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Vocational Factors Affect Eligibility for Disability Insurance

The Social Security Administration (SSA) asks whether it should change the way it considers vocational factors — older age, limited education, and lack of transferable skills — in deciding applicants’ eligibility for Social Security Disability Insurance (DI).  At SSA’s National Disability Forum today, I explained that DI’s eligibility criteria are already quite stringent and SSA should be cautious in revising them.

  • Age, education, and skills matter.  By law, DI applicants must have a severe and long-lasting medical impairment; even then, they’re expected to switch to other work — even in another field or at lower pay — if they’re able, considering their age, education, and work experience.  SSA uses vocational criteria detailed in regulation to weigh whether applicants can make such a switch.  A back problem that wouldn’t end the career of an economist or journalist, for example, might be career-ending for a worker who never went to college and has always done manual labor.  DI receipt is most prevalent among older workers with limited education.  (See figure.) 

  • DI eligibility criteria are already stringent.  Compared with other advanced countries, the United States imposes stringent eligibility criteria, spends relatively little on benefits, and targets spending on its sickest citizens.  DI’s modest benefits, five-month waiting period, and strict eligibility rules (requiring that beneficiaries be unable do any substantial work, not just their past work) make the program generally unappealing to prospective applicants who can work.  Allowance rates are low — 4 out of 10 applicants are awarded benefits — and tend to fall in recessions.  Even rejected applicants generally fare poorly in the labor market. 
  • Recent improvements in health and mortality haven’t been equally shared.  Health, life expectancy, and work capacity are improving on average for older Americans, but that’s not necessarily a reason to revise SSA’s vocational regulations.  Gains in life expectancy have been concentrated among people with higher earnings and socioeconomic status, and health at older ages differs substantially by education level and racial and ethnic group.  The shift to jobs that emphasize “mind over muscle” generally bodes well for older workers, say Urban Institute experts, “but probably not for those with limited education.”  And Boston College researchers find that, while opportunities for older workers have grown since the late 1990s, the gains have gone primarily to better-educated workers.

Tightening DI rules further would mean hardship for rejected applicants and would disproportionately affect minorities and people with low earnings and less education, who are more likely to apply for DI.