Academic journal article Social Security Bulletin

Economic Conditions and Supplemental Security Income Application

Academic journal article Social Security Bulletin

Economic Conditions and Supplemental Security Income Application

Article excerpt

Supplemental Security Income (SSI) is one of the most important means-tested transfer programs in the United States. This article examines whether economic conditions affect the likelihood that jobless adults with disabilities apply for SSI payments. Using data for 1996-2010 from the Survey of Income and Program Participation linked to Social Security administrative records, we examine jobless individuals and observe state unemployment rates at both the time their unemployment spell began and the time they applied for SSI. Hazard model estimates suggest that SSI application is positively associated with an increase in the unemployment rate during an individual's jobless spell but is less likely for an individual whose jobless spell begins when the unemployment rate is comparatively high. Omitting the baseline unemployment rate from the analysis distorts the estimate of the relationship between SSI application and the contemporaneous economic conditions. Our findings suggest longterm fiscal implications for SSI of sustained high unemployment.


Over the last 30 years, the Supplemental Security Income (SSI) program, which provides federally funded income support for individuals with disabilities, has become one of the most important means-tested cash aid programs in the United States. In 2015, SSI provided payments to 4.9 million low-income adults aged 18-64 who met its disability criteria (Social Security Administration [SSA] 2017a, Table 7.A1). That figure represents a doubling in the adult SSI caseload since 1990 (Chart 1). The federal government spent $46.9 billion on payments to SSI recipients with disabilities in 2015 (SSA 2017a, Table 7.A4), representing a 155 percent increase in real dollars since 1990. (1)

Because SSI is a means-tested program, one might expect application trends to be countercyclical--decreasing when the economy is expanding and increasing during recessions. However, the cyclicality of application has varied over time. Chart 2 graphs SSI applications for adults aged 18-64 (left axis) against the unemployment rate (right axis) for 1990-2015. For most of the period--from 1990 through about 2002 and from 2008 to 2015--the trend in SSI application followed the trend in the national unemployment rate fairly closely. For example, the steady decline in SSI application in the 1990s began about 1 year after the unemployment rate began to decline; SSI application increased as unemployment rates rose during the Great Recession of 2008-2010 and application declined during the subsequent recovery. However, the 2003-2007 period presents an anomaly: Although the unemployment rate fell, SSI application continued to rise. Rutledge and Wu (2014) offer a number of explanations for the continuing rise in applications during that period, including the lagged effects of prior welfare reforms that induced Temporary Assistance for Needy Families (TANF) program participants to switch to SSI, persistently high poverty rates, and increases in the share of the population in fair or poor health.

Selected Abbreviations

DI    Disability Insurance
SIPP  Survey of Income and Program Participation
SSI   Supplemental Security Income
TANF  Temporary Assistance for Needy Families
UI    unemployment insurance

A number of previous studies looked at the effects of economic conditions on growth in disability program caseloads. However, much of that work focused on Social Security Disability Insurance (DI), which is limited to individuals who meet that program's earnings-history thresholds and who therefore may be more responsive to economic conditions. Most research focusing specifically on SSI dates from the 1990s. Those studies found that higher unemployment was associated with increases in SSI application and caseloads (Rupp and Stapleton 1995; Stapleton and others 1998; Stapleton and others 1999). The relationship between economic conditions and SSI application may have evolved significantly since then. …

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