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Labor Force Participation and Disability: Did HomeBased Work Facilitate Labor Force Participation in

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Title: Labor Force Participation and Disability: Did HomeBased Work Facilitate Labor Force Participation in


1
Labor Force Participation and Disability Did
Home-Based Work Facilitate Labor Force
Participation in the Dawn of the Americans with
Disabilities Act?
  • Jennifer Tennant

2
Americans with Disabilities Act
  • Provides protection for those in the private and
    public sector
  • Signed into law on July 26, 1990 and went into
    effect two years later
  • Title I of the ADA addressed the employment
    situation of people with disabilities
  • It required that employers take steps to
    reasonably accommodate qualified individuals
    with a disability
  • Can accommodate at the onsite worksite or by
    letting workers to work at home
  • Home-based work goes against traditional
    constructs of work, so presents challenges in
    implementation

3
Four Sections of Presentation
  • Section I Introduction
  • Outline the ADA. How does home-based work fit in
    its mission? Does it create difficulties in
    implementation?
  • Discuss the literature of Labor Force
    Participation and Disability Status
  • Define the various measures of disability in the
    Integrated Public Use Microdata Series (IPUMS)
  • Summarize research questions
  • Section II summarizes the IPUMS data to compare
    the disabled and the non-disabled in and out of
    the workforce and by worksite choice

4
Four sections (continued)
  • Section III Economic theory behind labor force
    participation and disability status
  • Modeled after "Home-Based Work and Women's Labor
    Force Decisions" by Linda Edwards and Elizabeth
    Field-Hendrey.
  • The presence of a disability alters the fixed
    cost of working, but in various degrees depending
    if one is an onsite worker, a home-based worker,
    self-employed or an employee.
  • Section IV Econometric Model
  • Multinomial logit coefficients and marginal
    effects for this labor force participation problem

5
Qualified individuals with a disability
  • The ADA protects "qualified individuals" with a
    disability.
  • Title I of the ADA defines a qualified individual
    as an employee who "with or without reasonable
    accommodation . . . can perform the essential
    functions of the employment position that such
    individual holds or desires" (42 U.S.C.
    12111(8)).
  • The concept of which individuals are qualified
    is inextricably bound with the concept of
    reasonable accommodation.
  • Employers have a responsibility to try to
    accommodate, but rules do not define any specific
    accommodations

6
Reasonable Accommodation
  • An accommodation would be reasonable if it takes
    into account the specific job requirements as
    well as the limitations and skills of the
    employee.
  • An accommodation is not considered reasonable if
    an employer has to change the "essential
    functions or components" of the position.
  • An employer does not have to offer the employee a
    job that has requirements beyond the employee's
    skill level to reasonably accommodate.
  • Acceptable reasonable accommodations include
    creating accessible workplaces, modifying work
    schedules, and altering responsibilities and
    examinations.

7
Burden of Proof
  • Employees must show
  • she or he is indeed disabled
  • with reasonable accommodation, the employee can
    complete the essential functions of the job.
  • Employers must show
  • - The essential functions of the job are in fact
    essential, and that accommodating the worker
    would create an undue burden on the firm.

8
Working at home a more viable option
  • Strides in technology have made working from home
    a more viable option
  • Benefits increased flexibility and control,
    lower transportation costs, savings on office
    overhead, lower employee absenteeism, increased
    productivity, improved employee morale, and
    higher employee retention
  • Drawbacks some jobs require face-to-face
    contact with the public or clients is necessary,
    performance monitoring and communication delays.

9
The Vande Zande presumption against working from
home
  • Vande Zande v. Wisconsin Department of
    Administration addressed whether working from
    home is a reasonable accommodation under the ADA.
  • Looked at excessive absenteeism cases to build
    its foundation
  • Held that a person is not qualified for a
    position if she cannot maintain predictable
    attendance
  • This created a presumption that basically said
    that home-based work could never be a reasonable
    accommodation since physical presence was an
    essential component of a job

10
Is this presumption wrong?
  • Vande Zande was decided in 1995, right at the
    dawn of the Internet
  • Technology has grown drastically since then
  • The presumption against home-based work goes
    against the purpose of the ADA, which is to help
    bring disabled workers into the ranks of the
    employed.
  • A work-from-home arrangement might be the only
    viable option for a person who cannot leave home
    on a regular basis.

