People with Disabilities in the U.S. Labor Market

By Mary Nichols, on September 3rd, 2008

According to a national study by researchers at Cornell University, only 37.7% of people with disabilities in the U.S. population were employed in 2006, compared with 79.7 percent of people without disabilities. Moreover, surveys have consistently shown the average annual earnings of employed people with disabilities to be significantly lower than those for the non-disabled employee population. In 2000 for example, people with disabilities earned an average of $33,109 compared with $43,269 for non-disabled employees.

According to the Americans with Disabilities Act (1990) definition, a person with a disability is someone who a) has a physical or mental impairment that substantially limits one or more major life activities, b) has a record of such an impairment or c) is regarded as having such an impairment. This definition embraces an extremely heterogeneous group of people with different forms and severities of disability.

Although some people may be prevented from participating in the labor force due to the nature of their disabilities, this is not the case for a large number of people with disabilities: an NOD/Harris Poll conducted in 2000 found that more than two-thirds of all people with disabilities who were unemployed wanted to be employed.

An Increasingly Important Population

Since there are around 30.6 million people aged between 21 and 64 in the U.S. who have some form of disability, this group represents a potentially valuable source of recruitment that is likely to become increasingly important as the size of the working age population in the U.S. declines due to demographic change. On the other hand, if the labor force participation rate of people with disabilities does not rise, the pressures on the U.S. economy to support an increasingly large dependent population, consisting of non-economically active older people, children and the non-employed, will be exacerbated.

Clearly there are sound economic reasons why the U.S. labor market and economy would benefit from a higher rate of employment for people with disabilities. Yet there are also some significant barriers to be overcome if this is to occur.

Even though the Americans with Disabilities Act (1990) made it unlawful for employers to discriminate against a job applicant or employee with a disability, there is little evidence that the legislation has had much impact on the labor market situation of people with disabilities. Moreover, studies have suggested that although some discrimination against people in the labor market does persist, this is often less due to direct prejudice than to misperceptions about this group on the part of employers, a lack of awareness about how to attract job applicants with disabilities or uncertainty about what would be expected of them as an employer of people with disabilities.

Lack of Qualifications

At the same time, many people with disabilities find themselves at a disadvantage when competing for jobs due to factors such as relatively limited work experience, a discontinuous work history or the low confidence or self-esteem that characterizes some disabilities, particularly mental health disorders. As a group, they also have lower levels of qualifications than the non-disabled population: the Disability and Health in the United States, 2001-2005 survey found that adults without disabilities were significantly more likely, on the whole, to hold a college degree than those with various forms of disabilities.

The ADA specifies that employers should provide “reasonable accommodation” if required in order for a person with a disability to carry out the requirements of a job, unless that results in “undue hardship” in the form of significant difficulty or expense. Yet it can be difficult to establish what constitutes undue hardship to the employer and to balance this against the potential benefits of hiring a disabled job applicant, which may include their particular skills or expertise as well as a range of more intangible factors. For example, the U.S. Business Leadership Network, which actively promotes the employment of people with disabilities, stresses that the business benefits of hiring people with disabilities can include the improved creativity and productivity often associated with a more diverse workforce as well as the enhanced business reputation and possible increased market that results from being seen as an equal opportunities employer.

References

Altman B, Bernstein A. Disability and Health in the United States, 2001–2005. Hyattsville, MD: National Center for Health Statistics. 2008. http://www.cdc.gov/nchs/data/misc/disability2001-2005.pdf.

Human Resources and Social Development Canada (2004). Advancing the Inclusion of Persons with Disabilities 2004. http://www.hrsdc.gc.ca/asp/gateway.asp?hr=/en/hip/odi/documents/advancingInclusion04/chap4.shtml&hs=pyp.

Rehabilitation Research and Training Center on Disability Demographics and Statistics. (2007). 2006 Disability Status Report. Ithaca, NY: Cornell University.

U.S. Department of Health & Human Services Office on Disability website.

US Business Leadership Network website.

http://www.census.gov/Press-Release/www/2002/cb02ff11.html

http://www.accessiblesociety.org/topics/demographics-identity/census2000.htm



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Dominant Economic Views in Western Society, Part I

By Stephan Zimmermann, on September 3rd, 2008

This week, Chris poses this question:

Is there a dominant economic worldview in the Western society? If so, what is it? If not, what worldviews are the most popular/employed?

With the Democrat and Republican conventions upon us, no doubt we will be hearing more than we want about a “time for change.” Although the words may be different, the essence will be a replay of past conventions of both parties. The call for change has come from all major parties and throughout many decades.

Franklin Delano Roosevelt, using much of the thinking of John Maynard Keynes, moved the country to adopt a greater role for government in its economic decisions.

