Academic journal article Journal of Economics and Economic Education Research

Compensation Discrimination in the National Football League

Academic journal article Journal of Economics and Economic Education Research

Compensation Discrimination in the National Football League

Article excerpt

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INTRODUCTION

The study of racial discrimination in professional sports has been an actively studied topic for decades, though much of this work has been done in sports other than the National Football League (NFL). However, the NFL itself has become highly conscious of discrimination in both hiring and compensation by race since the early 2000's. The NFL created a diversity committee in October of 2002 expressly to hunt for discriminatory practices and offer recommendations to reduce racial discrimination of all types in the league.

Recommendations from the diversity committee included training and development programs aimed expressly at minorities. For instance, one recommendation, the so-called 'Rooney Rule' named after the chair of the committee Dan Rooney, ensures that at least one minority coach must be considered for every high level coaching position that opens in the league. The opportunity to discriminate against either coaches or players, however, cannot be fully eradicated by such rules. Though this paper does not deal with coaches, there exists the possibility of compensation discrimination by race as long as there is the possibility of collusion again black players or coaches. Without collusion, teams not discriminating would be able to hire talented black players at lower cost and increase their winning record, effectively bidding out most of the discrimination among teams (assuming teams put winning as a top priority). The incentive to break collusion of this type is strong, however, because even a single extraordinarily talented player can make a huge impact on a team.

When it comes to discrimination, Becker (1973) discusses the three classic types or 'tastes' of discrimination. They are employer discrimination, employee discrimination, and customer discrimination. Employer discrimination represents the situation where an employer simply has a preference for hiring one type of employee and pays that group more than the nonfavored group. The second type of discrimination mentioned by Becker, that of employee discrimination, is more subtle. In that case, one group of employees displays such a strong preference not to work with someone from a non-favored group that the resultant discord essentially forces the employer to discriminate to prevent the loss of overall productivity from attempting to mix the groups. The third form of discrimination is customer discrimination, in which customers have such strong preferences that they that they change their purchasing habits significantly enough to provide an incentive for employers to discriminate against the nonfavored group in order to maintain market share and profits.

Discrimination should be non-profit maximizing as a rival could hire the non-favored employees and create higher profits (in this case team wins, likely driving team revenue and profit), presumably driving the discriminating producer out of business. There have been suggestions, however, that discriminatory practices may not result in a negative outcome for the discriminators fast enough to bid it out of the market rapidly (Hellerstein, Neumark & Troske, 2002).

Professional sports, like any other for-profit business, define success by making profits. One way to make profit is to have a winning season. Having the best players is one way to attempt to have a winning record. Indeed, an argument can be made that in sports even one player can make a difference in a season record, a much stronger impact than a single employee is likely to make for a firm in other output markets. Therefore, there is a strong incentive for teams to find and retain the best talent available, regardless of race. This reduces the likelihood of employer discrimination in a for-profit scenario where profit hinges on having talented players. A team's talent scout or general manager who does not accomplish this will not retain his job. Should a team discriminate by pay, the rookie experiencing such discrimination will be highly unlikely to remain with that team after his initial contract expires and he becomes a free agent, so that discriminatory teams will be unable to retain the best talent. …

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