11
Labor Force Participation and Disability Status
  • Employment for people with disabilities have been
    getting worse rather than better since the ADA
    took effect. This seems to be counterintuitive
    and goes against the goals of the ADA.
  • Individuals with disabilities have lower
    employment rates than the non-disabled
    population.
  • Factors that contribute to this are high
    reservation wages and low market wages that
    reflect decreased productivity and
    discrimination.
  • Will employers be reluctant to hire workers with
    disabilities after the ADA because of increased
    accommodation and firing costs?

12
Definition of Disability According to the ADA
  • To be considered as a person with a disability
    under the ADA, at least one of three criteria
    must be met
  • a physical or mental impairment that
    substantially limits one or more of the major
    life activities of such individual
  • a record of such an impairment or
  • being regarded as having such an impairment. (42
    U.S.C. 12102(2))
  • To be covered, I must be disabled enough but
    not too disabled (that is, I must still be able
    to work). These are vague guidelines.

13
Definitions of Disability in IPUMS data
  • In the 1990 wave of the Census, three different
    types of disabilities were outlined --
    disabilities limiting work, disabilities limiting
    mobility and personal care limitations.
  • In 2000, these three disability measures
    remained, and there were three additional
    categories physical difficulty, difficulty
    remembering and vision and/or hearing
    disabilities.

14
Research Questions
  • This dissertation will focus on how the option of
    home-based work affected the labor force
    participation of the disabled during the dawn of
    the Americans with Disabilities Act.
  • Was the employment landscape for the disabled
    more favorable in 2000 than in 1990, after the
    passage of the ADA?
  • Did the reasonable accommodation mandate of the
    ADA and technology improvements make home-based
    work a more viable option for the disabled?
  • In sum, did home-based work facilitate labor
    force participation of the disabled?

15
Landscape for the disabled in 1990
  • In 1990, there were 6,007,023 people who
    described themselves as having at least one type
    of disability.
  • More than half (3,173,684) of the disabled were
    on-site workers approximately 48 as onsite
    employees and 4.9 as the onsite self-employed.
  • Only 101,219 disabled people worked at home
    0.5 as employees and 1.1 in a self-employment.
  • More than 45 of the disabled in 1990 were out of
    the labor force.
  • This dearth of home-based workers could be the
    consequence of the lack of telecommuting
    resources and computing power at this time.
  • 28.9 of those who were out of the labor force in
    1990 had a disability, compared with 5.5 of
    onsite employees, 5.8 of the onsite
    self-employed, 7.1 of home-based employees and
    6.4 of the home-based self-employed.

16
Landscape for the disabled in 2000
  • In 2000, 9,678,458 people identified as having at
    least one type of disability, a 61.1 increase
    from 1990.
  • In 2000, 77.6 of the disabled were on-site
    employees, 4.7 were self-employed on-site, .9
    were home-based employees, 1.1 were
    self-employed at home and the remaining 15.6 of
    the disabled were out of the labor force
  • There were 195,074 home-based workers and
    7,972,682 onsite workers who had at least one
    disability in 2000.
  • People with disabilities comprised 12.1 of
    home-based employees, and 11.4 of the
    self-employed who worked at home. Those with
    disabilities made up 13.6 of on-site employees
    and 13.4 of the self-employed who worked
    on-site. 1,510,702 disabled people were out of
    the labor force in 2000, which accounted for
    24.5 of those not in the labor force.

17
Change from 1990 to 2000
  • Between 1990 and 2000, both the employment status
    and worksite location of the disabled had
    undergone important changes.
  • A greater number and percentage of the disabled
    were on-site employees and home-based employees
    and fewer were out of the labor force.
  • The number of the disabled who were self-employed
    onsite or at home increased, but the percentage
    fell or stayed the same.

18
Change from 1990 to 2000, part 2
  • Almost 5 million more disabled people worked in
    2000 than in 1990 and more than 1 million fewer
    identified as being of out of the labor force
    during that time.
  • Two things seemed to be happening during this
    period
  • disabled people who were out of the labor force
    in 1990 became employed either onsite or at home
    in 2000 and
  • those who didnt identify themselves as disabled
    in 1990 did so in 2000.
  • The ADA may have had an influence on both of
    these factors.

19
Table 1
20
Table 1, continued
21
Table 2
22
Multiple Disabilities
  • There was a large amount of overlap between the
    disability categories of the IPUMS
  • almost 20 of those with a work disability also
    had a disability that limited mobility, and more
    than 10 of those identifying a work disability
    also had a personal care limitation.

23
Table 3
24
Wage and Salary Differences
  • Regardless of self-employment status or worksite
    choice, the disabled always earned less than
    their non-disabled counterparts.
  • In 1990, the average salary of a disabled
    employee was approximately less than half than
    the salary of their non-disabled counterpart.
  • The situation had improved for disabled employees
    by 2000. Not only were they making significantly
    more money than in 1990, the income-divide
    between them and their non-disabled cohorts had
    decreased.

