Labor Market Discrimination Against Men with Disabilities in the Year of the ADA.

• Author: Baldwin, Marjorie L.
• Position: Statistical Data Included

Marjorie L. Baldwin [*]

William G. Johnson [+]

The Americans with Disabilities Act (ADA) provides civil rights protections to persons with disabilities, but the debate that preceded passage of the Act was not based on empirical estimates that could be used to measure its performance. This article estimates the extent of wage discrimination against men with disabilities in 1990, providing a reference that can be used to evaluate the impact of the ADA. The results show large productivity-standardized wage differentials between disabled and nondisabled men that are weakly correlated with the strength of prejudice against different impairments. Physical limitations explain part, but not all, of the wage differentials. The results also show that low employment rates are a more serious problem than wage discrimination for workers with disabilities.

1. Introduction

   The Americans with Disabilities Act of 1990 (ADA) is the first federal legislation to provide civil rights protections to persons with disabilities. The Act's supporters promised that it would increase the employment and wages of persons with disabilities and reduce their dependency on public programs. The promises were not based on empirical estimates of discrimination, and there is no empirical base against which to compare the promises to the performance of the ADA. This article estimates the extent of wage discrimination against men with disabilities in 1990, providing a reference that can be used to evaluate the impact of the Act.

   The ADA does not grant a right to employment to all persons with disabilities. It requires that persons with disabilities be able to perform the jobs they seek, subject to "reasonable accommodations" by employers. This article, therefore, considers men who are able to work even though their health limits the amount or kind of work they can perform.

   The ADA's provisions assume that low wages and low employment rates for persons with disabilities are the result of discrimination caused by prejudice. Prejudice against persons with disabilities is well documented, but so are the limiting effects of physical impairments on workplace productivity (Hahn 1987; Margolis and Shapiro 1987; Clogston 1990). The core of the debate concerning the value of the ADA is whether the poor labor market outcomes of persons with disabilities are the result of discrimination or the limiting effects of health conditions. The relative importance of the two effects is a question that this article answers, within the limits of the methods used to study discrimination.

   The fundamental assumption of the discrimination argument is that employers incur disutility if they hire persons against whom they are prejudiced (Becker 1971). We use measures of negative attitudes toward persons with disabilities to test the influence of prejudice on the size of productivity-standardized wage differentials. The measures are from recent studies that use preferences for social distance to measure attitudes, similar to the concepts Becker (1971) used to represent preferences for discrimination.

   We estimate wage discrimination by decomposing between-group differences in mean offer wages into a part attributed to differences in productivity and a part attributed to discrimination and residual effects (Oaxaca 1973; Reimers 1983; Cotton 1988). Some of the elements used to control for differences in productivity between disabled and nondisabled workers are health-related limitations on physical functioning, such as lifting and carrying. Although the decomposition method has been used by most studies of discrimination, its estimates of wage discrimination include nondiscriminatory differences in wages, if significant variables are omitted from the wage functions. We address the problem in part by estimating alternative specifications of the wage functions and using the alternative results to represent a range of estimated discrimination effects.

   Wage discrimination affects employment as well as wages. If labor supply curves are upward-sloping, some men who would have worked at a nondiscriminatory wage will not accept a lower discriminatory wage offer. We use Baldwin and Johnson's (1992b) estimator to measure the disincentive effects of wage discrimination on the employment of men with disabilities.

   The results show that there are large productivity-standardized wage differentials between disabled and nondisabled men. The wage differentials are weakly correlated with the strength of negative attitudes toward different health conditions. Differences in physical limitations are an important factor explaining disabled-nondisabled wage differentials, but controlling for differences in physical limitations does not eliminate the wage differences.

   The results also indicate that low employment rates are a more serious problem than wage discrimination for workers with disabilities. The disincentive effects of wage discrimination account for only a small part of the difference in employment rates between disabled and nondisabled men.

