Black mothers with a trial of labor are 25 percent more likely to deliver by C-section than non-Hispanic White mothers. The gap is largest among mothers with the lowest risk and is reduced by only one-fifth when controlling for observed medical risk factors, sociodemographic characteristics, hospital, and physician or medical practice group. Remarkably, the gap disappears when performing a C-section is more costly due to a concurrent pre-labor C-section limiting surgical resources. This finding is consistent with provider discretion—rather than differences in unobserved medical risk—accounting for persistent racial disparities in delivery method. The additional intrapartum C-sections that occur among low-risk women when hospitals are unconstrained negatively impact infant health.