Yup, familiar with it. Would you like to be more explicit about why this means that paying members of a discriminated-against group 20% less than everyone else will lead to a quicker reduction in their pay deficit than paying them the same as everyone else? Thanks.

If blond employees at market rates give more bang for the buck than dark-haired employees, you should prefer to hire the former, as this will allow you to offer lower prices (and some of your customers will themselves be blond), make more profit (and some of your shareholders will themselves be blond), etc. Your competition will start doing the same so they too will get more bang for the buck (or be outcompeted by you). This will increase the demand for blond workers, bidding their market wages up, until an equilibrium is reached where blond employees will make no less money than equally good dark-haired employees. If instead you pass all of the gains from hiring blond employees to the employees themselves rather than to customers and shareholders, you won't threaten to outcompete other employers so they will have no reason to start preferentially hiring blonds too.

But this -- I think -- is refuted by my Nazi example: the Jew is going to get beaten up and sent to Auschwitz anyway, and would (slightly) prefer the other guy to find him rather than not, because the other guy will beat him up a little less badly.

He would still prefer to not be beaten up by anyone at all; conversely, the blond would not prefer to not be hired by anyone at all.