AMERICAN.COM

The Obama administration made a shocking announcement last week when they made public their desire to use explicit quotas in an effort to increase the employment of people with disabilities in firms who do business with the federal government. The mandate would dictate that disabled people make up 7% of the federal workforce, including federal contractors. Even if these new regulations survive legal scrutiny, they are likely to be a nightmare to both administer and for firms to comply with.

Drawing lines in the sand is very difficult with respect to disability. Policing the new quota will be a time intensive but ultimately arbitrary job, requiring a whole new army of federal government compliance officers. It will also be an expensive and frustrating compliance experience for those firms who do business with the federal government. While it is possible that on net it will increase the percentage of persons who are officially counted as having a disability and working for these firms, it is unlikely that it will increase overall employment by these firms or by working age people with disabilities.

Instead, as Richard Burkhauser and Mary Daly propose in The Declining Work and Welfare of People with Disabilities, the Obama administration should seek to fix the broken incentives in our current disability program. Rather than another mandate, the federal government should do something about the current incentives in the SSDI program that are making work pay for fewer and fewer working age people with disabilities. The current system is sending the wrong signals to employers; they are incentivized to shift the employee onto the federal dole. And it is U.S. policy decisions that have made the costs of accommodating and rehabilitating an employee unthinkable.

The most promising solution is experience rating, the mechanism that dictates State Workers Compensation programs. Firms whose workers require more benefits and medical services pay higher premiums, while companies that help their employees re-enter the workforce are rewarded with lower premiums.

Perhaps Stanley Thornton will be the giant straw that causes a policy breakthrough in our failing disability system. Thornton, as The Atlantic reported, is a 350 pound “adult baby” who receives disability benefits. Earlier this week it was decided that he was not fraudulently on the Social Security rolls.

Senator Tom Coburn asked for an investigation into Thornton’s case on the seemingly sound logic that anyone who can “custom-make baby furniture to support a 350-pound adult” should not receive Social Security Disability Insurance (SSDI) disability benefits.

While Thornton’s unique case is sure to stir outrage, of greater consequence is the SSDI system that he is drawing benefits from. The SSDI is both a fiscal and functional disaster: it is on pace for insolvency in 2017 and it discourages workers from returning to work through an ill-conceived incentive system. Austerity measures that aim to trim “adult babies” and others who can work off the disability rolls is at best a short-term fix. President Reagan attempted it in the early eighties but, as AEI Adjunct Scholar Richard Burkhauser explains, his efforts “were extremely controversial and resulted in a backlash that ended up making both SSDI eligibility criteria less strict and removing someone already on the rolls nearly impossible.” Cuts alone will only delay the reality that policy, not fraud or health conditions, is the root cause of the disability system’s failure.

Burkhauser, author of The Declining Work and Welfare of People with Disabilities, told McClatchy:

This is not a disability crisis in the sense that suddenly our workers are becoming less healthy. This is a fundamental flaw in the system that leads us to increasingly use SSDI as a long-term unemployment program for people who could be in the workforce if they had the appropriate (workplace) accommodations and rehabilitation.

The way forward is a serious conversation about what should be happening at the onset of a worker’s disability. Currently, there is little to nothing in the system that signals the costs to both workers and employers—both are inclined to increase the SSDI rolls on the federal dollar. Drawing on the experience of the Dutch, who have managed to stabilize a disability system which at one point had ballooned to 12 percent of their workforce, we should consider reforms such as making firms responsible for employees’ first year of sick pay or experience rating SSDI taxes. Experience rating allows those employers who do an above average job of getting workers back to work pay fewer taxes, while those who are poor at it pay more. Both of these adjustments provide an incentive for a company to accommodate workers, get them back on their feet, and help them lead a happier and more productive life.