2. Definitions

   Disability refers to activities, such as working, rather than attributes, such as gender or race. It is important to distinguish "disability" from "impairment" and "functional limitation," two terms that are often used incorrectly as synonyms for disability.

   An impairment is a "physiological or anatomical loss or other abnormality." An impairment may or may not cause a functional limitation, that is, a restriction of sensory, mental, or physical capacities. A disability occurs when functional limitations restrict the ability to perform activities such as working or attending school. [1]

   Consider, for example, a worker with a neurological impairment, such as epilepsy. Epilepsy causes a functional limitation, namely, the inability to walk and perform physical tasks during severe seizures. Seizures can restrict the person's ability to work, creating a work disability. If seizures are controlled by medication, a typical situation for most persons with epilepsy, the worker's job performance is not affected and the worker is not disabled. Workers with epilepsy are, however, still subject to discrimination.

   Economic discrimination occurs when groups of workers with equal average productivity have different mean offer wages or different opportunities for employment. Discrimination in employment can be expressed as refusals to hire, differentially high rates of job terminations, or refusals to rehire workers following work absences. We use data from the 1990 Survey of Income and Program Participation (Bureau of the Census 1992) to estimate wage discrimination against men with disabilities, and the disincentive effects of wage discrimination on employment. The next section describes the data and methods.

3. Data and Methods

   The data come from Wave III of the 1990 panel of the SIPP. Wave III includes questions on health and disability, including 18 functional limitations. One or more of 29 impairments are listed as the cause of the limitations. We define a person with a disability as someone with health-related limitations on work.

   Defining Comparison Groups

   We use Royal and Roberts' (1987) and Westbrook, Legge, and Pennay's (1993) studies of attitudes toward disabilities to rank the 29 impairments on our SIPP data by the intensity of prejudice they elicit. Each study uses social distance scales to rank attitudes from most acceptable to least acceptable. [2] The Royal and Roberts' study is older but includes a measure of visibility, which is an important influence on the extent of discrimination. [3] The Westbrook study is more recent and includes attitudes toward some conditions on the SIPP that are omitted by Royal and Roberts. The rankings of attitudes that appear in both studies are highly correlated, permitting us to take advantage of the unique features of each. [4]

   The SIPP samples are too small to analyze each of the 29 impairment groups. Instead, we classify men with disabilities into two groups, namely, men with impairments that are less visible or subject to less prejudice (LP) and men with impairments that are visible and subject to more prejudice (MP). The groups are described in Table 1.

   The scores for each impairment group are mean ratings from Royal and Roberts' (1987) survey, truncated to integer values. The Westbrook, Legge, and Pennay (1993) mean social distance ratings are reported in parentheses whenever they differ from the Royal and Roberts results. The Westbrook scores are used for heart disease, stroke, alcoholism, and AIDS, which are omitted from the earlier study.

   The LP (less prejudice) group includes all conditions that are unranked on the attitudes studies, and six conditions with high acceptability rankings and/or low visibility rankings. The MP (more prejudice) group includes 13 conditions, most with acceptability rankings of 3 or less and visibility rankings of 2 or more. The exceptions are cancer, speech disorder, and deafness, which have visibility rankings of 1 (not at all visible). We classify these impairments with the MP group because an employer is likely to have knowledge of the impairment even though it is not literally visible. [5]

   The sample consists of 11,708 nondisabled men (ND), 662 men with impairments subject to less prejudice (LP), and 240 men with impairments subject to more prejudice (MP). [6] The samples represent populations of approximately 54 million (ND), 3.1 million (LP), and 1.1 million (MP) men.

   The use of attitude studies to test for the effect of prejudice on discrimination toward minority workers is unusual. It is surprising, however, that studies of discrimination never test the fundamental assumption that prejudice, or "tastes for discrimination," is the cause of discrimination. The power of the two comparison groups to test for links between preferences and discrimination is limited, but we hope it encourages others to develop better tests.

   One of the important differences...