Examining Economic Motivators for Employers on Employment Rates

Employer's Attitude: Their Perception And Awareness About Disability

Organizations have a lot to gain from employing people with disabilities, as that improves the perception of the masses and clients alike as being sensitive, reasonable, and conscientious. The team has to be led from the front in this regard by the employers: the heads of the organization (Siperstein, Romano, Mohler, & Parker, 2005). The growing demand for labor supply in the 21st century cannot be ignored any longer. The labor market is getting tighter with the supply diminishing owing to many factors (Copeland, 2007). Employers have to consider the fact that employing people with disabilities is not simply a good business and economic decision; it is also a way of building up the reputation of their organization.

The facts point to a scenario where the population growth will be slower than at any previous time. The couple of decades to follow face a situation where a rapidly ageing population will go into retirement and more become unable to function in a normative fashion. At the same time, the role and importance of technology expands to a level where the basic skills required to execute work will change to a large extent (Braddock & Bachelder, 1994). Such conditions will force the employers to reassess their position regarding the employees, an important reason why the employers should take cognizance of the measures attended to by the ADA. The need for accommodating the spirit of ADA to employ people with disability more proactively needs to be appreciated, in fact it has to be turned into a social movement to meet the challenges of emerging social conditions (Waters & Johanson, 2001). The employers have slowly started taking notice of the facts and the lower supply of labor in the market to encourage the disabled to contribute actively in the business scenario.

Not very long ago, people with disabilities were not considered favorably for employment, but the current and impending necessity seems to have been realized by the employers (Conlin, 2000).

The Work Scenario

The era that we live in today is technologically advanced. The work that needs to be done today offers scope for flexible working hours and diminishing need for commuting. As such, even people with disabilities can work with equal if not better efficiency alongside colleagues who are able and physically fitter sans disabilities. In fact, working from the comforts of home has become a reality in these technologically advanced workplaces. This discounts the disability of a worker if he has been trained with the right skill sets. According to EEOC (2005), in at least 22 identified industries, telecommuting and tele-work has become possible making it a viable option for those with disabilities to be employed. The labor supply scenario (diminishing) is widespread and those hitherto ignored by the employers (disabled people) need renewed consideration to fill in the increasing gaps in labor supply.

The need of the times is that organizations need to be competitive globally to survive the changing dynamics. There is thus, an urgent need to seek the services of the people with disabilities who may contribute to the value of the organization by improving the morale and productivity at the workplace. The attitude towards the disabled class has to be revisited (Braddock & Bachelder, 1994).

Employer's awareness about the Disabled

The general perception of those with disabilities is that they are not capable of standing the rigors of the job and are hence not fit to be employed. The perception about their efficiency and consistency is at stake, too, generally. Organizations think they do not fit into their workplaces normatively (Copeland, 2007). Such widespread perception makes it difficult for employers to engage the services of the disabled labor in their organizations (Schall, 1998). The number of disabled people (with many different reasons and incapacities), make it all the more difficult for the people with disabilities to find productive and satisfying employment and growth opportunities, millions of Americans remain deprived, as a result (Copeland, 2007). The negative impact rebounds on the social fabric and commercial domains of the nation as the disabled remain relegated to sidelines of the mainstream of business and allied productive activities. These attitudes and barriers complicate the matters for both the business and society of the nation (Copeland, 2007).

The attitudinal barriers presented by organizations as a whole and that of the employer/owner as the leader in face of lower labor supply on the negative side posited against the positive angles of technological advances and the legislation of ADA on the other need to be studied analytically. The study takes into considerations the affectations of the employer regarding the disabled and the accommodations needed at the workplace and changes required to involve to the services of people with disabilities (Copeland, 2007).

The Aims of ADA

The main consideration of the employability of disabled persons is that of the attitude of the colleagues as well as employers towards them (Popovich, Scherbaum, Scherbaum, & Polinko, 2003). The other considerations regarding the issue are as under:

The Disabled are capable and have the willingness to work.

The main affective barriers arise from institutional constructs rather than from medical reasons.

