Social Security, Work and Poverty

Marta Russell

It is a tight labor market and tight labor markets traditionally threaten to give workers more bargaining power from which to secure significant wage increases. Wall Street and investors get nervous about tight labor markets. They reckon that the inflationary pressures may upset their profit margins, so it is not surprising that in the current uptick of employment, that the corporate state has intervened to protect the status quo income distributive system. I am referring to two recent actions taken by government, the ending the federal entitlement to AFDC or Welfare Reform which forced millions of women into the low end labor market and current efforts to entice some of the 4 million disabled persons receiving Social Security Disability Insurance (SSDI) into the workforce through the Social Security Return to Work program.

Since $720 is the average per month SSDI benefit it follows that many disabled persons would prefer to attempt work over a disability check but work remains a risky proposition because of disincentives built into the Social Security benefit system. Amongst many obstacles to employment lay disabled persons well-founded concerns that taking a job or becoming self-employed will result in the loss of one's public health care and/or the loss of disability benefits even though one is not earning enough to survive.

Social Security, for instance, pronounces one “able to work” when one earns what it calls “substantial gainful activity” (SGA) or $700 in one month period (for blind persons, it is significantly higher). The work rules are so arcane and complex that it would take a degree in Social Security policy, if there were such a thing, to get them straight. Those who act as advocates for disabled persons contesting Social Security rulings know what I am talking about (others try reading the Social Security Red Book!). I don't want to focus much on these details but briefly, there is a Trial Work Period that extends over a five year period in which one can earn more than $700 but once one hits a tenth month where one earns $700, one is subject to being completely severed from disability benefits and Medicare. What essentially happens is that disabled persons are shoved off an earnings cliff although they are not making the kind of money it actually takes to survive with no supports.

Recently Social Security proposed some changes to the Work Incentives “to provide greater incentives for many beneficiaries to attempt to work or, if already working, to continue to work or increase their work effort.” Social Security proposes to make automatic adjustments each year to the current SGA level at $700 for individuals with impairments (other than blindness), based on any increases in the national average wage index. SGA was originally set at $300 in the 1960s and it has only been changed twice: in 1990 SGA was raised to $500 and in 1999 it was raised to $700.

While this proposed reform is better than what exists now, the fact is that no one in Y2000 can support themselves on $700 per month in California, New York, Connecticut and most states in the country and live independently. The $700 SGA cut off is an at-poverty level subsistence. The Federal poverty guideline for one is $8,350. SGA works out to $8,400 per year (assuming one would be consistently working for a full year).

The current system of measuring poverty dates back to the 1960s with no allowance for changes occurring over the last thirty years. Research showed the average family spent a third of its income on food, therefore a "poverty income" was determined to be three times what experts thought the minimum food budget should be. Even so, that economy food plan was "for temporary or emergency use when funds are low" and was only 75 to 80 percent of a "low cost food plan" of the Department of Agriculture, which, "if strictly followed," could "provide an acceptable and adequate diet" (Mollie Orshansky 1965).

Non-the-less the equation has never been adjusted to take into account the sharp rise in housing, medical care, and child care costs of the following four decades which have altered the average household's economic picture. A 1990 study by Patricia Ruggles of the Urban Institute for the US Bureau of the Census concluded that in order to be comparable to the original threshold, the poverty level would have to be at least 50 percent higher than the current official standard. If basic needs were re-figured to the modern market, almost a quarter of the American people would be deemed living in poverty.

Cutting disabled persons off disability benefits when they earn just $700 does not lift one out of poverty, much less give one a chance to achieve a decent standard of living. Labor market discrimination is a steady reality for most significantly disabled persons and those who experience labor market discrimination are more likely to need public assistance. Studies show, for example, that most disabled persons work sporadically or part time -- that means that income is meager and inconsistent. One may earn something in one month and have no income for several months, yet the regulations will continue to allow Social Security to cut a disabled person off the benefits system if they earn $700 for JUST ONE month past a 9 month trial work period. The trial work period extends over 5 years -- that is 60 months! Social Security is not making a realistic attempt to ensure that the person will be earning at least $700 per month either consistently or for a prolonged period of time before shoving them off the cliff.

As one companero from No CA who has multiple sclerosis writes “as I sink farther into debt while trying to stay active on the civil rights front, my bitterness and anger towards the ignorance and contempt we all daily face grows and grows and grows. I would like to work as a HICAP program manager part-time but I have got to have a living wage and healthcare. It's hard enough coming up with money for Rxs and co-payments and shoes and shoe upkeep and just plain living. They build a system that you can never climb out of, they exclude you from participating, and then have the gall to blame you for what my friend Cynthia calls "disability oppression." Didn't you know -- we're all Welfare Queens!”

There is a case to be made for never ending disability benefits once one qualifies and is placed on benefits. I offer just two points here. Disabled persons are nearly three times as likely to live below the current poverty line -- 29 percent disabled live in poverty compared to 10 percent of nondisabled persons (National Organization on Disability/Harris 2000). During 1999, nearly 600,000 households filed for bankruptcy in the aftermath of a serious accident or illness. Those who manage to successfully Return to Work will never be able to make up for the financial losses suffered during years of lost employment.

The SGA and work rules fall way short of enabling one to get to the stage where one can earn a living wage and sustain what it actually takes to feed, house, cloth and cover other necessities of life for a prolonged period of time. The SGA level at $700 per month, even with yearly adjustments, remains archaic and unnecessarily punitive. At the very least, Social Security needs to take into account a revised poverty level adjusted to the current market, the living wage factor and an add-on to compensate for extra expenses related to disablement.

To overcome the labor market disadvantage affixed to disablement, disabled persons need more support from government, not the threat of an earnings cliff that will, if they aren't rules-educated and extremely careful, send them over the bureaucratic edge -- with no one counting the casualties.

Social Security is accepting public comment until October 10. You can email them at regulations@ssa.gov

Marta Russell is the author of Beyond Ramps: Disability at the End of the Social Contract. http://disweb.org/