Does political correctness and fear of racism hurt & how?

I am currently a student teacher and have noticed an alarming trend in many schools. Many students and faculty seem to be so afraid of being labled racist that they often are weary of disciplining to harshly minority students with the fear of being called racist. White students too seem to walk on eggshells when talking during cl to minorities because they are also weary of being labled. I think that this hurts both races, what do you think?