Racial discrimination and gender discrimination have been pervasive throughout history. Let's see the role they play in economics and how they can lead to differences in wages. So, we're going to talk about economic discrimination and this is the fact you're going to pay someone a lower wage or simply not hire someone based on an irrelevant characteristic. Okay? So, this might be "Oh I only hire blondes, I don't hire redheads or brunettes," right? It's something irrelevant to the job but it's playing a role in the hiring process. Generally, we don't discriminate on hair color; the most common forms that we see are going to be racial discrimination based on race and gender discrimination based on gender, right? And now what we're going to see is that white males make considerably more money than any other demographic group, right, and I'm sure you've all heard some studies and seen differences in wages and have seen studies where white males are making more money, right? But it doesn't all come down to discrimination that's currently occurring, it's not like all employers are just saying, "hey, he's a white male, I'm going to hire him and I'm going to pay him more money." It doesn't really work like that in theory; what we're going to see is that there are some other factors going into play rather than just current discrimination. Remember, discrimination happens throughout history and it takes time for changes in our society to fall into place. So, let's see some of these current problems that we see.
First, a reason why white males might be making more money is differences in levels of education. Okay, so throughout history, what we've seen is that there have been more opportunities for white males to receive a higher education, to go to college. Obviously, this trend is changing. We're seeing that there are more women in college, more minorities going to college, but remember that that's going to take time to take effect, right, so right now what we're seeing is that there are generally more educated in the white male category and that leads them to have more human capital. Remember that this education and this training, it leads to higher human capital which leads to higher wages. Okay, and I'm not saying that this is the only reason why white males are paid more, but this does explain some of the differences. The next one is the difference in experience. And we're going to see that men generally have fewer job interruptions than women. Okay, so things like pregnancy come into play when we think of a job interruption and that time where the woman's pregnant and can't go to work or after she's pregnant and taking care of the child, she loses that experience she would have learnt on the job and remember that experience also increases your human capital and when you have higher human capital, you make more money, so this is another reason these job interruptions are preferences. So, we're going to see that women represent approximately 90% of people employed in some of the low-paying jobs. Okay, so this includes preschool teachers, dental assistants, childcare, we're going to see that these jobs are mostly filled by women and they are mostly low-paying jobs. Where men fill approximately 90% of some high-paying jobs, right, so we see pilots, electricians, engineering managers, things like that, we're going to see that these roles are generally filled by men. Of course, this is going to change over time as differences in education start happening more than they have in the past, right? But these do explain some of the current differences in wages. Okay, but this obviously doesn't explain everything. There is still discrimination, but one of the main things that happens with discrimination is that it can be institutionalized, so it becomes part of the culture. Okay, and when it's part of the culture, it makes it much more difficult to get rid of, right? So we still have to this day, we have the lingering effects of slavery and segregation that are affecting African Americans in the United States, okay? So what we see often in urban neighborhoods or neighborhoods where a lot of Black families live, there are inferior schools, and in these inferior schools, they're getting a worse education when they go to these schools and that ends up with having lower human capital, right, and this isn't their choice, it's not like they chose to go to this poor school, they went to the school because it's the one in their neighborhood and it just doesn't have the funding to provide a quality education. So they have lower human capital. And then there's still discrimination where people just don't want to hire African Americans. There's actually a study done where they sent resumes with white-sounding names and Black-sounding names and the white-sounding names got more callbacks than the Black-sounding names. Right? So there's still this discrimination, definitely it's still happening, and since they can't get the jobs, it ends up like they have lower work experience. They can't get the job, they don't get the experience, and they don't get the human capital that allows them to get higher wages. Right? But let's, you know, this has been quite a heavy topic, right? Discrimination is a heavy topic. Let's think of the other side. Let's see a benefit of what could be happening here. However, on the bright side, well, this discrimination, it's going to cost money to people who want to discriminate. Okay, so let's look at this example. We've got peace and love Patrick and we've got discriminating Dave over here, right? So peace and love Patrick, he loves everybody and he'll hire any qualified candidate for his job. We're discriminating Dave is only going to hire white males, right? So what you could imagine is that peace and love Patrick can pay a lower wage, right? He's going to have more people he can choose from and in the sense if you have to pay a white male more, well he's going to have to pay more, to hire people at discriminating Dave, right? So we might see that peace and love Patrick might be able to hire someone for $10 an hour where discriminating Dave would have to pay $12 an hour, right? And now that discriminating Dave has this higher wage he has to pay, well, you could imagine his costs are going to be higher So eventually, peace and love Patrick can run him out of business, right, because he can keep lower costs, he can provide more efficiently to his customers, right, he reaches up the more of a minimum in his average total cost and he will be able to eventually knock discriminating Dave out of business, right? So that is the bright side is that discrimination is going to cost money and eventually, they shouldn't be able to make money in these situations. Alright, so this is a pretty heavy topic, but this is how it relates to economics here.
