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What Is Economic Discrimination?

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  • Written By: Malcolm Tatum
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  • Last Modified Date: 06 November 2014
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Economic discrimination is a term that is used to describe the occurrence of some sort of bias or discrimination based on economic factors. This type of bias may be based on a wide range of demographics that seek to marginalize certain groups within the economy, including select groups of workers, consumers, or even specific types of businesses. The concept of economic discrimination was first addressed in the United Kingdom during the middle of the 19th century, and is often cited as part of the basis for laws that prevent the issuance of charges or the offering of wages based on the bias of the business owner.

While price discrimination is often closely connected with economic discrimination, the two terms relate to two different scenarios. With price discrimination, monopolies charge different buyers different prices for the same goods and services, based on their willingness to pay. In contrast, economic discrimination is not concerned with the willingness to pay but the attributes of who is actually making the purchase.

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It is possible for economic discrimination to take place in a number of different settings. As it relates to workers, this form of bias may be based on factors such as gender, sexual orientation, religious preference, ethnicity, or even age. In this situation, some workers may be offered higher wages because they do not possess some attribute that the business owner considers undesirable. For example, a worker who is a member of a religion that is not well-known in the area, is over a certain age, and comes from a particular ethnic background may be offered wages that are lower than the wages offered to someone who was a member of the right religion, was under a given age, and was from what the owner considered a more desirable ethnic background. This would be true even if the two people possessed the same level of skills and were applying for the same position within the firm.

Another manifestation of economic description is aimed at consumers in general. Here, a retailer may offer products to consumers, basing the price extended on factors such as the neighborhood in which the retail outlet is located. For example, if a retail chain operates a store in an area that is mainly frequented by minorities, the retailer may actually charge higher prices for the same goods sold in other stores located in more desirable areas. An insurance company may also assess higher rates based on factors of race, age, or gender. In these examples, consumers who do not fall into the relatively narrow view of what the business considers the ideal customer are highly likely to pay costs that are considerably higher than those consumers that the business wants to attract.

Businesses may also be victims of economic discrimination. In this scenario, the gender, race, and religious preference of the business owner may be a factor in what type of prices the business pays. This means that a business owner who is a member of a minority race and religion in the area, and is not the typical gender for owners of that type of company, may pay more for the same business services offered to owners who are considered more desirable in terms of gender, religion, and race.

In some nations around the world, there are laws that help to minimize the amount of economic discrimination that occurs. Even within countries with regulations against this type of economic activity, instances do still occur, although they may be more difficult to prove. When an instance of economic discrimination is identified, it should be reported to government authorities immediately. In some instances, current laws may also provide the basis for victims of the discrimination to file civil suits as one course of obtaining redress for the discriminatory practices related to the incident.

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discographer
Post 4

@burcinc-- Actually, stores don't open in places where the company doesn't want people to shop from them. Technically, they can't force a certain group of people to pay more than others. It's against anti-discrimination laws and the business will be sued if that's the case. But actually avoiding areas where there are minorities can turn out to be an even bigger issue because it cuts off those groups from services and sometimes, even basic needs.

This was and continues to be a big issue in the DC area. In the areas of DC that are most populated by African Americans and people of low income, it is very difficult to find a grocery store. I know that in 2012, in some areas of DC, people only had access to 24 hour gas stations. But what can one get from a gas station? Some bread and milk at most and that too at high prices. Other stores have refused to open in these areas, so people literally had no access to food. They had to take a bus and or the metro for the closest grocery and many couldn't afford to go that often.

burcinc
Post 3

Wait, if a retail store doesn't want minorities to shop from them, they charge higher prices?! But why open a store in that area in the first place if you don't want people there to shop from you? I don't understand.

fify
Post 2

Price discrimination happens in the US. I see it all the time. I live on the East Coast but I'm from the Midwest. When I visit my parents in Iowa, I can't believe how cheap food is compared to the East Coast. I pay a lot more for the same box of cereal in Virginia. I just don't understand this. I realize that it has to do with the average income of the area but is it fair? I don't think it is.

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