1. Health and Employment: Macro Context
Edward Yelin, PhD
University of California, San Francisco
COEH Webinar May 3, 2017

2. Disclosures
Nothing to disclose

3. Employment of Persons with Disabilities Periodically Becomes an Important Policy Issue
Not usually because we care about their employment
Concerns about growth in number of beneficiaries of disability compensation systems – largest is SSDI
Heightened by aging of the population which puts increased fractions of people at risk of disability
Fueled by inherent subjectivity of classifying people as disabled
This American Life episode of about three years ago highlighted this with examples of people doing physically demanding leisure activities while collecting disability benefits

4. Rorschach Test
Many see disability compensation systems as enticing people out of work with high income replacement rates, a middle class version of the “welfare queen” trope.
Others view this in epidemiologic and demographic terms – simply the result of fact that more of us are older and at risk for disability
Another way to view trends in employment of persons with disabilities is as the result of changing laborforce dynamics (my view).
Reality probably incorporates elements of all three views: disability compensation is nice alternative to welfare and bridge to Social Security retirement, declining mortality may result in increased rates of chronic disease, and there is a push out of work for certain parts of the laborforce.

5. Disability Compensation Dynamics

6. History of Social Security Disability Insurance (SSDI)
Part of Progressive’s agenda
Not included in original Social Security legislation out of fears expressed by private disability compensation companies that it would lead to moral hazard (this was said in height of depression)
Enacted in 1956, first as a way of freezing access to Social Security retirement benefits, then, in 1960 as actual compensation
Reformed numerous times to deal with growth in program

7. Number of SSDI Beneficiaries (in mils), by Year, 1970-2015

8. Ratio of Number of SSDI Beneficiaries to Number of Insured (Percent), by Year, 1970-2015

9. Applications for SSDI Benefits (mils), by Year, 1970-2014

10. Awards of SSDI Benefits (in mils), by Year, 1970-2014

11. Ratio of Number of Awards to Number of Applications (Percent), by Year, 1970-2014

12. Ratio of SSDI Benefits to Average Earnings (Percent), by Year (1970-2014)

14. The Economic Model of Disability
What the model should hypothesize:
A worker with impairment, weighing his or her options, will leave work now and must wait six months to apply for benefits, knowing that the decision on the application will not come before another six to nine months, will have a one-third chance of success and, if successful, will replace about a third of earnings, an expected return of one-ninth of current earnings, with no disability income for at least six months and probably fifteen.

15. Structural Models of Disability
Erosion of physical basis of work removes brute force requirements as deciding factor in most cases
Control over pace and timing of work activities now central to employment
Melding rhythms of work with cyclical rhythms of chronic disease and its care
Ability to concentrate/communicate more important than physical capacity
Emergence of mental and neurological conditions as most prevalent causes of SSDI entitlement

16. Structural Models of Disability
Macro-economic version:
Dual labor market theory: disabled, like women, older workers, and racial/ethnic minorities relegated to secondary labor market
-last hired, first fired in jobs
-less likely to secure jobs in high wage/growth sectors of economy
Short-wave: more affected by cyclical downturns/upturns in employment
Long-wave: more likely to be displaced from declining industries, less likely to obtain work in rising sectors

17. Disability Dynamics
Analyses of National Health Interview Survey from
Disability defined as limited in activities
Definition changed slightly in 1997
Best to view trends as up to 1997 and then again after 1997
Two measures traditionally used in employment metrics
In laborforce vs. not (employed + those actively looking for work, the current official definition of unemployed)
Employed vs. not.
Analyses focused on “jeopardizing characteristics”, including gender, race, age, and disability defined as limited in activities
Each of these characteristics is protected by civil rights legislation

18. Proportion of Population Reporting Disability Defined by Activity Limitation

19. Men=red, women=blue
Authors’ calculations of National Health Interview Survey

20. 18-44
Authors’ calculations of National Health Interview Survey

21. 55-64
Authors’ calculations of National Health Interview Survey

22. Labor Force Participation of Persons with Disabilities

23. Authors’ calculations of National Health Interview Survey

24. Not limited
Authors’ calculations of National Health Interview Survey

25. Not limited
Authors’ calculations of National Health Interview Survey

26. Not limited
Authors’ calculations of National Health Interview Survey

27. Not limited

28. Not limited
Authors’ calculations of National Health Interview Survey

29. Not limited
Limited
Authors’ calculations of National Health Interview Survey

30. Not limited
Authors’ calculations of National Health Interview Survey

31. Summary and Conclusions-1
Aging of population doesn’t necessarily result in pandemic of disability and reductions in employment
No clear-cut trend in disability rates over last decade or so
Definitive proof that income replacement entices people to leave work impossible (not amenable to randomized trial)
Logic indicates that premeditated action to leave work would not be rational
1/3 chance of 1/3 of income with long wait for result

32. Summary and Conclusions-2
Disability would appear, like gender, age, and race, to jeopardize employment
Women with disabilities less likely to see increased employment rates
Men with disabilities more likely to see decreased employment rates
Reducing benefits unlikely to stem exits from employment among persons with disabilities
But reducing benefits will cut the income of 10m SSDI recipients and their families
Focus on economic growth, training, and anti-discrimination legislation central to improving employment of persons with disabilities