Promulgation of ADA improves the chances for disabled to seek and engage in productive roles in the organizations.

Preventing the disabled from the workplaces has an effect on both the society as well as organizations that need to be competitive in the global business dynamics

ADA offers incentives for employers for employing the disabled.

This study sought unbiased and honest opinions from respondents. As required and addressed by ADA, disability in all forms were accessed to understand the affective responses of the employers, colleagues and the disabled .

The basic attention to employers' negative affectations towards the disabled is a result of the fact that many studies have confirmed this reason to be at the base of the large number of unemployed, disabled people compared to the unemployment level of the more capable population (Copeland, 2007).

Employees Attitude Towards the Disabled

There are some Fortune 500 companies too that carry negative bias towards people with disabilities. Their concern is chiefly that of providing accommodations for the disabled. They also have apprehensions regarding giving departmental promotions to such people in their organizations (McFarlin, Song, & Sonntag, 1991). In the same vein a study has pointed out that about 66% of small businesses has consciously avoided employing people who are disabled (Harrison, 1998). Though most people in organizations are neutral to the issue, there are reservations about additional training and supervision costs, skills possessed particular issues about safety of the disabled and medical costs. In as much, we can conclude that the awareness levels about incentives provided by way of legislation or through personal affectations is minimal.

Other Employees

There is general negative perception about adjusting with those who are disabled in the workplace according to Berry and Meyer (1995). The apprehensions are more of the general kind with no particular reason for the same. There is general level of discomfort amongst employees sharing workplace with the disabled. Those who had hitherto no such experience of sharing workplace with disabled people had no reservations about or had generally positive affectations about people with disabilities as their colleagues (Mcloughlin, 2002). All the same, the same workers responded with apprehension when asked about the possibility of having disabled as co-workers citing the reason that others in the organization may not approve of the same.

Disability types

There is academic insight to prove that the most unacceptable disability type in an organization, specifically in the Fortune 500 companies is that of psychiatric or mental disability. The awareness about these types of problems and their acceptability is very low (Jones, Gallagher III, Kelley, & Massari, 1991) . The larger corporations are also not very aware about the legal implications of different legislations regarding disability and the specific interventions required of them to integrate those with disability into the mainstream. There is a clear reluctance amongst the top managements of larger companies to integrate those with mental afflictions compared to a better acceptance value to those with limited physical abilities as prescribed in the governmental regulations (Copeland, 2007).

Accommodations

In addition to above reservations and affectations, employers also believed that those with disabilities could not access the devices and gadgets to be used by employees in the workplace easily, which, they believe would interfere with their level of efficiency and productivity. Consequently, the outlook is that people with disabilities will not be able to handle requisite workload to work their way up the hierarchy in the organization (Copeland, 2007).

The Impact of ADA on Employers

Introduction

According to Scheid (1999), most employers were taking steps to include disable people into the workforce forced by the sanctions they would possibly face imposed by ADA. All those who had availed themselves knowledge about ADA were more inclined to employ disabled labor into their organizations. In organizations where the disabled were employed owing to apprehensions about sanctions, the discrimination did not recede substantially, though. Those with mental health issues continued to face discrimination at the workplace (Scheid, 1999).

ADA Title I has evoked positive responses, albeit of varying intensities, amongst employers, employees and professionals. The accommodations and architectural changes are now reasonable for the disabled to access workplaces in most organizations that have conformed to the conditions laid down in Title I (Lee, 2003).

The larger corporations and leaders there show more willingness to employ people with disabilities compared to smaller organizations as a general observation. This inclination comes more as compliance to the ADA act rather than improved affectation towards people with disabilities.

Awareness and Concerns about ADA

Awareness of ADA

There is more awareness about ADA than is generally thought. About 90% are aware of this act. However, only about half actually recruit disabled people and only 17% recruit people with mental issues. Those belonging to the white or Caucasian adhere to the ADA more readily, as do those with disabilities themselves (Copeland, 2007).

