print this pagePolicy Barriers for People with Disabilities Who Want to Work
By Bonnie O'Day, Ph.D.
I. Background
Despite passage of civil rights laws and a thriving economy, the unemployment rate for people with disabilities continues to rise. A Harris survey, commissioned by the National Organization on Disability found that 71 percent of people with disabilities were unemployed, as compared with 68 percent in 1994 and 66 percent in 1986 (Louis Harris & Associates, 1998; 1994; 1986). The 1990 census report also showed that the percent of disabled persons who were employed had actually declined during the 1980's, and that those who worked received less in wages than their coworkers without disabilities (U.S. Department of Commerce Bureau of the Census, 1990).
Of primary concern is the significant lack of progress in promoting employment during this period of unprecedented economic growth. Prior research has shown that economic cycles have a larger impact on the labor force participation of people with disabilities than on the nondisabled population (Trupin, Sebesta, Yelin, & LaPlante, 1997). These researchers have shown that labor force participation rates among people with disabilities rise more in good times and fall farther in bad times than among their counterparts without disabilities. If the employment rate for people with disabilities does not increase during this current period of economic growth, how likely will employment for people with disabilities increase during economic downturns?
Several authors postulate that a significant reason for the impenetrability of the unemployment rate is the lack of cohesion between income support and rehabilitation or civil rights programs. As Dejong and Batavia (1990) state, ". . . the civil rights goal of the ADA to bring people with disabilities into the mainstream of American life-is likely to be frustrated unless the other components that make up the nation's disability policy are also addressed" (p. 67). The U.S. General Accounting Office (GAO, 1996a) would seem to agree:
"Each week the Social Security Administration (SSA) pays over $1 billion in cash payments to people with disabilities on SSDI and SSI. While providing a measure of income security, these payments for the most part do little to enhance the work capacities and promote the economic independence of these SSDI and SSI recipients. Yet societal attitudes have shifted toward goals, as embodied in the ADA, of economic self-sufficiency and the right of people with disabilities to full participation in society... [T]he SSDI and SSI programs are out of sync with these trends" (p. 1).
This article explores the barriers that programs, including those of the Social Security Administration (SSA), the Rehabilitation Services Administration and the Health Care Finance Administration, place in the path of individuals with disabilities who wish to work. It evaluates various federal reform proposals and briefly reviews state responses to the problem of unemployment.
II. Programmatic Barriers to Employment
Empirical and anecdotal evidence suggests that certain federal policies provide significant disincentives to people with severe disabilities who want to work (Berkowitz, 1987; Martin, Conley & Noble, 1995; National Council on Disability, 1997; Watson, 1993). The following barriers have been identified:
1. Conflicting goals within Social Security programs. The conflicting goals by which income maintenance programs are governed contribute substantially to the problems SSI and SSDI beneficiaries experience. The following four goals generally govern such programs:
a. Adequacy. Income assistance levels should be adequate and keep people out of poverty.
b. Equity. Income assistance programs should provide comparable levels of assistance for people in similar situations.
c. Work Incentive. Income assistance recipients should always be better off, not worse off, by working rather than remaining unemployed.
d. Administrative Simplicity. The program should be easy to administer.
When the SSDI and SSI programs were established, the goals of adequacy, efficiency and equity were emphasized over the goal of providing work incentives. The de-emphasis of work incentives can be traced to the prevailing public perception at the time that people with disabilities deserved income support because their disability prevented them from working (Dejong & O'Day, 1997). The basic program philosophy that people with disabilities cannot work has not changed. The work incentives have never been truly integrated into SSA's program goals. It may not be reasonable to expect that the SSA adopt as a primary mission that of returning its beneficiaries to work.
2. Strict program eligibility requirements. The crux of the problem is located in the eligibility criteria for SSA's programs. To be eligible for SSDI or SSI, 223(d) of the Social Security Act states that the applicant must show: ". . . an inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months.... An individual shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education and work experience, engage in any other kind of substantial gainful work which exists in the national economy (Emphasis added.)
According to this definition, an applicant is assumed to be either disabled or not disabled. If the person is deemed to be disabled, the disability must be "total and permanent" or result in death (Dejong & Batavia, 1990). Only those persons determined to be disabled, assumed to be completely unable to work, will receive benefits.
