Current Economic Question Moment

Supreme Court Ruling Effecting Minority Groups Will Have A Negative Economic Impact

The Supreme Court ruled in the 303 Creative case where the website developer owner denied a man who wanted a website for gay marriage. As I understand the ruling, the Court ruled the Designer’s free speech and religious freedom allowed her to refuse. Many believe this opens the door to allowing anyone to start a religion or, worse, use words to discriminate against whatever group they choose. Economically this is a step back to the 1960s or longer.

Do you want to hear a Hill story?

I come from an all-white town in the 1960s. Like most of you, I had to work summers to pay for my college education (tuition was $6 an hour, but wages were $2.38 an hour). During the first two summers out of high school, I was a laborer for United States Steel. My assistant foreman, Earl Washington, was a fifty-plus-year-old African American who had worked at the mill since his teens. He knew that mill forward and backward. Yet, the golden rule was an African American could not be a foreman or higher management.

Assistant foreman Earl had every reason to discriminate against a white teenager from an all-white town working in an all-white summer college student labor gang. Earl never saw me as a white college student and gave me double shifts at increased pay, allowing me to work six days and gave me every break in the books. The man had every right to be bitter, to reduce productivity, take advantage of work conditions, and discriminate against the white kid.

Instead, he took the time to teach me about the mill and see that I had opportunities to fulfill my dreams. The man taught me more about discrimination than any course, book, or seminar (I’ve been to dozens of them over the years). As educators, I firmly believe it’s our responsibility to help everyone that needs it regardless of color, religion, or sex preference. I also received that
training at home but seeing it in the real world makes a difference.

Enough with personal views; what about the economic impacts of discrimination?
Productivity Decreases.

We know that Gross National Product is the sum of the value of all goods made in a given year for the domestic and world economies. The value is equal to the number of goods produced times the real price of the goods.

GNP = Quantity produced times real prices

Where: Real prices are nominal (Current money prices) prices divided into a base year set of prices.

The base year is chosen for steady prices. (I’ll cover this in another
moment due to word limitations).

Quantity equals the worker’s productivity times the number of workers.

Discrimination limits productivity
Discrimination limits the ability of the worker to maximize productivity and lowers the quantity produced. In Earl’s case, he needed to have the authority to maximize the knowledge of the mill.

Wage Growth is Reduced
Since supply is limited by discrimination (reduced by limiting productivity), there will be less income, and discretionary spending will be reduced.

Innovation Impacts
Demand for goods are decreased since there are lower wages and less goods. The need for more innovations is limited. The incentive to invest in research and development at the corporate level is reduced due to reduced profits.

I could go on, but I’m out of words 560+.