The Disabilities of ADA Regulations
The Americans With Disabilities Act of 1990 (ADA) is a prime example of the shortcomings of government regulation--even those born out of the best intentions. Who can oppose a law designed to help disabled people get jobs?
Nevertheless, the economist's role is to raise the difficult questions others may avoid. Thus, we must ask, "How well is this well-intentioned law working?"
Sadly, the available data are not very supportive. One survey reported that the portion of men with disabilities who are working dropped from 33 percent in 1991 to 31 percent in 1995. Using a different definition of disability, another study showed no change. At the same time, both studies concluded that the proportion of men without disabilities at work rose slightly, from 81 percent to 82 percent.
Some reasons for these disappointing results seem clear. The ADA apparently scares some prospective employers away from hiring workers with disabilities. They fear the extended litigation that may arise from complicated provisions of ADA and the costs of the required accommodation.
Some ADA court cases surely create more problems than they solve. One such case required an employer to hire a second person to correct mistakes made by the disabled person. Having to hire two people to do one person's work certainly discourages prospective employers. Serious problems in employer-provided health insurance also may arise, such as coverage for "preexisting conditions."
A key reason, however, for the decline in the portion of people with disabilities at work has little to do with the ADA. It results from another federal program that works at cross-purposes with the ADA. Old Age, Survivors and Disability Insurance (OASDI) provides income to disabled people who are not working.
Although such transition payments are needed in the case of recoveries from severe accidents, most of the time they have become lifetime entitlements. Only 1 out of 1,000 people in the OASDI program ever returns to work. Outlays for this budget item have been rising rapidly, from $24 billion in 1990 to an estimated $47 billion for fiscal year 1997.
A related federal program (Supplemental Security Income) provides income to people with disabilities who are not covered by OASDI. Payments to these beneficiaries have risen from $6 billion in 1980 to $27 billion a year.
These expensive federal programs contain no provision for helping people get back to work. None of the money is used for rehabilitation, retraining, or assistance devices (such as computer-aided prosthetics). It may be unduly harsh to label these large federal outlays as the equivalent of old-fashioned welfare, but the similarities are striking.
Public policy toward people with disabilities should be changed. We need to avoid both extremes: (1) assuming that every unemployed person with a disability is being discriminated against and (2) pensioning off every person with a disability. As someone who has both pushed a wheelchair and helped make public policy, I believe I understand the need to subordinate emotion to hard-nosed analysis.
Consider why so many employers are hostile to the ADA. Original congressional bills were so poorly drafted that they covered active drug users and alcoholics. It took a great battle just to narrow the benefits to recovering drug addicts and alcoholics. Provisions of the final bill were so vague that at the outset the government warned employers that litigation was bound to ensue.
Some useful guidance can be obtained by studying the actual experience of employers who hire workers with disabilities. Northwestern University studied a segment of the disability workforce, those with mental disabilities. Employers rated these employees as "excellent" or "good" in overall job performance, willing to work hard, punctual, and productive. Two-thirds of the employers were very satisfied with their interactions with coworkers. However, only 40 percent were very satisfied with the interactions with customers.
Employers should be encouraged to assign people with disabilities to jobs that will minimize their problems and maximize their output. Regulatory approaches that cavalierly alienate employers provide no incentive to hiring people with a broad range of abilities and disabilities. And surely "welfare-type" programs should be a last resort, not a first.
Murray Weidenbaum is chairman of the Center for the Study of American Business.
For more information ...
The Case against the Americans with Disabilities Act. This "feel-good" law imposes tremendous costs, yet its greatest beneficiaries are lawyers and those with questionable claims. (Reason, August/September 1995, 8 pp.)
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