BEYOND THE NUMBERS
The number of disabled workers collecting Disability Insurance (DI) benefits tripled from 2.9 million in 1980 to 8.9 million the end of 2013. Some see this growth as evidence that the program is out of control. But most of that growth stems from five demographic factors, as our new paper explains:
- Population growth. The working-age population (conventionally defined as people aged 20 through 64) rose by 43 percent since 1980. That increase, alone, would have generated an extra 1.25 million DI beneficiaries in 2013, compared with 1980.
- Population aging. The risk of disability rises steeply with age; people are twice as likely to receive DI at age 50 than at age 40, and twice as likely at age 60 than at age 50. The baby-boom generation — the large cohort born between 1946 and 1964 — has aged into those high-risk years over the past few decades (see graph). That added another 900,000 DI beneficiaries in 2013, compared with 1980.Image
- Growth in women’s labor force participation. Besides having a severe impairment, DI applicants must have a steady work history — and until women joined the work force in huge numbers, relatively few of them qualified. The rise in women’s labor force participation explains why the number of insured workers grew much faster than overall population, especially among older workers. It’s responsible for another 900,000 beneficiaries in 2013, compared with 1980.
- Rise in retirement age. When disabled workers reach Social Security’s full retirement age, they begin receiving Social Security retirement benefits rather than DI. The rise in the full retirement age from 65 to 66 in the early 2000s delayed the conversion of disabled workers to retired workers. In December 2013 more than 450,000 people between ages 65 and 66 collected DI benefits; under the former rules, they would’ve received retirement benefits instead.
- Increase in women’s rate of receipt. Until the mid-1990s, women who had worked enough to qualify for DI in the event of disability were only about three-fourths as likely as their male counterparts to receive DI benefits. Now they’re equally likely to do so. This development added another 650,000 beneficiaries in 2013, compared with 1980.
In sum, these five demographic factors alone account for over 4.1 million more DI beneficiaries by 2013 — expanding the DI rolls from 1980’s 2.9 million to 7 million. Put another way, these five factors account for nearly 70 percent of DI’s enrollment growth since 1980 and four-fifths of DI’s total enrollment in 2013.
And we know many of the reasons for the remaining growth (which include changes to eligibility rules in the mid-1980s, the impact on the workplace of globalization and technological change, and lower death rates), even though we can’t readily quantify them.
A proper understanding of the contribution of demographic changes and other factors should help policymakers as they decide how to ensure Disability Insurance’s long-term solvency.