25
Wage and Salary Differences, Pt 2
  • A disabled onsite workers income was
    approximately 47 of their counterparts income
    in 1990, but had risen to 77 of the income of
    the non-disabled onsite worker in 2000.
  • In 1990, the income of a home-based disabled
    employee was approximately 51 of the income of
    the home-based non-disabled employee. In 2000,
    this proportion had risen to 73.
  • On average, it is more lucrative to be an
    employee than self-employed, regardless of
    disability status, worksite choice or year. This
    became even more striking in 2000 than in 1990,
    since incomes for the self-employed dropped
    during the 1990s, while incomes for employees
    rose.

26
Table 4
27
Public Assistance
  • The disabled were much more likely to be on
    public assistance than their non-disabled
    counterparts in 1990.
  • Those who are out of the labor force are markedly
    more likely to be on public assistance than those
    who are onsite workers and home-based workers,
    regardless of disability status.
  • Onsite workers are the least likely to be on any
    sort of public assistance like welfare or Social
    Security.

28
The Change from AFDC to TANF
  • The presence of the ADA was not the only change
    that happened in the 1990s. In 1996, Congress
    passed the Personal Responsibility and Work
    Opportunity Reconciliation Act that radically
    changed the welfare system in the United States.
    Welfare changed from Aid for Families with
    Dependent Children (AFDC) to Temporary Assistance
    for Needy Families (TANF).
  • TANF is much more restrictive than AFDC, and
    includes work requirements and time limits. It
    also decreases the implicit tax on non-welfare
    earnings to incentivize work.
  • As the cushion of disability insurance lessened
    for those with disabilities in the 1990s, they
    may have been more likely to enter the labor
    force.
  • In 2000, the number and percentage of those on
    welfare were both much lower than in 1990. The
    disabled who were out of the labor force were
    still more likely in percentage terms to receive
    welfare benefits than the non-disabled and the
    disabled in the workforce, but the divide had
    markedly decreased.

29
Table 5
30
Theory Behind Home Based Work Model
  • Based on Home-Based Work and Womens Labor Force
    Decisions by Linda Edwards and Betsy
    Field-Hendrey, which is based on previous work
    done by John Cogan on fixed costs and labor force
    decisions.
  • They outline two differences between home-based
    and onsite work.
  • First, the fixed costs associated with working
    (e.g. time costs associated with commuting,
    out-of-pocket commuting expenditures and clothing
    costs) are greatly reduced for home-based
    workers. Second, home-based workers may be able
    to engage in some joint production of income and
    household commodities. (Edwards and
    Field-Hendrey, 174)

31
Applying the Model to the Disabled
  • Edwards and Field-Hendreys analysis focuses on
    the labor force participation of married women.
  • Married women often do the majority of the
    child-rearing and household maintenance, so they
    have a different decision making process than men
    when considering whether or not to enter the
    labor force and for how many hours.
  • Women have different reservation wages, that is
    the minimum wage level to induce a person into
    the market, and this reservation wage is
    dependent on many factors, including other income
    and presence of children in the family.
  • Since the option of home-based work reduces many
    of the costs of working, Edwards and
    Field-Hendrey states that the presence of the
    home-based work option leads some women who would
    have chosen to be out of the labor force to enter
    as a home-based worker (176).
  • The theoretical basis for the disabled is similar
    to that of married women.
  • The disabled, too, have greater costs of working
    than their non-disabled counterparts.
    Transportation, mobility and accommodation issues
    affect the disabled more than the non-disabled.
    Also, a household commodity for a disabled
    person could be having a doctors or therapy
    appointment, or taking care of oneself when
    symptoms flare up. Home-based work could provide
    the flexibility and lower costs of work that
    could induce those with disabilities to enter the
    labor force.