The main aims of ADA legislation are to engage the interests of the employers to offer opportunities to the disabled people and provide reasonable accommodation to such people when in the workplace. According to some researchers, the employers have to bear additional costs to accommodate the disabled people in their organizations. This in turn has been detrimental to the cause of employment ratio of the disabled; some economists challenge this inference. They contend that the decline of rate of employment amongst the disabled is largely owing to the fact that certain provisions of the DI scheme enable the disabled to live without entering into fruitful occupation and productivity. The relevant statistical data substantiation is obtained from the National Health Interview Survey to support this claim. There is a direct correlation between those who are out of work citing 'inability to work due to health conditions' and those availing benefits under DI (Cook & Burke, 2002).

The inference drawn in academic circles and by economists is that the 'relaxation' of inability to work criterion within the framework caused most of those with disabilities to forsake employment and seek social and disability benefits. Thus, a large workforce left the labor market. The employment rates of the disabled have been falling ever since, further compounded and accentuated by the downturn of economy.

Concerns

Even as employers carry their attitudes and negative perceptions about the productivity and overall efficiency about people with disability, they are also concerned with the legal sanctions they might face even after they make efforts to provide jobs to the disabled. All legislations engender a fear of sanction and legal proceedings as employees are not fully aware of the factual position. Academic work in legal circles has pointed out that only about 16% of the cases filed under the provisions of ADA have resulted in favor of the complainant against their employers. The relief granted to the aggrieved parties came in the form of remedial relief, back pay, or compensatory damages. The job related relief came in the form of monetary payments related to hiring, reinstatement, and promotion in the organization. The later relief was negligible at about 1.5% (Ullman, Johnsen, Moss, & Burris, 2001). A further (and deeper) analysis of the cases brought up under the relief provided via legislation from the government indicates that the cases are segregated under three headings depending on the evidence of intensity of discrimination available. The categories were assigned headings A, B, and C. Under A, only those cases were put that had proven credentials of discrimination that would stand in the court of law. Cases under B. were to be further investigated by the field officers of EEOC to ascertain the facts and seek more evidence if likely and possible. Cases under C. were the weakest and dismissed as non-viable. Initial policies in this regard (providing relief to the disabled through legislations aimed at discrimination at workplaces) required thorough investigation of each and every case filed by the complainants. The cases have been declining ever since 1998 and the results in favor of litigants under the three categories show a downturn- A-22%; B-11% and C-2% (Ullman et al., 2001).

Qualitative and ethnographic studies become more important when one tries to analyze the effect that ADA has had on the employment ratio of the disabled people. The leading cause of such an analysis is that claims on ADA are receding possibly because employers and aggrieved employees reach an understanding outside legal premises.

The employers seek a more considerate appreciation of the efforts they undertake to accommodate and hire people with disabilities. Provision of voluntary accommodation and other designed interventions help disabled workers to perform better, need to be appreciated, they feel. Though the general perception about this minority section has not disappeared fully, the employers are comparatively more appreciative about ADA and the disabled section in the recent times. The most debated point of contention is that of providing accommodation as it involves investments and complexities that might prove to be an impediment to absorbing the disabled. The other concern is about the productivity and efficiency of the disabled section, an area that requires additional resources in the form of supervision. Another legitimate concern is about the mentally afflicted workers who are clubbed under the clauses of the ADA act (Cook & Burke, 2002).

Implications of ADA for the Employers - Incentives Provided under ADA

The employers could gain a deduction on expenditure of up to $35,000 for providing 'reasonable accommodation in owned or leased premises.

Such expenditures would be treated as capital expenditures that would earn depreciation as fixed assets.

Small businesses are eligible for credits to make the workplace amenable to disabled workers under the Disabled Credit Act. The maximum amount of such credit per year will not exceed $5,000. If recurring expenditure is incurred by small businesses, they may be granted a maximum of $10,000 credit per year.

Targeted Jobs Credit: employers are eligible to take a credit of 40% of the $6,000 wages paid to persons with disability in the first year of the employment (Bullock, 1993).

