Academic journal article Social Security Bulletin

Labor-Force Participation and Earnings of SSI Disability Recipients: A Pooled Cross-Sectional Times Series Approach to the Behavior of Individuals

Academic journal article Social Security Bulletin

Labor-Force Participation and Earnings of SSI Disability Recipients: A Pooled Cross-Sectional Times Series Approach to the Behavior of Individuals

Article excerpt

by L. Scott Muller, Charles G. Scott, and Barry V. Bye *

This article examines two important aspects of work behavior, labor-force participation, and earnings among persons who since 1976 have become entitled to SSI disability benefits and received payments for a full calendar year or longer during the intervening time period. A data set was developed containing the records of a random sample of all individuals who had ever received Supplemental Security Income (SSI) disability benefits and matched to earnings records maintained by the Social Security Administration (SSA). A multivariate analysis based on a pooled cross-sectional time series approach was employed using individual-level data to first estimate the probability of an SSI recipient performing work and then to estimate, among those who worked, the level of earnings. For this analysis, the SSI population was divided into three distinct groups based on their diagnosis: the nondevelopmentally disabled, the developmentally disabled (other than the mentally retarded), and the mentally retarded.

The analysis provides information about the impact that individual characteristics (such as age, education, diagnosis, and so forth) play in the decision to work and in determining the level of earnings. The analysis also addresses yearly variations in labor-force participation and earnings. The Supplemental Security Income (SSI) program provides benefits to aged and disabled persons whose incomes and resources are below specified limits. The program began in 1974 with the conversion of certain recipients of State welfare and other programs into the new federally administered SSI program. In December 1994, more than 6 million persons received SSI benefits. More than two-thirds of these recipients were disabled recipients under the age of 65.

The SSI program's definition of disability is very strict, requiring the demonstration of both a severe impairment and a resulting inability to work. Specifically, applicants must be unable to engage in "substantial gainful activity" (SGA) by reason of a medically determinable physical or mental impairment that can be expected to result in death, or that has lasted or can be expected to last for a continuous period of at least 1 year. In 1994, earnings over $500 per month constituted SGA.

Despite the severity of their disabilities, some recipients either continue to work, or return to work after they are awarded benefits. In September 1995, about 8 percent of all SSI disability recipients ages 18-64 were working.1

Since the program's inception, the Social Security Administration (SSA) has been exploring methods for encouraging SSI recipients to return to work or to increase their work efforts. The efforts have been supported by various provisions of the law that permit SSI recipients to keep their earnings while maintaining eligibility for partial cash benefits that have been reduced for earnings, and to retain Medicaid coverage even when SSI payments stop. These provisions include income exclusions for blind work expenses, plans for achieving self-support, student earned income, impairment related work expenses, and Section 1619 (Public Law 96265).

Section 1619(a) provides special cash benefits to disabled individuals who would otherwise lose eligibility for SSI payments because they have earnings at the level that is considered to represent SGA. Section 1619(b) provides special SSI recipient status for Medicaid purposes to working disabled or blind individuals when their earnings make them ineligible for cash payments. In September 1995, about 73,000 SSI recipients were participating in Section 1619(a) or (b). Of these recipients, about 10,500 were covered by a program to achieve self-support, and over 14,000 had income exclusions for blind work expenses or impairment related work expenses.2

SSA has publicized these provisions and has been searching for other means of identifying and encouraging potential workers. …

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