Completing the Picture: Key Features of the Social Security Disability Insurance Program. The Rise in the Number of Beneficiaries is Due in Part to Shifts in Labor Force Demographics and in Part to Other Factors

03/01/2014

The Rise in the Number of Beneficiaries is Due in Part to Shifts in Labor Force Demographics and in Part to Other Factors

The past three decades have seen a dramatic rise in the number of people who receive SSDI benefits. From 1980 to 2010, the SSDI caseload increased from 2.9 million to 7.9 million, excluding those age 65 and over (Stapleton & Wittenburg 2011). Experts agree that labor force demographics account for much of this growth, as the working-age population expands, more women join the labor force, and the "baby boom" generation ages--older workers have always entered SSDI at a higher rate than younger workers. However, SSDI caseloads have grown by more than can be accounted for by labor force demographics alone. Of the total increase, 2.8 million (57 percent) is due to labor force demographics. The remaining growth--2.2 million (43 percent)--is due to other factors. The percentage of growth explained by other factors varies with the time period considered, but is substantial over almost any lengthy period considered in the last three decades.

An array of factors is likely at work here. One example is the changing prevalence of disability in the working-age population, although the research in this area is inconclusive (Fujiura 2001). Another example is the changing stringency of medical eligibility criteria due to legislative, administrative, and court actions. Yet another example is changes in the labor market, such as increased layoffs during recessions and changes in wage rates. SSDI applications and, to a lesser degree, awards rise during recessions, and that connection has grown stronger over the years. The wages of low-skill workers have grown more slowly than average wages, and because SSA indexes initial benefits to the growth in average wages, the benefits of low-skill workers have grown more slowly than the average worker's (Autor & Duggan 2003). The final set of factors are policies external to SSDI, such as the declining value of Social Security early retirement benefits, which increase the relative value of SSDI benefits for older workers.

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