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Open Letter to EPI’s Lawrence Mishel

Dr. Lawrence Mishel, President
Economic Policy Institute
1225 Eye St. NW, Suite 600
Washington, DC  20005

Dr. Mishel:

Your organization’s new study “Black-white wage gaps expand with rising wage inequality” attributes the increase in measured differences between the wages of whites and the wages of blacks to “discrimination.”

This explanation is as implausible as it is simplistic, as it strongly suggests that American businesses increasingly leave money on the table by refusing to compete to employ lower-priced black workers in jobs that black workers can do just as well as white workers.  If you, your staff, and your board of directors truly believe that blacks are underpaid because of discrimination, why don’t you launch your own businesses and hire these legions of underpaid black workers?  Not only will you do well by earning the handsome profits that come to those who discover and use under-priced resources, you’ll also do good, as the competition you unleash in the market for these workers will soon raise their wages to levels that more accurately reflect their productivity.

But I wonder if you really do believe that the American economy swarms with the legions of under-priced workers that your new study suggests.  Many other of your organization’s studies, especially those of “offshoring,” complain about American businesses greedily hiring lower-wage foreign workers.*  Can you explain why American businesses avidly, and without regard to workers’ race, grasp the profits that are available by employing lower-wage but equally productive foreigners (and thus, on your telling, drive American wages down so that they are closer to foreign wages), while at the same time these businesses stubbornly refuse to grasp the profits that are available by firing higher-wage whites and hiring in their place equally productive but lower-wage blacks?

As long as inconsistencies such as this one mar your organization’s larger narrative, you must forgive the rest of us for rejecting both your findings and your policy recommendations.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* Here’s a recent example.

“Progressive” researchers, if they are to be believed, are stupendously adept at spotting real-world profit opportunities, but they are shockingly reluctant to exploit these opportunities commercially.


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