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The debates over the passage of Title VII of the 1964 Civil Rights Act were marked by passionate disagreement: conservatives objected to the legislation as an unwarranted interference with employers' freedom of contract, while liberal supporters considered it a first step toward racial justice. While disagreement about what employment discrimination law should do has continued—in much the same form—to this day, there has been surprising consensus about the mechanism by which Title VII actually works: whether it is thought of as inadequate or excessive, Title VII is usually presumed to promote the hiring of those it is designed to protect. The logic underlying this presumption is simple: by making employers liable for failures to hire based on race (or other forbidden grounds), the law raises the price of such discriminatory activity and produces less of it than would occur if employers were left completely free to hire whomever they wished.

As Donohue and Siegelman and others have recognized, however, there is a tension between protecting applicants against discrimination in hiring and protecting workers from discriminatory firing after they have been hired. Antidiscrimination law forbids both kinds of conduct, but the two prohibitions are inherently at odds. By making it harder to fire certain workers, employment discrimination law tends to make these workers less attractive prospects at the hiring stage. An employer would prefer to hire someone who can be easily fired (should that prove necessary) than an otherwise identical applicant whose firing would be subject to legal scrutiny. Thus, protection against discriminatory firing acts as a kind of tax on hiring those to whom it is extended.

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