Ben-Shalom and Stapleton 2013 — Trends in the Composition and Outcomes of Young Social Security Disability Awardees

Summary

Michigan Retirement Research Center Working Paper (WP 2013-284) tracking compositional shifts and five-year longitudinal outcomes for young (age 18–39) Social Security Disability (SSD) awardees across 12 cohorts (1996–2007), using the 2009 Disability Analysis File matched with Master Earnings File data. The paper introduces a six-subgroup taxonomy crossing benefit type (disabled worker (DW) vs. Disabled Adult Child (DAC)) with Supplemental Security Income (SSI) history (no SSI, SSI as child, SSI as adult only) and documents both sharply changing caseload composition and paradoxical employment dynamics: former SSI-as-child disabled workers are the most work-oriented subgroup despite being the most disadvantaged.

Key Claims

• Overall awards barely grew ($+3\%$) 1996–2007: $148{,}242$ $\to$ $153{,}020$ young SSD awards. All growth was in DAC ($+53\%$: $19{,}626$ $\to$ $30{,}003$); disabled worker awards fell $6\%$
• DAC share surged: $13\%$ $\to$ $20\%$ of all young SSD awards; the DAC growth is almost entirely explained by SSI-as-child DAC, which rose steadily throughout the period
• SSI-as-child composition shift among DW: $1\%$ $\to$ $9\%$ of young disabled workers had received SSI as children (1996 $\to$ 2007); SSI-as-adult share rose from $17\%$ $\to$ $20\%$
• SSI-as-child composition shift among DAC: SSI-as-child DAC jumped from $29\%$ $\to$ $48\%$; SSI-as-adult DAC from $21\%$ $\to$ $30\%$
• Psychiatric disorders rising in all subgroups: most steeply among DW-SSI-child (consistent with Sullivan v. Zebley spillover); intellectual disability concentrated in DW-SSI-child subgroup
• Family-member representative payee rising across all subgroups, most steeply for DW-SSI-child and DAC-SSI-child
• Paradoxical return-to-work ordering: DW-SSI-child has the highest five-year suspension/termination for work (STW) and earnings rates — $\approx 72\%$ earned $>\$1{,}000$ annually in at least one year vs. $\approx 40\%$ for DW-no-SSI or DW-SSI-adult (1996 cohort, end of year 5); these workers are younger, more work-oriented, and higher users of work incentives
• DAC have dramatically lower work engagement than DW: DAC-no-SSI best among DAC at $\approx 31\%$ earning $>\$1{,}000$; DAC net-suspended-or-terminated-for-work (NSTW) months per $1{,}000$ awardees $\approx 1/5$ those of comparable DW subgroups
• Mortality falling for all DW subgroups across cohorts 1996–2004; mortality levels lowest for DW-SSI-child (youngest), higher for DAC

Causal Mechanisms Discussed

• Sullivan v. Zebley (1990): Supreme Court decision relaxed child SSI eligibility to include psychiatric/behavioral assessments → cohort of children awarded SSI in early 1990s aged into SSD in late 1990s–2000s, explaining SSI-as-child growth
• 1996 welfare reform: states gained financial incentive to transition Temporary Assistance for Needy Families (TANF)-eligible families to SSI / Disability Insurance (DI), further inflating SSI child rolls and eventually SSD
• Special Disability Workload (SDW, 1999–2002): retroactive DI awards to existing SSI recipients; explains 1999–2002 spike in DW-SSI-adult and SSI-child subgroups
• Baby boom aging: boomers turning 50+ in 1996–2007 $\to$ more parents eligible for Old-Age, Survivors, and Disability Insurance (OASDI) $\to$ more DAC awards; explains steady DAC count increase independent of recession or policy shocks
• 2001 recession: induced disabled-worker applications across all subgroups; explains 2000–2002 count increase

Concepts Introduced or Extended

• Disabled Adult Children Program
• DI Return-to-Work Milestones

Entities Mentioned

• Yonatan Ben-Shalom
• David Stapleton
• Social Security Administration

Quotes

"Following the 1996 reform of welfare benefits for low-income families with children, states had a stronger incentive to help parents with disabilities in low-income families obtain either SSI or [DI] . . . states might have also helped parents qualify for DI in order to make their children eligible for DAC benefits."

"Policymakers need to consider other options for the support of youth and young adults with disabilities—options that do not discourage work while promoting dependence."

My Take

The key insight is the inversion of the intuitive disadvantage ranking: SSI-as-child disabled workers are the poorest, most impaired-at-award subgroup yet have the highest employment rates. The most likely explanation is age composition (they're youngest) combined with the work-oriented culture and skill-building that SSI work incentives and vocational rehabilitation (VR) services provide from childhood. This undercuts the case for targeting employer-facing early-intervention programs at the DAC population, which is younger-on-average but far less engaged. The steady DAC growth trajectory driven by baby-boom aging is a slow-moving cost driver that has received little policy attention.