Remedies: Interventions and Legal

Considering the concerns cited by the employers, that seem genuine reasons to improve the effectiveness of ADA, the government offered to put in place supportive intervention programs that would help ease the disabled worker into the organizational structure. Intervention programs initiated by the government have had the desired positive effect according to many of the employers. The second important development has been the Supreme Court judgment that narrowed down the 'inability' criterion (Cook & Burke, 2002). Prior to this ruling about inability, people with medications and other interventions, resorted to disability benefits and were a cause of diminishing employment, while at the same time a cause for increase in litigations against the employers. An advantage of ADA has been that most of those who employed disable workers later found that they had changed their negative affectations about them to positive ones over time (Hernandez, Keys, & Balcazar, 2000). Hahn (2000), observes that the discussion about 'disability and impairment has been obscured with the ruling of the Supreme court. The remedy according to him is to provide for an equitable climate in the workplace instead of enforcing the clause of 'reasonable accommodation' for the people with disability (Hahn, 2014). Cook and Burke (2000) believe that such an analysis is the way out of the dilemma faced in the implementation of the ADA in its real, effective sense.

2. Assessment of ADA through Market Theories

The effectiveness of ADA legislation can be assessed only by analyzing it rigorously against legal, affectation, and attitudinal changes it has set in. The various stakeholders Affected by provisions of ADA need to be accounted for. The main emphasis of ADA is the employability of the people with disability through an engagement with the employers. Students of different fields will tend to analyze the issue from different angles. The policy makers need to take into account all such perspectives to assess the situation. The deliberations of the different analyses will bring to fore different and conflicting points-of-view. The reconciliation of all such matters will help the required adjustments to make best out of the relatively new legislation (Bullock, 1993).

In a decade since its appearance in 1990, ADA seems to have made no apparent impact in providing employment to the disabled or improving the perception of the employers towards them as prospective workers. The number and percentage of disabled unemployed continues to lag far behind those who are non-disabled. Amongst those with a disability only 30.4% were in jobs or seeking jobs actively whereas the corresponding figure for the ones without any disability was much higher at 82.3%. These figures are for those in the employable age of 16-64 years (source: Current Population Survey, 1998). The actual percentage in jobs was correspondingly 26.6% and 78.2%; those in full time jobs: disabled, 63.9% and non-disabled, 81.5%. The average earnings of a disabled person in employment lagged similarly for the disabled at $29,513 for the disabled behind $37,961 for the nondisabled. The access to education likewise does not show a healthier trend. While 31% of the disabled did not have high school education, the corresponding figure for the non-disabled was much lower at 17.5% (Bullock, 1993).

However, ADA has had its share of positive contribution: if the 1991 SIPP (Survey of income and Program Participation) showed the employment ratio of disabled to be 23.2%, which rose to 26.1% in the 1994 survey. There has been a perceptible change in the employment levels of those with mental issues. Similarly, more disabled are taking to education in recent times (Bullock, 1993).

If the main proposition of ADA was to bring the disabled into the mainstream of economic activity then an economist's point-of-view and analysis based on economic theories become important. In analyzing the effects and programs of ADA, various 'Discrimination' theories will be relevant. We will then study the economic models in practice through which we can analyze the effectiveness of ADA. The main aims of ADA are aimed at the employers: a) equity in payment and employment to disabled people and b) provision of reasonable accommodation to the disabled employees to help them access to most facilities to improve their efficiency and productivity.

In this discussion, we will also try to explore some additional questions about the models attested to by ADA. In so doing we will visit the theories and principles applied in the market and economy that will test the ADA in its assumptions of providing relief to the disabled class/group through requirements sought of the employers. The different theories that have empirical foundation and are adhered to by economists and market students alike require close scrutiny while assessing the implications of ADA.

