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THE ESSENCE OF THE AFFIRMATIVE ACTION ISSUE

Income distribution objectives, laws prohibiting social discrimination, and, in some instances, policies intended to rectify the effects of past discriminationaffirmative action goalshave all become a part of "the rules of the game" for American business. Social responsibility is imposed on business and industry in the interest area of employment discrimination in the contexts of hiring, promotion, retention, and compensation. The regulation of business and industry in these contexts is intended, according to its proponents, to eliminate overt discrimination on the basis of gender, racial or ethnic background, religious preference, or age, and, in many instances, such regulation is also intended, according to its proponents, to rectify the effects of past discrimination based upon these same characteristics. In practice, the greatest emphasis in affirmative action programs is placed on discrimination which is based either on sex or on racial or ethnic background.

In theory, government regulation designed to eliminate employment discrimination should have no adverse impacts on business and industry, for, in theory, discrimination between individuals in relation to hiring, promotion, retention, and compensation would be based only upon performance or upon per formance potential. Lundberg, & Startz (1983) found that firms would enjoy increased profitability as a result of the elimination of compensation differentials based upon sex or upon racial or ethnic background. Their study assumed, however, that the distribution of abilities and motivations to learn, knowledge bases, and skill levels were similar in all racial and ethnic groups, and in both men and women, and that employment policies based upon performance or potential performance would result in an integrated workforce, in which a firm would a...