Libertarians and others often make the economic argument -- employers would be stupid to pass over more qualified minorities, as it would cost them money.

This fails for several reasons, at least in the USA and nations with a similar population distribution.

First, since racism is generally irrational, the racist employer will probably not believe that a minority can be better qualified. Further, even if they allow that it might be possible, the utility they gain from not having a minority is likely to be greater than any monetary cost. Why? Keep reading.

With minorities, it is almost certain that there will be a non-minority of equal or even better ability available. It is simple matter of statistics applied to population sizes, having nothing to do with genetics, culture, education, or what have you. So the likelihood of actual, substantial monetary costs is probably quite low, if not non-existent, for the majority of job fields.

I suspect that even in majority-racism nations, such as the old South Africa, the qualified applicant pool would still keep monetary costs of racism down, due to poor educational opportunities available to the oppressed group in question.