Disabilities and Employment

Questions persist about how well Social Security Disability Insurance, workers' compensation, Supplemental Security Income, and veterans' benefits protect people who are unable to work. This study examines disability benefit receipt, income, and poverty status for a sample of Americans as they age. The results underscore the precarious financial state of most people approaching traditional retirement age with disabilities. Fewer than half of people who meet our disability criteria ever receive disability benefits in their fifties or early sixties. Poverty rates for those who do are more than three times as high after benefit receipt than before disability onset.

A patchwork of public programs, including Social Security Disability Insurance, workers’ compensation, Supplemental Security Income, and veterans’ benefits, provides income supports to people with health problems who are unable to work. Yet, many Americans who develop disabilities in their fifties or early sixties fall into poverty. With millions of boomers entering their sixties—when work disability rates peak—it’s time to fix the social insurance safety net for disabled workers.

This project uses data from the 2005/2006 National Health Interview Survey to provide a profile of the prevalence of different types of disability and employment among TANF recipients. We find that prevalence of disability varies widely depending on the specific measure used. Using narrow and broad composite disability measures, anywhere from 10 to 40 percent of TANF recipients have a disability and almost one-fifth have a family member with a disability. Disability prevalence among Food Stamp recipients is similar to TANF but low-income mothers have lower prevalence on almost all measures. Employment among TANF recipients with disabilities is considerably lower than among recipients without disabilities.

The American Recovery and Reinvestment Act of 2009 (ARRA), the economic stimulus package passed in February, provides significant resources for developing environment-friendly “green jobs.” The act includes $48 billion overall for job training and education, nearly $100 billion for transportation and infrastructure, $20 billion in tax incentives for renewable energy, and more than $41 billion for energy-related programs. But it is unclear how green investments will benefit the country’s most vulnerable individuals: low-wage workers with limited skills.

This paper examines work-limiting disability using the 1996 and 2001 panels of the Survey of Income and Program Participation. Nearly 10 percent of employed parents developed or had a recurring disability over the course of the panel. For about a quarter of this group, earnings dropped by more than 25 percent of family income, with other income sources offsetting only a small fraction of lost earnings. In addition, workers who hold health insurance policies through their employer were less likely to reduce hours worked or leave their job following disability onset, effects consistent with job lock.