The problem with this "all or nothing" definition is that applicants must prove their inability to work to receive benefits. Because the result of the decision is either full award or complete denial of benefits, applicants have a strong incentive to establish their eligibility for benefits by promoting their limitations. Conversely, applicants have a disincentive to demonstrate any capacity to work because doing so may disqualify them for benefits. The result is that, by the time they become eligible for benefits, applicants either truly are unable to work (at least in their current situation), are convinced that they really are too disabled to work or are so fearful of losing eligibility that they will not attempt to find work (Dejong & Batavia, 1990; Martin et al., 1995; U.S. GAO, 1996a).
Another problem is the length of time an individual spends establishing eligibility for SSA programs versus the need to initiate rehabilitation as soon after the onset of a disability as possible. An applicant will not seek work or attain rehabilitation during the 2 years often necessary to establish qualification for SSI or SSDI for fear of jeopardizing program eligibility. The skills, abilities and habits necessary to work become eroded, and the person loses valuable time he or she could be spending being retrained in a more suitable vocation. One study showed that those who were unemployed for more than I year were much less likely to return to work (Kamkar & Tenney, 1991). Thus, the length of time to establish eligibility for income support militates against the potential to become employed.
Paradoxically, work incentives were built into the SSI and SSDI programs to encourage beneficiaries to leave the disability rolls and go to work, after they have undertaken extensive efforts to show that they cannot work. SSI recipients only lose $1 of their benefits for every $2 of earnings and can deduct impairment related work expenses. Recipients can also use earnings to pay for vocational equipment or training through a Plan for Achieving Self Support (PASS). A recipient with high medical or personal assistance expenses can retain Medicaid benefits after earnings become too high to allow SSI cash payments. Earnings must remain under an income ceiling established by each state to be eligible for the program. SSDI work incentives include a 1-year trial work period, 36 months of extended eligibility for Medicare benefits, a Medicare buy-in program, and deduction of work expenses (SSA, 1991).
But evidence suggests that these work incentives are not well used. The GAO (1996b) found that about 8 percent of SSI recipients aged 19 to 64 reported any earnings, and about 1 percent of SSDI beneficiaries reported earning $500 per month or more (SSDI beneficiaries who earn less than $500 a month are not required to report their earnings). Another study of about 4,400 SSDI beneficiaries in 1991 found that 18 percent began working after their benefits were approved. However, only about 40 percent of those working had earnings in excess of $3,600 - which is considered Substantial Gainful Activity (SGA) - and two-thirds of those achieving SGA had medically recovered and were no longer considered disabled under SSA's definition. Also noteworthy is that only between 10 and 20 percent knew about work incentives under the SSDI program, and almost no one said they were influenced to return to work by these provisions (Hennessey & Mueller, 1994).
3. Loss of medical coverage. Access to medical coverage is critical if people with significant disabilities are to become employed in larger numbers. The gateway to full medical coverage, including durable medical equipment, personal assistance and prescription drugs, is eligibility for SSI benefits. The entanglement of income and medical benefits results in the potential loss of medical coverage when earnings rise and cash benefits are eliminated upon return to work. The Harris Survey of Americans With Disabilities conducted in 1994 found that 31 percent of those who are unemployed find loss of health insurance or long-term services to be a work barrier.
Ironically, the services and supports that enable an individual to live independently in the community and to sustain employment may be lost if he or she successfully finds a job. Part-time work that is becoming increasingly available and is well suited to people with some disabilities may not be an option due to lack of healthcare coverage. Although people on SSDI are able to keep their Medicare benefits for several years after becoming employed, they will lose this coverage after several years of working. If healthcare is covered by the employer, PAS, prescriptions and adaptive equipment may not be covered, or may not be sufficient to meet the individual's needs. It therefore makes sense for SSI recipients and SSDI beneficiaries to refrain from or restrict employment to maintain publicly funded medical benefits.
4. Individuals may be financially worse off by working. While SSI recipients only lose $1 of benefits for every $2 they earn, SSDI beneficiaries face a $700 earnings "cliff" ($1,050 for legally blind individuals) that presents a significant impediment to employment.1 An individual who earns over $700 per month (minus any impairment-related work expenses) will lose his or her entire SSDI check. A disabled SSDI beneficiary must find a job that pays about $20,000 per year and provides medical benefits and a blind person must make about $25,000 per year to profit by earning over the SGA level (Ruth, 1997).2 The sensible course of action for most people is to remain unemployed, or to keep earnings low enough to retain cash payments. Based upon several public hearings on work disincentives, the National Council on Disability reports that, to keep their SSDI benefits, SSDI beneficiaries turn down promotions, refuse increases in hours or overtime or actually reduce their hours when their wages rise (NCD, 1997).
