ADA Hurt Disabled Workers
In my recent post about Walter Block, I wrote:
I notice that Provost Singh thinks that a statement that the Disability Act shouldn’t exist is racist and/or sexist. Seriously? Is she aware that one of the groups that has been most hurt by that law is people who are disabled? The reason is that the requirement for accommodating those with disabilities makes employers hesitant to hire disabled people.
A commenter on my post, Daniel B, in what he called a rant but I thought to be a good comment, stated:
Now that my rant is over, I must ask David to please post some ADA readings for us in the comments section 😀 I want to learn more!
I replied that I was pretty sure I had read an NBER working paper on it some years ago. It turns out that I did, but I had forgotten who the authors were.
The paper is Daron Acemoglu and Joshua Angrist, “Consequences of Employment Protection? The Case of the American with Disabilities Act,” NBER Working Paper #6670, July 1998. Here’s their abstract:
The Americans With Disabilities Act (ADA) requires employers to accommodate disabled workers and outlaws discrimination against the disabled in hiring, firing, and pay. Although the ADA was meant to increase employment of the disabled, it also increases costs for employers. The net theoretical impact turns on which provisions of the ADA are most important and how responsive firm entry and exit is to profits. Empirical results using the CPS suggest that the ADA had a negative effect on the employment of disabled men of all working ages and disabled women under age 40. The effects appear to be larger in medium size firms, possibly because small firms were exempt from the ADA. The effects are also larger in states where there have been more ADA-related discrimination charges. Estimates of effects on hiring and firing suggest the ADA reduced hiring of the disabled but did not affect separations. This weighs against a pure firing-costs interpretation of the ADA. Finally, there is little evidence of an impact on the nondisabled, suggesting that the adverse employment consequences of the ADA have been limited to the protected group.
Angrist, by the way, is one of the three co-winners of the 2021 Nobel Prize in economics.
The paper was ultimately published in the Journal of Political Economy, 2001, Vol. 109, No. 5
Thomas Lee Hutcheson
Dec 24 2021 at 6:06pm
This is an important result and suggests that, like other employer mandates — costs imposed on employers for the general good, the costs should be compensated. This is certainly the way “paid” leave should work.
Thomas Lee Hutcheson
Dec 24 2021 at 6:21pm
It’s unfair to come down too hard on the “racist/sexist” criticism of ADA as he was presumable just appealing to the policy preferences of his audience. But it does illustrate the problem of criticism of a policy without suggesting how it should be reformed. The naïve reader may think that the critic disagrees with the objective of the policy rather than the details of its design.
Dec 24 2021 at 11:45pm
Nothing wrong with paid leave in general. Many companies I worked for give more paid leave than the legal minimum, so that restriction isn’t binding in those cases.
Binding legal minimum requirements for paid leave are a more complicated topic. The arguments are rather similar to eg minimum wage discussions.
Dec 24 2021 at 10:01pm
I’m somewhat skeptical as the same law surely had a huge effect on incentives to call yourself disabled. Not just economically but socially as well.
After all, if I want a job and am having trouble getting one and I believe employees are allowed to discriminate and deny accommodation rewuests I have a strong incentive to call myself fully abled. OTOH if I can get an accommodation by law I may have incentives to declare myself disabled. Not to mention the social effect
(sure, you aren’t telling the employer but ppl don’t like to lie so they instead shade which category they view themselves as part of).
Peter Michael Gerdes
Dec 24 2021 at 10:27pm
Looking at the way they dealt with this in the paper I have to revise my initial impression. Yes, I think they nicely handled the concern about changes in reporting.
However, the attempt to compensate for the effect of SSI and DI seems woefully inadequate. Indeed, to me it suggests the exact opposite (this is true cause) as they find that it actually eliminates the employment harm after a certain period (as one might expect given time it takes for info to trickle down) for the older male group they were able to use disability status matching on. The result they mention for the female group seems to cast doubt on the suitability of the model (why is linearity assumed in equations for effect of DI/SSI)
In the actual world it seems like ppl often think that to get DI/SSI they can’t take almost job lest risj denial and thus we should expect that even ppl who don’t get SSI/DI might have been deterred from working by that prosoect.
Having said that the paper has shifted my probabilities from: no fucking way to : seems quite unlikely and this is far from conclusive but worth investigating.
Dec 26 2021 at 4:40am
Thank you for the study :). My statement of “rant” was more about the length of my post (fortunately the tone was ok, although the formatting of my paragraphs got messed up).
Another NBER study was more skeptical than Angrist and Acemoglu of any ADA disemployment effect in the long term, but agrees it definitely happened in the short term. I haven’t read this study but the summary doesn’t give me a good impression.
The summary says the costs of the ADA were “often one-time costs on employers – costs that may well have been exaggerated or particularly salient in employers’ minds just after the ADA’s enactment.” Actually, ALL the costs — even the “often” incurred ones — aren’t one-time. All future new businesses will incur these additional ADA costs when the buildings are constructed. Building future businesses is not a one and done affair, and that alone makes this statement inaccurate.
More fundamentally, the ADA created constant uncertainty about hiring disabled people. What’s a “reasonable accommodation”? Will they sue me or otherwise cause me headaches if they don’t like what I’m doing to accommodate them?
When an ambulance dispatcher who fell asleep twice on the job – due to difficulties from sleep apnea – sued her employer under the ADA (article cited here), we’ve really gone into the realm of absurdity with ADA lawsuits. The above link talks about some other wacko lawsuits. Can we look at these examples and say “Not to worry; I’ll know when a disabled person would sue me”? If we can’t say that, why would we expect businessmen to be different (especially when they experience such a lawsuit for the first time)?
