Elena Gutierrez, Chapter 5, Question 4

One of the first issues that Charles Wheelan proposes in chapter five are economical forms of discrimination. I had heard (even in Mr. Hofffner's Into to Economics class) of different ways that companies discriminate against prospective employes or clients. Whether it's a company choosing to hire a white man over a black man, or an insurance company choosing to cover a person based on their occupation, these are both forms of economical discrimination. In chapter five Wheelan writes about how a company will hire a white man over a black man (even if they are both equally qualified for the job) based on the statistical information indicating that black men are 24% more likely to have been an ex-convict than a white man. This form of economic discrimination is "rational discrimination." An employer can make the argument that he wasn't entirely in the wrong in hiring a white man over a black man, because he has "defensible" reason based on "broad statistical patterns." (Naked Economics 107)  

Wheelan also writes about the hiring process at law firms. Employers are more likely to hire a male applicant over a female applicant (again even if both male and female applicants are both equally competent.) Based on demographics, employers can infer that the female applicant has a higher chance of having children, taking a paid maternity leave, and eventually cutting her hours or leaving the firm. In this case the law firm would not only suffer the cost of paying one of their employes while she is    not working, but the cost of re-hiring and training a new employe. Wheelan shared a solution that businesses' and law firms' have come up with to keep female employes around after their maternity leave; employers will add a maternity bonus to a women's salary. Wheelan writes that working mother's with a package can "Keep it if they come back, and return it if they don't." (Naked Economics.107) This maternity package could work, because women are more likely to get back to work earlier, and stay with a firm that offers a generous maternity package.