Abstract
This paper argues that a primary cause of racist outcomes in the workplace is the degree of explicit or implicit protectionism employers receive. When this occurs, employers are protected from market penalties that would otherwise increase the costs associated with workplace discrimination and reduce profits. Examples from U.S. economic history are provided to support the argument that wage differences in competitive markets can he explained by differences in worker productivity and that wage differences between whites and blacks did not significantly diverge until after labor market interventions had the effect of protecting employers from market penalties resulting from such actions.
