Yesterday, I wrote a piece about why I believe business probably doesn't need to worry about President Obama nominating Sonia Sotomayor for the Supreme Court. One of the loudest criticisms I've heard from conservatives has been about Ricci v. DeStefano, a case where she effectively said it was okay to disregard firefighter test scores to ensure minorities were hired. This essentially says affirmative action is okay.
Speaking to someone outraged about this verdict yesterday, I explained that this was a social issue, not a business issue, so it was not relevant to what I wrote about. Upon reflection, I am starting to wonder if this case matters after all.
Last week I wrote another piece about how reverse-ageism is might be bad for the economy. The crux of the argument was that, by discriminating against youth, the economy may be harmed, for various reasons I explained. Could similar arguments be made about discriminating against the majority, who might have scored higher on tests or have been more qualified?
Any economic argument against affirmative action would probably have to rely on productivity. It would also necessarily include the assumption that the applicant who scored higher on tests or was more qualified would do a better job, or in economic terms, be more productive. If that's true, it could be argued that affirmative action stunts economic growth because productivity would have been higher if the more qualified applicant was hired.
Is this necessarily the case? It sure would seem like it -- if you believe that test scores or qualifications have anything to do with job performance. I suspect that most people do.
There is, of course, a counter argument. Does diversity provide greater economic returns than mere productivity? Progressives would probably say so, though conservatives might disagree.
How about the case in question -- firefighters? I find it a pretty hard to believe that diversity would have a more positive effect on a fire department than having firefighters who are more qualified to perform their duties. Thus, from a purely economic standpoint, Sotomayor's decision seems flawed.
In other situations, however, it might not be so clear. What about an architecture firm? How about a restaurant cook? Feel free to share your thoughts as comments.
Imagine a French restaurant that prides itself on always having an authentic French chef as its head chef. The current head chef is retiring in six months. His sous-chefs are a Frenchman of reasonable talents and an American who really has the knack but whose last name is Smith. Is the American of superior culinary skills a) working his heart out to be the best and most dedicated sous-chef he can be? b) biding his time while looking for restaurants that value the quality of their cuisine over the "Frenchness" of their staff?
In all likelihood, the restaurant's policy isn't just going to prevent it from getting a superior head chef down the road. It's also going to prevent it from getting the best out of a superior employee who knows his prospects for advancement are limited.
There is an adequately comparable example in the world of government contracting (my industry) that may be useful to examine. There are statuary requirements for awarding contracts to certain subsets of the population, whether based on minority status, sex, or prior service to the country. While the overall percentages are small (between 3-10% for each each "set-aside"), in aggregate they can add up to +30% of total discretionary spending by the USG.
What impact does this have on the quality of service delivered? In my experience the difference between unrestricted and set-aside contract performance is negligible. Generally this is because of the fairly robust population of set-aside companies that compete. So there is competition, even if it is within a smaller subset of the overall contractor population.
This is the key element, in my opinion: the market that's impacted by any sort of affirmative action needs to be deep enough in talent/skill in order to work efficiently. Otherwise economic productivity will be harmed, and the sub-optimal end-state will occur. To make Affirmative Action work in a transparent way, I feel the hiring authority should carve out "set-aside" slots in advance of interviewing candidates in order to meet some sort of minority hiring goal. Giving preferences "behind the curtain" makes the process more difficult on everybody.
Final thought - Affirmative Action at its core is a moral decision, not an economic one. The argument that reducing the pool of qualified candidates (and even selecting less qualified over more qualified) to meet certain goals will somehow improve the overall economic productivity of an organization is ridiculous on its face. Institutions and politicians need to be honest about this.