The handicaps of the Americans With Disabilities Act

Richard Epstein Senior Fellow, Hoover Institution
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A recent story in The New York Times offers a surprising critique of the Americans With Disabilities Act when it comments on the “flood of suits” brought by a small number of individuals in wheelchairs against a wide range of small businesses in New York City. These quasi-professional litigants scour the landscape to identify businesses whose premises are not in compliance with the elaborate access rules set by the ADA. Then, for a fee of around $500, they refer their discoveries to specialist lawyers who force expensive settlements with the hapless owners, collecting lucrative fees for themselves in the process, usually without litigation.

One successful ADA lawyer, Martin Coleman, puts it bluntly: “As a private attorney, every lawsuit that I file is to make money, because that’s how I make a living. … And in that regard, I’m no different than any other private attorney.”

My gripe is not with Mr. Coleman, but with the legal system that authorizes this type of litigation in the first place. The lawyers behind the ADA scheme claim that their private enforcement beefs up public enforcement. But private lawsuits need not be aligned with social welfare. Indeed, in this instance, they work at cross purposes.  Lawyers like Mr. Coleman march to the incentives the ADA creates for them. They don’t know and don’t care that these capital expenditures produce little to no social benefit. Indeed, if there had been any perceptible need for the changes demanded in such lawsuits, some regular customer would have sued long ago.

Congress has not been shy about supplying grandiose justifications for antisocial outcomes. The ADA states that “physical or mental disabilities in no way diminish a person’s right to fully participate in all aspects of society,” and, further, that “the continuing existence of unfair and unnecessary discrimination and prejudice denies people with disabilities the opportunity to compete on an equal basis … and costs the United States billions of dollars in unnecessary expenses resulting from dependency and nonproductivity.”

So there you have it. The ADA creates a strong set of new entitlements in seeking to correct the so-called misbehavior of “prejudiced” members of the population who do not recognize that they lose their own money because of their “unfair and unnecessary” forms of discrimination. The confusions in this argument cry out for correction.

First, the objections to the ADA do not rest on the premise that disabled people have no “right to participate” in gainful social activities. Even without the ADA, in a market economy, these people can offer their services to others on whatever terms and conditions they see fit. The catch is that their disabilities will, in some, but by no means all cases, make their services less desirable. Where the disability is trivial, it will have at most trivial effects. Where it is not, it will lead to a reduction in wages for work done. That wage differential, however, is not a function of any irrational prejudice. Instead, it rests on the unassailable premise that as the price for a good or service goes up, the quantities demanded of that good or service will go down.

In and of itself, this hard reality about disabilities generates beneficial consequences that the defenders of the ADA uniformly overlook. The sure knowledge that they are at a business disadvantage puts constant pressure on disabled individuals to take steps to improve their own situation. It is a lot cheaper, in most instances, for disabled people to use narrower wheelchairs (which have become widely available) than it is for property owners to knock down and rebuild narrow bathrooms and hallways to accommodate the older, and wider, models.

At the same time, the absence of the ADA would present huge entrepreneurial opportunities for third parties to introduce their own innovations that help disabled persons improve their overall position. The ability to work and shop online at one’s own pace offers a set of dazzling technological improvements that have done more to help the disabled than the massive expenditures under the ADA.

Second, it is just indefensible to claim that the supposed discrimination against the disabled “costs the United States billions” of dollars. Any potential profit opportunities of that magnitude would never go unnoticed in a market economy. The position of the ADA defenders is that businesses are so systematically ignorant that they must be forced to tap this market by nonstop public coercion. If these changes were cost justified, they would have been voluntarily incorporated long ago, without government prodding. Instead, we see a system in which virtually all new architectural projects in the United States have to be approved by government actors before they are allowed to go forward.

If you have the slightest familiarity with the industry, you know that these modifications do not come cheap. The modifications that are inexpensive will be implemented anyway. The modifications that aren’t include specialized ramps, bathrooms, and elevators that hog space that is better put to other purposes. Yet at no point is anyone in the government required to prepare a cost-benefit analysis to explain the need to mandate the installation of all sorts of chairlifts that are never used.

To this day, I recall an incident that occurred years ago at the University of Chicago. The occasion was the dedication of the new law school clinic building. A woman attendee with a broken leg was seated in a wheelchair when our group came to a set of steps next to which was a chairlift that no one had the key to and which no one knew how to operate. The solution was easy enough. Three or four of us picked up the woman in her wheelchair and carried her down the steps.

