Businessweek Archives

How The Disabilities Act Will Cripple Business


Economic Viewpoint

HOW THE DISABILITIES ACT WILL CRIPPLE BUSINESS

One of the most far-reaching pieces of labor legislation in years took effect in late July. Unfortunately, the Americans with Disabilities Act is more a make-work project for lawyers than an effective way to help the disabled.

The act covers not only people with hearing, sight, or mobility impairments but also those with emotional illness, dyslexia, AIDS, and past drug or alcohol addictions. This is why some of the act's supporters claim that it will help more than 40 million Americans. But it is a distortion of the meaning of "disability" to pass a law that may include almost 40% of the labor force.

It is no longer legal for the more than 2 million businesses with 25 or more employees to ask job candidates or their references about disabilities. This is broadly defined to include questions about medical history, past absenteeism because of illness, and past treatment for alcoholism. Employers must also make "reasonable" efforts to accommodate the disabled, and, if a disability is revealed as a result of a medical exam, an employer cannot withdraw a job offer unless the action is justified as a business necessity.

The new law defines disability so ambiguously that whether or not a person has been excluded from a job unfairly will often be impossible to determine with any confidence. Are people handicapped--and hence entitled to special consideration--simply because they cannot work under stressful conditions or because they object to any criticism of their work that may mean a return to alcohol or drug dependency? Lawsuits arguing these and many other strange positions are possible under the new law. Civil rights legislation has plenty of weaknesses, but ambiguity about who is included isn't one of them. Discrimination is banned on the basis of characteristics that are usually easily determined, such as race, gender, or religion.

SHOTGUN APPROACH. Under the 1991 Civil Rights Act, the disabled gained the right to sue for compensatory and punitive damages. So the additional provisions of the Disabilities Act can be expected to be a boon to litigation. A disturbingly large number of lawsuits already clogs the U.S. judicial system. It is senseless to have another poorly drafted act with a very broad sweep.

Those members of Congress and others who sincerely want to help the disabled could support such a shotgun approach only if they believed U.S. business was incapable of determining the employment qualifications of persons with minor hearing impairments, emotional problems, or a history of alcoholism or drug abuse. Yet this is highly unlikely under present conditions, when companies are hard-pressed by international as well as domestic competition to cut costs and fill jobs with the best available candidates. And it is particularly ludicrous to believe that juries and judges are better qualified than competitive pressures from the marketplace to determine whether someone measures up to a job.

The U.S. is surely rich enough to help those who have serious disabilities, innate or contracted. And since gainful employment fosters self-respect, the help should include assistance at finding useful, satisfying work. But the new law illustrates the disturbing recent tendency by Congress to impose the cost of its actions on business rather than on taxpayers. Obviously, this allows Congress to hide the costs of compliance and doesn't add to the budget deficit.

MEAN-SPIRITED. The world competition confronting American business makes it ill-prepared to bear higher costs without losing markets and cutting employment. Most of the cost will be passed on to workers, consumers, and, eventually, the disabled themselves. Walter Y. Oi, a distinguished economist at the University of Rochester, blind since youth, believes that many companies will seek loopholes to avoid taking on handicapped applicants, because they fear costly litigation. Anyone who questions legislation to help the disabled risks being branded as mean-spirited or too miserly to spend a little to help those hit by misfortune. This is why the new act sailed through Congress with the full support of the President. But it is still a bad law that is likely to do more harm than good--which is why a very different approach is needed.

I believe disability coverage should be limited to the perhaps 3 or 4 million people estimated to be seriously handicapped in vision, hearing, or movement, as outlined by objective definitions of these impairments. Instead of shifting the responsibilities to business and the courts, Congress should offer employers who hire disabled workers a generous payroll subsidy that increases with the severity of the handicap. This approach would place the burden directly on taxpayers and would concentrate help on the truly handicapped.

The total cost of such a program would be manageable. For example, an average subsidy of $3 per hour--which may be much larger than necessary--for 3 million disabled workers who average 1,200 hours of work per year adds up to about $11 billion per annum. That is not a negligible addition to government spending, but it is far smaller than the likely total cost of the vague present law.GARY S. BECKER


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus