Academic journal article Social Security Bulletin

The Decline in Earnings Prior to Application for Disability Insurance Benefits

Academic journal article Social Security Bulletin

The Decline in Earnings Prior to Application for Disability Insurance Benefits

Article excerpt


The Social Security Disability Insurance (DI) program provides benefits to individuals with disabilities and, in some cases, to their dependent family members. Individuals must accrue sufficient work histories and payroll tax contributions to be eligible for DI benefits. Some researchers, such as Autor and Duggan (2010), argue that the structure of the DI program supports a dependency on benefits that combines with other factors to increase program costs. However, other researchers have argued that many DI beneficiaries are simply unable to work (Bound 1989; Stapleton and others 2008).1 Providing preapplication employment supports and related services to individuals at risk of applying for DI benefits might improve their economic well-being and lower the number of DI applications and awards.

To assist workers with disabilities effectively, researchers and policymakers might direct support services toward narrowly targeted subgroups (Wittenburg, Mann, and Thompkins 2013). In selecting groups to target for assistance, policymakers must consider factors such as the earnings history or the functional abilities of the prospective target populations. This article investigates one potential factor to consider when planning early intervention efforts: the decline in earnings in the period leading up to application for DI benefits. Although that factor has previously been observed (see von Wachter, Song, and Manchester 2011), this article focuses on the duration of the decline in earnings across disability types. The analyses in this article will serve as a first step in understanding the trends in earnings prior to application and will expand the exploration of how best to target intervention efforts.

Literature Review

Interventions to help maintain employment and earnings may be more effective if they occur prior to application for disability program benefits (Autor and Duggan 2010; Liebman and Smalligan 2013; Gimm, Hoffman, and Ireys 2014). Several initiatives have explored the effectiveness of early intervention. For example, the Demonstration to Maintain Independence and Employment (DMIE), administered by the Centers for Medicare & Medicaid Services in 2006-2009, tested the effectiveness of "wrap-around" services to prevent or delay employment loss and benefit receipt (Gimm and Weathers 2007; Whalen and others 2012). These services included employment-related supports, medical and behavioral services, life and work coaching, and person-centered case management (services varied by state).2 In their evaluation of DMIE, Gimm, Hoffman, and Ireys (2014) found statistical evidence that early interventions significantly reduce the likelihood of federal disability-program benefit receipt after 12 months.

Similarly, Killackey, Jackson, and McGorry (2008) evaluated the effectiveness of Individual Placement and Support (IPS), an employment-support initiative in Melbourne, Australia that focused on enabling competitive employment for individuals with a mental illness.3 The authors found evidence suggesting that intervening at earlier stages of mental illness-specifically, at a first episode of psychosis-and incorporating IPS into the treatment regimen led to more jobs acquired and longer employment periods for their participants. Those receiving IPS treatment at the first stage of psychosis also worked more hours per week and relied less on welfare benefits than did the participants receiving the usual treatment regimen.

To date, most of the demonstrations administered by the Social Security Administration (SSA) have focused on employment efforts after award. Wittenburg, Mann, and Thompkins (2013) reviewed demonstrations conducted by SSA before and after Congress passed the Ticket to Work and Work Incentives Improvement Act of 1999. Although the authors concluded that none of the reviewed demonstrations were likely to reduce caseloads or benefit awards enough to reverse program growth, they found that demonstrations targeted narrowly to specific populations showed positive employment impacts. …

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