32
The Econometric Model -- Data
  • The data used in this article are from the
    Integrated Public Use Microdata Series (IPUMS) of
    the Census for the years 1990 and 2000. The
    sample used is the 5 sample of housing units,
    and includes all people aged 25-55 who did not
    live in group quarters, were not in school or in
    the military. This sample also does not include
    the unemployed it only includes those who are
    either employed or out of the labor force.
  • Home-based work status is taken from the
    "transportation to work" question of the survey,
    question 23a.
  • "How did this person usually get to work LAST
    WEEK?"
  • If the respondent's answer was "worked at home,"
    then he or she is considered a home-based worker
    in this study.
  • People who work at home occasionally are not
    considered home-based workers for the purpose of
    this study since their motivations for working at
    home may differ with those who have chosen it as
    their primary worksite.
  • The sample only includes those aged 25-55 to
    separate the worksite decision from the school or
    retirement decision.
  • Special weighting to make the samples of onsite
    and homebased workers approximately equal

33
The Econometric Model
  • There are three separate, but related questions
    that have to be answered by an econometric model
    and our data. First, are those with disabilities
    more or less likely to out of the labor force?
    Second, for those who are in the labor force, are
    the disabled more or less likely to be a
    home-based worker? Third, was there any change
    in the first two questions between 1990 and 2000?
  • To answer these questions, I used a multinomial
    logistic regression model (mlogit) and the IPUMS
    data for 1990 and 2000.
  • The mlogit regression is used because the
    dependent variable is a polytomous variable.
  • The dependent variable, workstate, has only 5
    choices out of the labor force, on-site
    employee, on-site self-employed work, home-based
    employee and home-based self-employed worker.

34
Marginal Effects
  • After calculating the mlogit coefficients, I will
    determine the marginal effects that is, the
    change in the predicted probabilities of being in
    each category connected to changes in the
    explanatory variables.
  • Marginal effects look at a one unit change in the
    explanatory variables when the variables are
    continuous, and the change from 0 to 1 in
    dichotomous variables.
  • Focus on the marginal effects related to
    disability type to answer questions like
  • What is the change in the predicted probability
    of being an on-site employee when a person has a
    work disability compared with not having a work
    disability?
  • What is the change in the predicted probability
    of being a home-based employee when a person has
    a personal care limitation compared with those
    who do not?

35
Independent Variables
  • Using the data from 1990, the independent
    variables of the regression were age, age
    squared, education level, education level
    squared, age multiplied by education level,
    married, white, black, hispanic, presence of
    children in the household in the following age
    categories under one, one to two, three to
    five, six to twelve, and thirteen to seventeen,
    rural status, welfare recipient status, Social
    Security recipient status, other income and one
    of the three different disability measures a
    disability that limited work, a mobility
    disability and a personal care limitation.
  • The regression was the same for 2000, but
    included SSI recipient status and three other
    disability measures physical difficulty,
    difficulty remembering and vision and/or hearing
    difficulty.
  • These four variables were not added to the IPUMS
    data until 2000.
  • The logit regressions were weighted with the
    home-based vs. onsite weighting described
    previously.

36
How Can We Separate the Effect of the ADA from
other Effects?
  • The protections of the ADA only apply to
    employees those who choose or are forced to
    choose to work for themselves do not get the
    protection of reasonable accommodation.
  • We can look at how the marginal effects of the
    home-based and onsite employees changed relative
    to the self-employed workers to see the impact of
    this legislation on the labor force participation
    of the disabled.

37
Table 6
38
Table 7
39
Table 8
40
Table 8, continued
41
Table 9
42
Table 9, continued
43
Table 10
44
Results
  • In 1990, having a disability drastically
    decreased the probability of working as an
    on-site employee.
  • The disability limiting work category,
    understandably, decreased the probability the
    most by 24 percent.
  • A person who had a mobility disability in 1990
    was almost 13 percent less likely to be an
    on-site employee.
  • In 2000, these effects changed in a remarkable
    way. Now, an employee with a work disability was
    1.1 percent more likely to work on-site.

45
Results, continued
  • Home-based employees
  • In 1990, having a work disability or a mobility
    disability slightly increased the probability of
    being a home-based employee.
  • Having a personal care limitation slightly
    decreased that probability, by .1 percent.
  • For the most part in 2000, disability status
    slightly increased the probability of being a
    home-based employee.

46
Results, continued
  • The self employed
  • In general, the changes in probabilities for
    self-employed workers were either negative or
    much more muted in a positive way, than for those
    who were employees.
  • This lends credence to the fact that the ADA may
    have had a positive influence on the employment
    situation of those with disabilities, giving them
    more options to work.

47
Conclusions
  • Between 1990 and 2000, the disabled were more
    likely to be working and less likely to be out of
    the labor force.
  • The vast majority of those who entered the
    workplace went to onsite jobs, but home-based
    work provided an important place as well for
    increased labor force participation of the
    disabled.
  • As the digital age continues to thrive, there is
    greater and greater place for home-based work
    opportunities.
  • The onsite world of work will always be dominant,
    but the reasonableness of working from home
    increases with every technological advance.
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