Because of its unintended victims, noted economist Joseph Stiglitz and his co-authors urged that lawmakers take another look at how asbestos claimants now get compensated – by filing suits against companies accused of making or using the fire-retardant material, Reuters reported.
The suits often help prompt the companies to seek bankruptcy protection, reported the study commissioned by an insurance industry group. An avalanche of asbestos personal injury claims has cost more than $54 billion in settlements so far and driven more than 60 US companies into bankruptcy, according to the study.
These bankruptcies have led to a loss of 52,000 to 60,000 jobs, according to the study, which Stiglitz wrote along with Jonathan Orszag and Peter Orszag of Sebago Associates Inc., an economic policy consulting firm, Reuters said.
Displaced Workers Lose As Much as $50,000
“The costs imposed on these displaced workers amount to between $1.4 billion and $3 billion in present value, or roughly $25,000 to $50,000 per displaced worker,” the study said. The workers at bankrupt companies have also lost thousands from their defined contribution accounts due to the fact that many hold company stock as a retirement investment, the study said.
“A large component of the payments made to asbestos claimants involves transfers from workers at the defendant firms,” said the study by Stiglitz, who chaired the Council of Economic Advisers under former President Bill Clinton, according to Reuters. “The purpose of this paper is not to suggest that impaired claimants are unworthy of assistance, but rather to highlight the fact that payments to any claimants are not free.”
While researchers said they recognized that citizens who have suffered from asbestos-related illnesses deserve appropriate compensation, the study questioned the fairness of the liability lawsuit approach to paying their claims.
“Since many of these firms were not asbestos manufacturers, the costs imposed on workers may seem unfair and inefficient from an economic perspective,” the study said. “In light of these costs, re-examining the system used to compensate those with illnesses associated with asbestos exposure seems worthwhile.”
With many asbestos manufacturers already bankrupt, lawsuits are naming companies that used it in products they sold, and a recent study said these companies spanned 85% of the US economy.
Asbestos was widely used for fireproofing and insulation until the 1970s, when scientists concluded that inhaled fibers could be linked to cancer and other diseases.
The study was commissioned by the American Insurance Association.