Theories of Discrimination

The emphasis of Title I of ADA is to address the disparity in the income levels between those paid to the disabled and the non-disabled worker. This effect may be the result of the fact that the two groups offer different productivity values to the organization and work they engage. In addition to efficiency level difference, they may also possess different skill sets and capabilities. The different kinds of work that they are capable of engaging in result in different levels of efficiency, even if in the same work. The disabled may also find paying attention to work as more engaging and satisfying as against those without disabilities. These differences affect the outcome in work and levels of efficiency to which the market reacts by paying more or less as compensation for work.

The differences in wages may not be solely due to the individual's abilities. The market forces can also add to the differences of wages earned by the group. Discrimination of a group might result in lowering the potential that a group might possess in executing a job required of it. ADA lays emphasis on 'Discriminatory Practices' that appear in the market to normalize the patterns of wages between the employment rates, retention, and compensation of the disabled and the non- disabled people.

We now take a brief look at the established Discrimination Theories that have caused the legislation of ADA. The implications of these theories and the deviations thereto would be the grounds of discussions in the following pages.

There are mainly three theories of Discrimination that economists discuss. The first is that those employers practicing discrimination will be forced eventually to give up discrimination or face isolation from the perfectly competitive market. The outcome would be that of equal wages. The second contention arises from the fact that the employees within an organization may seek higher wages as compensation to the effort that they have to perform alongside the disabled (minority) group, which affects their productivity. Such discrimination causes a difference in the wages earned by the two groups. The last theory involves the discrimination shown by the clients and customers. Such discrimination would result in the gap in the wages of the two groups- workers with visible disabilities and those without.

The discriminations may have their roots in premarket conditions- as in the lack of or hindrance to access to proper education and training in their formative years. This, economists might term as pre-market discrimination. Such lack of access may result in the overall lack of skill set and human value accumulation of the group that is marginalized. Thus, even as they enter the market, they might be handicapped by inadequate skill-set required of them to execute the jobs at the workplace.

Gary Becker's Theory

In the marketplace, the disabled group might face forces arising out of employers' discrimination, clients' outlook and their probable colleagues' dispensation towards them. They, thus, have fewer choices and may have to settle for lower wages. The cumulative effect is that the individuals of such group may hesitate to invest in upgrading their skills been given to understand that the returns thereto will always be lower. This is termed as the post-market discrimination.

The three stakeholders in the market are the clientele, employees, and the employers. The discrimination arises in varying degrees from these three elements that make up the market forces. The theories of discrimination in the job market hence evolve around these factors. These rules have been studied and formulated by the Classical Theory put forth by Gary Becker (Dewey, 1958).

The 'Distaste' according to Becker causes the employer to pay lower wages to the discriminated employee as a cost of incurring losses owing to his presence in the organization. This happens in spite of the fact that the productivity of the disabled is no less than that of the non-disabled employee. The non-discriminating employer would benefit in the long run under such conditions as his costs of running the business are lower. That would push the discriminating employer out of the market in the long run. The resultant situation would be that of an equitable market as long as wages to workers are concerned. This situation would however be realized only in a perfectly competitive market (Dewey, 1958).

In the event that the employees of an organization profess 'Distaste', they would seek higher wages to overcome the effort of having to work with those who have disabilities. The employer may be forced to employ people with disabilities due to slack in the labor supply. A wage gap would result consequently. The employer however may resort to segregating the workspaces of the two groups to lower the demands of the non-disabled group.

The client is another stakeholder in the market forces. If the customer refuses to be served by the disabled group, the disabled group would have to be relegated to functions that do not require direct contact with the clientele. Such a tactics resorted to by the employer to overcome the discrimination by the clients would result in saturation of limited types of occupations and opportunities for the disabled group. This could result in lowering of wages, in turn. The loss would however manifest in the social mobility of the segregated workers.

Employer's Market- Monopsnist Theory

In a market where the employer attracts the most labor, he holds the key to the wages allowed to his workers. The payments are hence lower than in the perfectly competitive markets attended to by Gary Becker in his classical work. The employer, acting logically segregates his workers according to their abilities and functional efficiency, thereby reducing the outflow in terms of wages. The overall efficiency of the business improves as a result. In such an ideal monopsonist scenario, the non-discriminating employers would be pushed out of the market eventually (Dewey, 1958).

