NOTE: I would be remiss if I did not acknowledge writers such as Walter Block, Butler Shaffer, Thomas Sowell, Walter Williams and Stefan Molyneux in helping me clarify my thinking. And a special thank you to Facebook user Julie Canny for prompting me to write this note.
If there are no functional differences between races or genders with respect to the ability to perform a given job and there are no state enforced barriers to entry into the market place, the employer who discriminates based on race or gender is putting himself at a competitive disadvantage by depriving himself of competent workers and risking public backlash.
If I and another entrepreneur were in the same business, producing the same goods or services and my competitor either would not hire women or racial minorities or paid them less that their white male counterparts he would be shooting himself in the foot.
All I would have to do is either hire those he wouldn't at a slightly less rate of pay than he gives his white men or hire his existing women and minority workers for more than he is currently paying them and slightly less than he is paying his white men.
I would then have lower costs and could undersell him, not to mention I would have the public's goodwill working for me and against him. It would not be very long before my business would more profitable than his and my market share would be increasing while his diminished.
At that point I would be susceptible to the same market forces that allowed me to put him out of business. Since I was more profitable than him and making more money, it would be in my interest to increase the pay of my women and minority worker to a comparable level with their white male counterparts or I would be just as vulnerable to the same tactics as I had used against my competitor.
This can only work in a free market with no barriers to entry. The reason it was not happening prior to Civil Rights Act of 1964 was that there were (and still are) high barriers to entry in the market. Licensing and regulation impose costs on businesses. Existing firms have already passed the hurdles and can afford to operate in the restrictive environment. New businesses have to overcome them, preventing easy entry by new competitors.
Similar dynamics apply to retailers and those providing "public" accommodations. Stores, motels and bus companies, for instance, do not prosper by turning away customers. Women and minority money spends just as well that of white men. If someone has a restaurant or a bus company and they refuse service to minorities all a competitor has to do is serve all comers.*
And when you think about it, forcing a racist or misogynist to serve or hire people he hates keeps the bigot in business. If people were allowed to discriminate openly the public would know who the discriminators were and would be able to shun them, putting them out of business.
I realize this runs counter to most everything people are taught, but people have been taught that free markets are bad things, so they cannot grasp how they actually operate and do not understand that freedom will always triumph over bigotry if it is given the chance to do so.
Forcing compliance does not foster virtue, it only breeds resentment and resistance.
Virtue can only arise when people are allowed to choose it.
*I do not have any cites handy, but I understand that "whites only" restaurants and "back of the bus" were not imposed by the restaurants and bus companies--at least not all of them--but by legislation because the discriminators could not compete with those who did not discriminate. Rather than face competition, they lobbied for laws restricting it.
While I have not found any "hard" cites I have found a few "soft" ones that suggest it.
Anyone who reads this and has solid references would have my gratitude if they would share them. Also grammatical or spelling correction and fact checking would be appreciated as well.