It is easy to protest that no one in a wheelchair should be dependent on the grace and kindness of other individuals. But the opposite is true: In a good civil society, it is exactly that kind of conduct that allows for inexpensive labor to substitute for highly impracticable and unsightly capital “improvements” that do little or no good to anyone. Indeed, the high cost of retrofitting existing buildings routinely leads their owners to postpone their renovations, with resulting inconveniences to future users, to the construction, and to other workers who could have profited from the earlier work. Ironically, in a world without the ADA, the new premises would on average be friendlier to disabled persons than the existing structures. Unfortunately, those hidden losses are not taken into account in setting ADA compliance rules.

This attack on the ADA should not be read as a clarion call to remove all ramps and lifts from airports and hospitals. Clearly, cost-benefit ratios change dramatically with context, so much so that sensible institutions install these devices when the anticipated high level of use justifies the capital expenditures. It is just a canard to think that without the ADA, the investment in disability access would fall to zero or even close to that.

Indeed, the only socially correct assessment of the ADA has to ask this question: Are the huge costs of statutory enforcement justified by the modest social gains, if any, that follow from nationwide compliance with these mandates? Those gains can be achieved at much lower costs, which for the most part would produce more sensible innovations. In all likelihood, that answer is in the negative once we abandon the improbable assumption that the strong social pressures that forced passage of the ADA would turn silent in the event of its repeal. Given the visibility and emotions surrounding the issue, that just won’t happen.

None of these questions about the ADA get asked, however, because the huge ADA subsidies are all off-budget, as neither the federal nor the state and local governments contribute a single cent to cover the costs of their mandates. At this point, the separation of the right to coerce from the duty to pay leads public officials to ignore or understate the costs of their programs. The necessary consequence of that critical design mistake is a vast overinvestment in facilities for the disabled, none of which would have been made if government budgets made their costs explicit.

The same point is true, for example, in connection with rent control and rent stabilization laws that mandate that landlords continue to lease out their premises to tenants at a maximum price set by the state. As Justice Antonin Scalia wrote long ago in Pennell v. City of San Jose (1988), San Jose’s rent control scheme permits extensive transfers to preferred tenants “to be achieved ‘off budget,’ with relative invisibility, and thus relative immunity from normal democratic processes.”

The requirement of compensation would, of course, revolutionize the application of both the rent control laws and the ADA. In practice, in times of budgetary stringency, no government at any level will be prepared to foot the bill for the extensive architectural alterations that the ADA now requires. It is not that the level of expenditures would drop to zero. But once they are on the financial hook, government actors would have an incentive to take out their green eyeshades to make sure that expenditures on facilities promised a high return on taxpayer dollars. Accordingly, no longer would every bus or train car need to meet these exacting standards. Instead, the state could take bids from private providers to supply the type of installations that they were prepared to pay for.

In some instances, high costs might lead governments to drop these programs altogether. But why lament that result given that the current consensus behind the ADA rests on a mistaken view about the social role of antidiscrimination laws more generally. Historically, the basic rule has always been that the owners of private property have the absolute right to refuse or admit others to their premises if they see fit. The good social sense behind this premise is that the independent decisions of many separate owners are a precondition for a competitive market that in general moves real estate to its highest value.

The one powerful historical exception to this rule applied to firms that held a legal or natural monopoly over a given type of service, of which the best historical examples were common carriers and public utilities. In these cases, the established rule, articulated first by English judges and carried over to the United States, was that “if a man will take the benefit of [a] monopoly, he must as an equivalent perform the duty attached to it on reasonable terms.”

Stated otherwise, no one has the absolute right to exclude when he exerts monopoly power either through a state grant or through natural circumstances — e.g. by owning the only wharf in the only nearby harbor. In these cases, the standard control mechanism is that the firm must supply its goods to all customers at reasonable and nondiscriminatory rates.

The application of this principle is fraught with difficulties in ratemaking that would take extensive administrative expertise to resolve. But one clear principle of traditional ratemaking most relevant here is that a monopolist is always allowed to recover from each class of customers the distinctive cost of service for that group. Ratemaking, on this view, is not a disguised system of cross-subsidy. It is only a way to prevent the exertion of monopoly power against all groups. This view therefore flatly condemns any effort to convert government ratemaking into a tool to force cross-subsidies between groups. The violation of that principle imposes enormous social losses across the board. Once those systematic losses are recognized, the current practice of scouting out targets of opportunity will be seen as the symptom of a much larger problem — the indefensible logic of the ADA itself.

Richard A. Epstein, the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, is the Laurence A. Tisch Professor of Law, New York University Law School, and a senior lecturer at the University of Chicago. His most recent books are Design for Liberty: Private Property, Public Administration, and the Rule of Law (2011), The Case against the Employee Free Choice Act (Hoover Press, 2009) and Supreme Neglect: How to Revive the Constitutional Protection for Private Property (Oxford Press, 2008). This article originally appeared in Defining Ideas, a journal of the Hoover Institution.