Ronald Reagan, espousing the ideas of Nobel Prize recipient Milton Friedman, became the effective spokesman for the “me” generation.

Both Democrat and Republican conventions will ceaselessly invoke the religious symbolisms which translate into votes.

All will have an impact on the United States and on the world.

The political conventions, however, should focus amateur (and professional) economists on the intellectual discussions that have been raging in the economic community as to whether men and women are essentially “Homo economicus” or something else. Moreover, the debate needs to point out the inherent contradictions between the principle of “Homo economicus” and the espoused religious beliefs.

Economics as a specific study has been nascent for roughly two centuries, since philosophers and early economists like Adam Smith, David Ricardo, and John Stuart Mill, among others, tried to define and quantify how best mankind could achieve the maximum result from any economic activity. They painted a rational, self-centered, perfectly informed individual who wants wealth and avoids unnecessary labor.

That picture is still held up as the ideal economist, designed to maximize his or her physical well-being.

Incredibly, this model more than contradicts the religious beliefs of the time as well as today.

Certainly a majority of people in the western world, influenced by European thought, subscribe to this view. Unfortunately, mankind is hardly rational nor perfectly informed, yet nearly ninety-five percent of mankind admits to a belief in a deity. Many billions are adherents of the Judeo-Christian-Muslim beliefs system. In not one is the definition of “Homo economicus” held out as an admirable trait.

Why, then, should economics as we know it stress the concept of maximization?

That question has resulted in continuing battles among economists, including Nobel Prize winners Franco Modigliani and Herbert Simon. It is more than a fine distinction between maximum gains derived from economic activities and simple satisfaction. Simon suggests, for example, that most people are not focused on maximizing gains but rather simply on meeting their particular level of satisfaction.

Achieving satisfaction appears more reflective of and beneficial to mankind, especially in the non-western world. Satisfaction, rather than maximization, should be much more emphasized to students of economics.

Does this mean a reevaluation of our concepts of mankind?

Of course!

At a time when the world as a whole is imperiled by the by-products of maximization – pollution, deforestation, continued poverty and starvation – it is perhaps the economist, working hand-in-hand with political and religious leaders on a world-wide basis, to avert continuing problems.

It may also require a much wide acceptance of non-traditional recipients of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Stephan is a former department chair for economics and taught at various colleges and universities at both graduate and undergraduate levels. If you would like Stephan to answer your economics-related questions, read his post “Got an Economics Question?” and submit your questions in the comments area there.



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SEC Moves to Adopt International Accounting Standards

By G.L.C., on September 3rd, 2008

The recent securities pact between the United States Securities and Exchange Commission (SEC) and the Australian Securities and Investment Commission is seen as a step towards the SEC’s goal of globalizing investing. In another step towards achieving this goal, the SEC has now floated a plan that could require U.S. companies to switch to international accounting standards starting in 2014 and permit others to make the switch even sooner. The switch to international standards could be staggered starting with large U.S. companies in 2014, followed by mid-sized companies in 2015, and small companies in 2016.

A small group of large companies could begin using the standards as early as next year. To qualify, the company must be among the 20 largest companies in its industry and a large number of its competitors would have to already be using the international standards.

Companies switching to international accounting standards would make it easier for investors to compare companies operating in different regions. It also makes it easier for companies to raise capital in whatever market seems most attractive.

There could be many roadblocks which the SEC will have to overcome before the plan can be implemented. There are already concerns about how the transition will occur and how uniform the accounts will be. U.S. companies and auditors will have to learn new accounting rules.

The international accounting standards are set by the International Accounting Standards Board. Whether all countries accept the standards set by the Board is a different issue. Countries have asserted that they have the right to approve or modify the standards issued by the Board. The European Union has allowed banks to ignore parts of the standard. The SEC hopes to deal with this by accepting filings using international standards only if it complies fully with the Board issued standards.

Problem would crop up if the Board issues a rule that the SEC believes is wrong. If the U.S. Financial Accounting Standards Board considers such a rule, the SEC can overrule it.

The plan, if approved, could result in a wholesale change in the U.S. accounting rules. There are many issues on which the international rules are silent. In many cases, the international rules will require more professional judgments from auditors.

Accounting firms have welcomed the SEC’s plan. They look upon the plan as the best opportunity to achieve the goal of a single set of high quality standards around the world.

Until the Sarbanes Oxley Act was passed in 2002, the U.S. Financial Accounting Standards Board was financed by contributions from companies and accounting firms. The Sarbanes Oxley Act gave the Financial Accounting Standards Board the right to levy charges on public companies. This was necessary to assure its independence. Now where does the International Accounting Standards Board get its financing? The answer – the same sources where the U.S. Financial Accounting Standards Board got its financing before the Sarbanes Oxley Act. The switch could depend on the Board getting an independent and stable source of financing.



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