Competition for good workers punishes employers who make their hiring and promotion decisions on factors other than productivity.

Civil Rights Act of 1964 | Throughout the 20th century, free market competition had been wiping away the vestiges of slavery and Jim Crow. Without government intervention, blacks had made steady progress, but there were still remnants of labor market discrimination in 1964 and many people regarded it as a national problem. Led by President Lyndon Johnson, Congress passed the Civil Rights Act of 1964. The act’s Title VII provided that employment discrimination was illegal and established a new agency, the Equal Employment Opportunity Commission, to enforce it.

Significantly, however, the law did not require employers to fulfill group quotas in their workforces. In fact, the statutory language was written carefully to prohibit “preferential treatment to any individual or groups because of race, color, sex, or national origin.” The law was meant to attack the perceived problem of discrimination against individuals, not to bring about equal results for groups. At that time, the law only reached to those few employers who still insisted on keeping black or other minority workers out; the great majority of employers that did not discriminate had nothing to fear.

The law did not stay that way for long.

In 1965, Johnson signed Executive Order 11246, which imposed a far more onerous hiring regime on firms that contracted with the federal government. That order created the Office of Federal Contract Compliance—now known as the Office of Federal Contract Compliance Programs (OFCCP)—and empowered it to ensure that firms holding contracts with the federal government comply with its nondiscrimination rules. Companies wishing to become or remain eligible for federal contracts had to follow OFCCP regulations aimed at what federal officials regarded as “fairness.” The result was de facto racial quotas.

Also, Congress has amended the Civil Rights Act several times, first in 1972, in ways that liberated the EEOC to pursue its own vision of what nondiscrimination requires of employers. Not content merely to go after the small and dwindling number of employers that held to bias against some groups, EEOC officials have kept expanding their mission to the point of absurdity, as the authors show with numerous cases.

Disparate impact | Finally, the courts have gotten into the act. The leading case is the Supreme Court’s 1971 decision in Griggs v. Duke Power, which turned occupational testing and standards into a legal minefield by ruling that facially neutral tests or standards can nevertheless violate the law if they might have a disparate impact on protected minority groups. That decision was manna from heaven for the EEOC, which began to bring numerous cases based on the theory that various firms’ employment rules resulted in some alleged disparate impact.

The O’Neills devote many pages to OFCCP and EEOC cases where the employer found itself in the bureaucratic cross hairs for actions that would seem entirely reasonable to most people. Many of the cases apparently have no more basis than a desire for government officials to look busy. For example, one firm was hauled into court because it hired mostly white workers over a mere three-month time span, ignoring the company’s long-run record, which was faultless. Eventually, the OFCCP lost in court (and one heartening thing we learn from the book is that judges often slap down these “we’re suing just because we can” cases), but the costs of needless litigation are irretrievable.

Government officials, the authors note, benefit from favorable publicity when they institute proceedings against a company, with press releases depicting themselves as knights in shining armor battling the dark forces of corporate discrimination. If they manage to force a settlement (as often happens), that is another occasion to crow. If they should happen to lose, that news will reach hardly anyone and the public will never contemplate the unseen costs.

When they win, not only do the bureaucrats trumpet their glory, they’re inclined to impose Treaty of Versailles–like conditions on the vanquished firm. In one case, the EEOC went after the clothing retailer Abercrombie & Fitch over “image discrimination” that manifested itself in it penchant for hiring young, attractive, white kids who fit the image the company projected through its advertising. Instead of fighting an expensive legal battle, the company capitulated and accepted a consent decree. That decree mandated, among other things, that the firm hire a “vice president for diversity,” employ up to 25 “diversity recruiters,” and ensure that its marketing materials “reflect diversity.”

In a recent initiative named E‑RACE (Eradicating Racism and Colorism from Employment), the EEOC plans to investigate through a five-year program of data collection what it suspects is the problem of “colorism”: preferences for lighter-skinned over darker-skinned people within the same racial group. The authors write that this “suggests that the agency sees a world still drenched with racism.” Probably so, but it also suggests an agency that wants to look like it’s busy solving deep social maladies as a means of guarding against budget cuts.

Education | Equal employment enforcement is worse than just a costly program to solve a diminishing labor market problem. It also impedes progress attacking the real problem, which is providing young people, especially black males, with the skills they need to succeed. The O’Neills write,

We find that it is not employment discrimination that is holding back groups with lower earnings. When lack of skill is the problem, it is counterproductive to compel employers to hire or promote workers they view as unsuitable for the job…. Moreover, the requirement of racial and gender preferences … that are the basis of affirmative action and disparate impact rulings can have undesirable effects. They reduce the incentive to obtain the human capital needed and they reduce the significance of the accomplishments of those minorities who did not require special standards to compete.

In other words, the crusade for ideal fairness in the labor market (as viewed by EEOC and OFCCP bureaucrats) is a distraction from real problems. The authors don’t indict our horrible public primary and secondary school system directly, but fixing basic education so that most young Americans leave high school with respectable skills and work habits would do infinitely more good than the witch hunt for race and gender discrimination. The O’Neills evidently didn’t want to expand their book by getting into education, but that indictment is present between the lines.

Our authors do not, however, call for abolishing the government agencies and even write that the EEOC has “important work to do.” On that point, I disagree. Their work shows that capable workers will be able to find employment that pays them according to their productivity, no matter their race or sex.

Even if companies sometimes have preferences for people with certain characteristics, the market is an ocean of opportunities. When Abercrombie & Fitch hires only perky white kids, that means there are fewer perky white kids competing for other jobs in retail sales. When Joe’s Stone Crabs hires only male waiters to carry their heavy trays (another protracted battle covered in the book), that means there are fewer men competing with women for other restaurant jobs.

If it were politically possible to do so, we should get rid of the EEOC and OFCCP, thus saving the country a great deal of useless regulatory cost. Reining them in would, however, be a good first step and this book helps mightily in paving the way.