The Declining Work and Welfare of Working-Age People with Disabilities 11 th Annual Joint Conference of Retirement Research Consortium August 10-11, 2009 Richard V. Burkhauser, Cornell University Mary C. Daly, Federal Reserve Bank of San Francisco The findings and conclusions expressed are solely those of the authors and do not represent the views of the SSA, any agency of the Federal Government, the RRC, or the Federal Reserve Bank of San Francisco.

MRRC papers and… MRRC Papers  Dutch disability reforms and their effects on caseloads, employment, and income  Trends in employment and income of people with disabilities in the U.S. Book on disability policy in the U.S.  How is it working?  What are its shortcomings?  How might it be changed?

Divergent trends in caseloads

Surprising closure of income

Critical difference in employment

Motivation for the book U.S. Disability Policy: Goals and Outcomes  ADA—most people with disabilities can work and would do so if given the opportunity.  The share of working age people on federal disability programs has risen and the employment rates of people with disabilities have fallen. What happened?  Goals were not matched by policy changes, leaving little room for behavioral shifts.  Change is possible, as demonstrated by reforms to U.S. welfare and the Dutch disability system.

Disability is not always limiting

Health status relatively constant

As are work limitations

Literature suggests a role for policy Potential for influence  Impairment and work limitation not one for one  Work limitation and work effort are not one for one  Not all people with severe impairments say they are work limited  Many people with work limitations are employed Evidence of influence  Variation in allowance rates by state  Growing percentage of DI/SSI awards due to mental & musculoskeletal  Growing number meeting vocational criteria  Growing number qualifying at the ALJ stage

Lessons from welfare reform

Reforms did not lower income

Arguments for disability reform  People with disabilities are falling behind the rest of the population, even other vulnerable groups  Work is a key determinant of household income and its trends  Current work effort of people with disabilities reflects policy as well as health/impairment  Welfare reform highlighted the ability for even vulnerable populations to work  Changing incentives will require reforms to U.S. disability programs like those for welfare and the Dutch disability system

Themes for potential reform U.S. Disability Policy Reform  Follow the spirit of the ADA and make work the priority of U.S. disability policy.  Redirect resources from post-benefit work programs to pre-benefit work support/initiatives  Allow states and other agents to experiment and innovate as in pre-welfare reform trials  For SSDI, shift part of the costs to firms/private insurers to motivate them to focus on work first  For SSI, treat the program like TANF and devolve the program to the states (like TANF) and allow for experimentation and innovation.