Fifty Years of Reparations

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The summer of 2020 Black Lives Matter protests/riots revived discussion of reparations for slavery and segregation. President Biden recently added his support to a congressional campaign to study the issue.

The fact of the matter is that we’ve had reparations, in the form of “affirmative action,” for the last half-century. Fifty years ago this week the Supreme Court gave its approval to the “disparate impact” theory of discrimination under the Civil Rights Act. A month later the Third Circuit Court of Appeals approved the Department of Labor’s “affirmative action” orders, which the Supreme Court let stand.

“Affirmative action” as a technical term first appeared in the National Labor Relations (Wagner) Act of 1935. The Wagner Act made it illegal for employers to discriminate against union members or organizers. If they violated the law, the National Labor Relations Board could order them to reinstate, provide back-pay, and take any other “affirmative action” that the Board prescribed. Ironically, this law empowered many unions that excluded or segregated blacks, and the NAACP and Urban League opposed it for this reason.

The federal government began to prohibit racial discrimination in employment just before World War II. In response to labor leader A. Philip Randolph’s threat of a “March on Washington” to protest segregation and discrimination in the war-preparation effort, President Franklin D. Roosevelt ordered all federal contractors to stop discriminating on the basis of “race, creed, color, or national origin.” He created the President’s Commission on Fair Employment Practice (usually called the FEPC) to enforce the order. Southern congressmen cut off funding for the commission after the war ended, but every subsequent president issued a similar executive order.

President John F. Kennedy added an “affirmative action” requirement in 1961. This was widely understood as what is often called “soft” affirmative action — voluntary outreach programs, to let blacks know that opportunities existed, to recruit at historically-black colleges, to advertise in black newspapers, and generally to reform “old-boy network” hiring systems. As the decade progressed, and especially after the urban race riots of the mid-1960s, affirmative action became harder. The Labor Department devised the “Philadelphia Plan” under President Lyndon B. Johnson. This required contractors in certain construction trades in certain cities to adopt “manning tables,” with “goals and timetables” for increasing minority employment — quotas in all but name. The political reaction caused Johnson to shelve the plan, but his successor, Richard Nixon, restored it. (His recently-deceased Secretary of Labor, George Shultz, was the prime mover on it.) Nixon not only stopped Congress from overriding his Philadelphia Plan order, he extended it to all government contractors in 1970s.

In the meantime, Congress had enacted the Civil Rights Act of 1964, whose Title VII prohibited racial (and sex) discrimination for all employers. Fear that it would lead to quota hiring led Congress to insert several provisions to prevent it. The act applied only to intentional discrimination. It protected merit and seniority systems and other qualification standards so long as they were not “the result of an intention to discriminate” or “designed, intended or used to discriminate.” It prohibited “preferential treatment to any individual or group” due to statistical “imbalance which may exist” between the group and the total population.

The agency that enforced Title VII, the Equal Employment Opportunity Commission, quickly got around these provisions. It developed the “present effects of past discrimination” principle to make the act retroactive. The “disparate impact” theory held that qualifications that resulted in few minority employees were per se discriminatory. Individual treatment and intent did not matter, only statistical results did. The Supreme Court upheld the disparate impact theory in the case of Griggs v. Duke Power Company, in April of 1971.

Long before “woke capitalism,” corporate America learned to embrace race-based personnel policies. They figured that the cost of hiring a certain number of less-productive minority employees was less than the cost of defending purely merit-based employment systems. The crucial support came in the 1979 Weber case, in which the Court insulated employers from “reverse discrimination” suits by whites. Corporate affirmative action was legal so long as it did not “unduly trammel” the interests of white workers. Ronald Reagan campaigned against affirmative action in 1980 (as an executive order, he could unilaterally revoke it). But his big business supporters convinced him to leave it alone. In fact, they wanted more affirmative action, to impose its costs on their small-business competitors.

Corporations, after all, do not pay for affirmative action. Like other regulatory costs, they pass them on to the consumer. Thus, we all pay for affirmative action (including, to some extent, its beneficiaries). It is a sort of hidden tax to benefit black and other minority workers. It is reparations in all but name.

Paul Moreno is the William and Berniece Grewcock Chair in Constitutional History, Professor of History, and Dean of Social Sciences at Hillsdale College.

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