Mises Wire

The Feds Are Suing Oracle for Discrimination, Even Though No One Has Complained

Three days before Barack Obama left office, his Department of Labor served a complaint against Oracle America, Inc., alleging gross systemic discrimination in both its hiring and pay practices.

Specifically, it claims that Oracle discriminates against non-Asians in hiring for sixty-nine job titles and discriminates against women, Asians, and African Americans in pay for eighty job titles.

Did Oracle Discriminate?

Is it strange that Oracle allegedly discriminates both in favor of and against Asians?

The Office of Federal Contractor Compliance Programs (OFCCP) is at the center of this complaint; it is involved because Oracle is a government contractor. The only points supporting the OFCCP’s claim are statistical analyses.

The complaint mentions exactly zero employee complaints, and it doesn’t even try to say that there is evidence that Oracle intended to discriminate.

It is difficult to determine and compare the myriad factors involved in assigning appropriate compensation, and the statistical analyses that OFCCP conducted likely fall short. Economically speaking, any mutually agreeable level of compensation is appropriate, and in a free market, compensation will tend to be equitable.

Should the OFCCP Have This Power?

When Oracle filed a countersuit on November 27, 2019, however (yes, the case is still open), its press release discussed none of those points. Instead, it focused on the unconstitutionality of the Department of Labor acting as “investigator, prosecutor, judge, jury, and appellate court.”

Of course, such arrangements are not limited to the Department of Labor; they have become unfortunately common throughout the federal bureaucracies. This is despite their blatant violation of the constitutional separation of powers, arguably the most basic fact of American civics. As soon as we started learning about the US government, most of us learned about the separation of powers and how the Founding Fathers designed the system with the famous checks and balances that prevent tyranny.

How well has that tyranny prevention worked out so far?

Oracle argues that the situation is not only unconstitutional but also statutorily illegal. It remains to be seen how the suit and countersuit will turn out; typically, it takes extremely deep pockets to win such a fight against the feds. Oracle may yet come out on top, but so far it appears that the checks and balances have failed to protect Oracle—a company that provides over one hundred thousand jobs and many billions of dollars of services to the economy each year.

Could the Free Market Handle This?

The OFCCP has not made a compelling case for the existence of systemic discrimination at Oracle; its claims are prima facie incongruous and based exclusively on ambiguous data. Indeed, it appears that it has inserted itself into a situation in which no one has complained, no one has objected, no one has said that their compensation was not appropriate for their labor or that they objectively should have been hired when they were not.

But, what if there really were discrimination?

And, is there a better way to handle it than the intra-DoL system, or even the constitutional system?

My interest is in how this situation would play out in a free market. Let’s consider it.

A free market, with total freedom of association, would probably have no claims of hiring discrimination, because no companies would be compelled to hire or retain anyone against their will. Of course, a reputation for discrimination could easily lead to a loss of revenue, as a consumer base that opposes discrimination would likely choose to take their business elsewhere.

Furthermore, formal antidiscrimination “regulations” could be voluntarily adopted. Private associations or organizations could act as “ratings agencies” and prescribe standards for avoiding discrimination, as well as perform regular audits to ensure compliance. Consumers could choose to patronize only those companies that subscribe to sufficiently stringent standards and pass the audits.

How Would the Free Market Handle This?

What would happen with a discrimination claim in a free market?

Let’s say that Oracle is certified as discrimination-free by the standard-bearer antidiscrimination association. In this scenario, a prospective employee believes that Oracle has discriminated against him in the hiring process or a current employee believes (despite mutual agreement) that Oracle has discriminated against him in his compensation.

He could discuss it directly with the appropriate people at Oracle, or he could take it to the antidiscrimination association that certifies Oracle as discrimination-free.

If his claim has merit, the association would need to ensure that Oracle settles it swiftly and fairly, or have its discrimination-free certification revoked. To do otherwise would risk the association’s reputation and tarnish the value of its certifications.

Is There Another Way to Look at the Situation?

Of course, this is just one way it could play out. The best thing about the free market—wait, is there a single best thing?—is that one person can’t conceive of all the remarkable ways that collaboration and competition can make the world a better place.

On the other hand, you may have noticed some similarities between how a discrimination claim would work in a free market and how it works with a state-run system. Part of that is because the free market is impossible to get away from completely, and part of it is because my imagination is likely affected by the status quo. The main benefits of the free market vis-à-vis the state-run system are the lack of coercion (in both funding and association) and the opportunities for innovation.

In any case, it appears that the constitutional system isn’t working, since we have unconstitutional bureaucratic judicial pipelines all over the place and those pipelines don’t work too well by their own standards.

Image Source: US Dept of Defense
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. 

Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

Become a Member
Mises Institute