The third theory is based on discrimination through statistics. Such a situation arises when the employer id hiring the candidate. Improper and insufficient information about the candidate might arise when the employer has no idea regarding the productivity or usefulness of the candidate to his organization. The method he resorts to causes the possible discrimination. He might adopt the method of engaging a pool of candidates out of which he might retain those who show promise of development. This is a costly process of hiring. Instead, if the employer relies on statistical determinants like education and learning of the candidate, then he is resorting to cheaper modes of determination. However, if he considers that the disability factor is a definite barrier to productivity then discrimination has taken place. The employer has relied on stereotypical choices. The employer recognizes a particular group readily in making his choices. The employer has not incurred the requisite cost before obtaining the potential capabilities of the candidate prior to absorbing him in the organization. The last condition is that the employer has some prior information about the productivity of a particular group rather than concentrating on the individual. These are then the conditions related to the 'Statistical Determination/Discrimination' theory.

Title I of the ADA:

The main emphasis of ADA is to erase the employer's perception that the people with disability are not competent enough for productive employment. This leads to the situation where the disabled are unable to compete fairly with others. Such a situation is in consonance with Becker's model of statistical discrimination theory.

The theory of incorrect and complete information is also taken into consideration as we observe from the statutes of the legislation. ADA relates to impairment of mental or physical faculties as a disability. These stipulations aim to protect the rights of those who had previous history of inability to work and are having limitations in exercising certain functions, though not in life functions. The example of a cancer survivor explains the position of ADA in this stipulation. Those having impairment- physical or mental are covered under different conditions laid down in Title I. such candidates can claim discrimination benefits if the employer opines his reluctance to engage them in the workplace in spite of proven skill sets and inclination to work productively. These members of the society are treated with same discrimination as those with a history of disability since birth. As such, Becker's theory of Discrimination applies, equally well in such cases, on which ADA has based its statutes (Schwochau & Blanck, 2014).

ADA has also defined qualified people with disability who may perform normatively 'with or without' reasonable accommodation in the jobs he desires to opt for in the organization.

The clause of 'reasonable accommodation' is an addition that ADA has made over and above the theoretical observations about people with disability seeking gainful employment. In the discrimination theories visited above we have no mention of disabled people being afforded 'reasonable accommodation' in order to perform productively that would otherwise not been possible (Schwochau & Blanck, 2014). The authors and Drafters of the ADA have taken this extra step over and above the classical theories that require the employer to incur extra expenses for the people with disability to perform normatively. In Becker's models- the main presumption is that of an ideal competitive market where such expenditure is not sought explicitly to enable the disabled to perform equitably with the non-disabled worker. Becker's model presumes discrimination appears when all implements at the workplace being same, a particular group is assumed to underperform as compared to the normative, nondisabled group. Technological implements at the workplace have to be constant according to classical theory when discrimination is applied in selecting the candidate from either of the groups (Schwochau & Blanck, 2014).

The ADA, however requires that the employer make exclusive provisions -- architectural changes, implements etc., and incur those expenses in order to make the disable person perform productively. At the same time, ADA also requires of the employer to pay equitable wages to the disabled worker. Such a deviation from the classical theory of discrimination in the ADA has caught the attention of the economists who therefore debate the dual implications on the employer (Schwochau & Blanck, 2014) .

Economic Implications and Labor Market Theory:

Labor Supply

The discrimination in the labor market takes into account the basic models' functioning. According to the models, the desires of the employer and those of the employee are matched with the job requirements. The models that have hence been devised comprise of the labor demand as well as the labor supply model. These models have resulted from deductive reasoning and observation. The main consideration of a worker seeking employment is a result of his value given to work and non-work engagements.

The employee opts for a job when he sees the job as being more gainful when weighed in relation to his non-work activities like transportation, social and familial commitments etc. The wage and value he derives out of the work have to be more than the other costs take cumulatively. Thus the labor supply is that group of individuals which accepts to work at a given wage and value for work in that market.