A related problem is that people with some disabilities, such as long-term mental illness, tend to work in low-status, low-wage jobs, often retain these jobs for a year or less, and work only intermittently because of relapse. This work pattern causes significant problems for people on benefits. For example, SSDI beneficiaries can work for up to 9 months in a 5-year period (with a 3 month grace period) without losing benefits under the Trial Work Period (TWP). However, because a beneficiary need earn only $200 per month to use a TWP month and because the 9 months of work need not be consecutive, beneficiaries can easily exceed their TWP and suddenly lose their benefits. Because the TWP level is so low, beneficiaries can use up their TWP in a sheltered workshop with no real opportunity to test their competitive earning potential. This creates a significant disincentive to engage in even a minimal level of employment.
5. Complex, confusing and seemingly arbitrary rules. Service providers, advocates and consumers alike testified at the National Council on Disability (NCD) hearings about the impossibility of keeping track of the seemingly capricious and arbitrary rules regarding work incentives. The difficulty of keeping track of the work incentive provisions causes significant numbers of recipients and beneficiaries to be overpaid - 75 percent of all recipients who make between $600 and $1,000 per month (GAO, 1996b). Several participants in NCD hearings testified that increasing stress levels and exacerbations of their disability symptoms occurred as a result of threatening letters they received and the potential loss of benefits when they returned to work-not as a result of the work itself (NCD, 1997).
6. Lack of choice in vocational rehabilitation providers. Advocates and policymakers, alike have questioned the effectiveness of public rehabilitation programs since the early 1970's and are calling for sweeping reform in the federal-state system (National Association of Rehabilitation Facilities, 1992; National Council on Independent Living, 1992). They base their criticisms on findings of the GAO that most clients of the vocational rehabilitation program received only modest services, less than half obtained education or training and just under half received services costing less than $500. GAO also found that the gains in employment and earnings after rehabilitation faded after about 2 years, and 8 years later 61 to 66 percent had employment and incomes no better than or below the pre-rehabilitation level (U.S. GAO, 1993). Lack of information, counseling and resources were cited as major barriers to employment by a random sample of 76 members of a national organization of blind consumers. Key concerns included adequate help to develop job-seeking skills, financial assistance to purchase assistive technology, getting adequate information about career opportunities, having access to good placement assistance, and having blindness-related needs considered in design of job training programs (Wolffe, Roessler & Schriner, 1992).
Several participants in the NCD hearings testified that they faced tremendous obstacles in using the state vocational rehabilitation agency to obtain career and employment services. Some stated that they were denied services altogether. Others felt their counselors were unresponsive or failed to provide appropriate career counseling and choices. Still others were denied the adaptive equipment they needed, even when they had been offered employment. They supported a voucher or ticket system to allow them to choose where they will receive their rehabilitation (NCD, 1997).
7. Lack of employer incentives to hire people with disabilities. Employers face the fear, and sometimes the reality, that they must bear the burden of the additional costs necessary to hire someone with a disability. Although Congress has adopted tax incentives to induce private employers to hire people with disabilities, they have proven to be less than effective. Employers can take credits or deductions for modifications to the employment site, or in some cases for a portion of the wages of a new employee with a disability. In practice, the effectiveness of these tax incentives is limited by lack of employer awareness and the complexity of applying for the credit. Evidence also suggests that the tax credit does not change employers' behavior. Employers reap a windfall when they hire workers with disabilities they would have hired irrespective of the tax credit. Another problem is that employees may not want to reveal their status as a welfare recipient to an employer; the discrimination they may face may be equal to or greater than any advantage that the tax credit would provide (Bassi, 1995; Schaffer, 1991).3
In sum, the research literature, disability advocates and consumers who participated in the NCD hearings make strong and convincing arguments about the role of federal programs in keeping people with disabilities unemployed. But significant questions still remain. For example, which barriers are most significant? What are the characteristics of people who experience each type of barrier? And how much do recipients and beneficiaries understand about the existing work incentives?
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This article is from American Rehabilitation, Spring/Summer 1999