Over the past few months, countless volunteers from the American Civil Liberties Union (ACLU) have swarmed the UC Berkeley campus area in attempt to recruit signatories for their latest cause. Their latest campaign, it turns out, is to support a federal law which would effectively make it illegal for employers to fire homosexual employees on the basis of their sexual orientation. At first glance, this seems like a very reasonable proposal, as certainly no rational person in today’s society would want gays or anyone else to be unfairly discriminated against in matters as important as employment. Indeed, the ACLU is undoubtedly driven by the best of intentions, namely to protect and improve the livelihoods of these individuals. Unfortunately, as is the case with virtually all government interventions into economic matters, such a law would not only be inconsistent with the principles of a free society but would also serve to make everyone, including gays, worse off than they are now.

History is replete with examples showing how the unintended consequences of well-meaning government interventions and regulations ultimately serve to do the opposite of what its supporters intended, and this ACLU supported bill would be no different. While its advocates imagine that such a law would magically solve all employment problems for gays, the logical consequences of such legislation would be a very different scenario. Essentially, by giving certain workers the legal basis to sue for discrimination, this law would effectively make this protected group a liability to employers due to the excessive costs of fighting off the countless lawsuits that may occur, even when the accusations are false. As a result, employers would inevitably become increasingly fearful of hiring individuals within this protected group for fear that firing them for any reason at all could easily lead to a costly lawsuit and tremendous drain on the company’s resources. Thus, employers, even non-biased ones who would not have discriminated in the past, will be economically forced to adopt a policy of not hiring homosexuals in the first place, or perhaps limiting any new hiring all together so as to prevent bringing such a liability onto the company. Therefore, the inevitable result of such legislation would ultimately be the exact opposite of what the law would be intended to do, insofar as it would incentivize employers to not hire gays, thereby decreasing their employment opportunities and worsening their economic standing as a group.

If the preceding scenario seems far-fetched, it is actually a nearly exact account of what occurred following the passage of the Americans with Disabilities Act (ADA), a similar law which gave the disabled special workplace protections from being fired. Needless to say the result has been a litigation nightmare for employers, and it turns out even truly disabled people were hurt by it as well. In the five years immediately following the passage of the ADA in 1991, the employment rate of disabled Americans dropped by a staggering 11%, far more than the rate for average citizens.1 The main reason behind this can be attributed to the fact that many of even the most caring and sympathetic employers were no longer willing to take on disabled workers due to the massive liabilities they now represented. So while it did indeed make it less likely to be unfairly fired as a disabled person, this was more than made up for by the fact that it also became significantly harder for the disabled to find jobs in the first place. There is no reason to think that similar legislation replacing the disabled with another group such as gays would have any different effects.

While the possibility of discrimination in the workplace is something very few people want to see, it is crucial to remember that government is very rarely, if ever, the solution to such problems. Fortunately, the free market does offer a solution in such predicaments. An unhindered market provides its own incentives against such behavior by rewarding employers who employ solely on the basis of efficiency and productivity and punishing those who make decisions based on anything else. Thus, employers acting on irrational biases will necessarily lose some competitive advantage and be worse off, making government interference into this process both entirely unnecessary and counterproductive. Ultimately, it will only be when our society learns to embrace the forces of the free market and stops relying on the heavy hand of government to solve its problems that our society will be able to progress away from such undesirable problems. ■

Notes

http://www.cato.org/pubs/regulation/regv23n1/deleire.pdf