In my original post I cited a link with a nice story illustrating the perverse incentives of the ADA in medical care (link here). And there was another link that says this: “Some customers have legitimate claims. But most lawsuits involve a minor technicality, such as the height of a soap-dispenser or the width of a parking spot, which has little bearing on the accessibility of a business, says Martin Orlick, a property lawyer in San Francisco who specialises in ADA compliance. Because fighting in court can cost $30,000-60,000, businesses often prefer to pay a smaller sum to make a lawsuit go away. There is evidence that lawyers explicitly target small businesses, which are more likely to pay up without a fight… Settlements usually run to around $10,000 before anything is fixed. ‘I know guys who are on payment plans with some of these lawyers,’ Julie Griffiths [of Citizens Against Lawsuit Abuse] says.”
I see a parallel here with racial discrimination. A business that discriminated against the disabled pays a cost in doing so just like it would if it was racially discriminating (as documented at this website such as the article on discrimination). I’m not confident enough to say we should get rid of all anti-racial-discrimination laws (I have to read way more on “freedom of association”), and similarly I’m not entirely confident that we should axe the entirety of the ADA. I agree that there’s stuff that must get cut, but I fear that there would be “too many” cases where the disabled “could have” been accommodated but weren’t if I killed all of the ADA (e.g., websites that could have been more accessible but weren’t). In short I feel the quantity of accessibility would be in some sense suboptimal compared to (I say this to try avoiding the nirvana fallacy) that quantity when there’s government intervention of some sort.
I feel like I’m missing something in my analysis (probably the specifics of how the disabled would cope without the ADA and an idea of how life as a disabled person was before the ADA) but I feel too uncomfortable saying “abolish the ADA entirely” until I deal with those doubts.
My fear is probably exaggerated. Some of the really tragic disabilities – being blind or deaf – were not historically the source of most ADA complaints. Instead, it was back injuries. So abolishing the ADA presumably wouldn’t affect the blind and deaf the most. But the fear is still there despite knowing this.
In any case I think there’s one simple reform that hopefully everyone can agree with. Lawyers shouldn’t be allowed to sue for ADA violations without acting on existing complaints from the disabled. The ADA is supposed to be about the disabled, not about what lawyers think the disabled should want. If the disabled aren’t complaining about the violations of the ADA, why should we care about those violations? Allowing lawyers to sue without citing existing complaints is a recipe for the lawsuit madness we have now. One lawyer involved in a bunch of ADA lawsuits made the incentives he faces under the current system clear: “‘As a private attorney, every lawsuit that I file is to make money, because that’s how I make a living,’ he added. ‘And in that regard, I’m no different than any other private attorney.'” And third parties wouldn’t be able to impose costs on others despite never using the benefits of their mandates (“Asked if she ever patronized the businesses she sued after they made improvements, Ms. Massi said, ‘Unfortunately, no.'”). When Massi called what the article referred to as “several thousands of dollars” in legal fees from such lawsuits “a few bucks,” she was a classic example of a third party who knows nothing about the costs they’re imposing on other people.
This reminds me of a story I read in a book Applied Economics: Thinking Beyond Stage One (page 100). In San Mateo County, California, an old racetrack with declining attendance was going to be torn down and replaced with housing and businesses. But then a local group formed and started demanding the racetrack to be designated “historic” so this replacement wouldn’t be allowed to happen, thanks to historical preservation laws. That group was headed by a woman who admitted she had never set foot in that racetrack in all her years in San Mateo County. Both Massi and that woman are people who say they are dedicated to getting certain things like racetracks or improvements – but apparently not dedicated enough to use them!
My more controversial second reform is that the medical market has to get strongly deregulated. Drugs and devices unapproved by the FDA should be allowed to be sold, but only if they show a clear disclaimer that they aren’t approved. This should help innovative devices that ease the disabled’s lives get produced more cheaply. For the sake of brevity on that subject I’ll refer to David and others’ (such as Milton Friedman’s) works on that issue. Medical licensure also has to be relaxed; after doing so the disabled (and society as a whole) will be richer and that will facilitate them getting more expensive devices to deal with disabilities.
Hopefully everything I’ve written here makes sense 🙂
Dec 26 2021 at 6:02pm
Also belated happy holidays 🙂
To clarify what I said in my post here, I’m mostly concerned about the “legitimate complaints” from “some customers” that would be leftover without the ADA, analogous to the “leftover” racial discrimination that would occur without anti-discrimination laws (where we’d have total freedom of association). I just feel uncomfortable about totally getting rid of both if that makes sense, although I feel like I’m missing something. To give another example, OSHA hasn’t really improved the rate at which workplace deaths were falling, and economic historian Price Fishback found that “[m]ost [safety] regulations appear to have codified existing practices in the relevant industry” during the 19th century. That’s convinced me that there should be minimal governmental regulations in these areas, but not zero whatsoever. Hopefully this makes my position clearer.
Dec 27 2021 at 12:26pm
I wonder if the conclusions would be the same after the subsequent 20 years. I’m sure many of the employment issues get gamed by the schemers and those are real costs. But it’s clear that there have been some very valuable benefits from the legislation. First, the municipal and private physical plant is so much more functional than what was replaced. Something as simple as ramps at curbs makes life easier for everyone. Newer buildings are much more pleasant to be/work in too. Most of the retrofits are one time costs. What they replaced also had to be maintained. Second, access to resources for kids with learning disabilities has really improved (partially, but not fully due to ADA). It’s not perfect and wealthier areas still get more resources than poorer areas. These kids deserve the chance to maximize their education and our country is wealthy enough to fund these programs.
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