Off the Charts Blog | Center on Budget and Policy Priorities

News stories and bloggers continue to point to Hale County, Alabama, as the prototypical example of a place where many residents receive federal disability benefits.  But, Hale County is anything but typical.

We think that about one in five Hale County residents between 20 and 64 receives disability benefits from Social Security or Supplemental Security Income, based on data here and here. That’s far above the national average of about one in 16.  We’ve previously pointed out that disability receipt varies by geography.  Several facts make Hale County an outlier:

• An unusual age distribution.  Among Hale County’s working-age population, relatively few are under age 50, and large numbers are aged 50-64 (see chart).  The risk of disability rises sharply with age.  People are roughly twice as likely to be disabled at age 50 as at 40, and twice as likely to be disabled at 60 as at 50.  Hale’s demographics put its population squarely in those high-risk years.

• Low educational attainment.  Hale’s high-school completion rate, at 71 percent, is well below Alabama’s (81.9 percent) and even further below the national average (85.4 percent).  Limited education narrows the kind of work that people can do and their ability to move into other jobs when impairment strikes — which is why the law specifically directs the Social Security Administration to weigh vocational and educational factors for older workers when sifting through disability applications.

• A lopsided industry mix.  Compared with the nation as a whole — and even with Alabama — employment in Hale County heavily skews toward farming, forestry, fishing, and manufacturing.  As we’ve noted, areas with a blue-collar industry mix (such as this one) tend to have higher rates of disability receipt than more service-oriented economies, because the work is arduous and the skills often not transferable.  One of Hale County’s main industries, catfish processing, exemplifies the kind of slippery, noisy, and physically demanding work that would be impossible for someone with severe impairments to perform.

The Robert Wood Johnson Foundation ranks Hale 65th out of 67 counties in Alabama — and even further behind national norms — on a variety of health measures.  Hale’s statistics on premature death, lack of health insurance, the number of doctors and dentists per capita, motor vehicle crashes, and even access to safe drinking water are bleak.

These facts show not just how untypical Hale County is — but how important the disability programs are in providing a safety net for some of our most vulnerable citizens.

In an attempt to reignite efforts to reach a bipartisan budget compromise, President Obama’s new budget will adhere to his final offer to House Speaker John Boehner of December 17 in their budget talks.  As a result, it will contain more savings in both Social Security and Medicare — both in the first ten years and beyond — than the House-passed Ryan budget.

The Obama budget contains major concessions.  It will include $400 billion less in revenue and $200 billion more in discretionary program cuts than Obama’s original offer to Boehner earlier in December.  It will also include the proposal to shift Social Security and various other cost-of-living adjustments to what’s known as the chained CPI, which was not part of Obama’s earlier offers to Boehner in December and which many Democrats strongly oppose.

Yet, while Obama is adhering to his final offer to Boehner, the Speaker has buried his offers to Obama.  His last offer to the President included $400 billion more in revenue than the President and Congress enacted at the start of January.  Now, both Boehner and other congressional Republican leaders say that any more revenues are unacceptable.

And, when the White House released major elements of Obama’s olive-branch budget on Friday, House Major Leader Eric Cantor said he was in a wait-and-see mode “as to whether this White House is really serious.”  That’s a stunning statement, considering that the House-passed Ryan budget includes smaller Medicare savings over ten years than Obama’s new budget will include, and it does not include the chained CPI or any other Social Security savings — and considering that the House budget’s only specific revenue proposals would cost $5.7 trillion over ten years, according to the Tax Policy Center.  Who is being serious here?

As the New York Times’ David Leonhardt recently pointed out, many in Washington tend to describe compromise as halfway between the budget positions of the two parties’ leaders, whatever those positions may be and even if only one party is compromising.  That would be particularly misleading in a situation like this — where the President confronts his political base with proposals like the chained CPI, which appalls many progressives, and takes a big step toward the Republicans in an effort to reach an agreement, but Republicans step farther away from him as they seek to placate their political base.

Last fall, Senate Minority Leader Mitch McConnell and Speaker Boehner described changes like the chained CPI and more means-testing of premiums for affluent Medicare beneficiaries as (in McConnell’s words) “the kinds of things that would get Republicans interested in new revenue.”  The new Obama budget includes both measures.  Yet, the Republican leaders’ response so far has been to insist that revenues are off the table and that the $400 billion in further revenues that Speaker Boehner offered in December is now unacceptable.

Further, the House budget would undo the sequestration budget cuts on defense programs, while more than doubling the sequestration cuts in non-defense discretionary programs — hardly a move toward the middle.

Moreover, if one sets up a playing field where the new Obama budget is one pole and the current Republican no-tax, deep-spending-cut position the other — and presents the halfway point between them as a logical compromise — the result is to ask President Obama and the Democrats to accept an outcome well to the right of Speaker Boehner’s offer in December. That won’t happen, and it shouldn’t happen if policymakers are to produce a fair and balanced package.

So, while Majority Leader Cantor has questioned whether the White House is serious, the real question is whether Republican leaders will be serious and be willing to take on their base, as Obama is doing with his new budget.

National Public Radio is running a series of reports about the Social Security Disability Insurance (DI) program, as I mentioned yesterday.  One of its pieces focused on Hale County, Alabama, and alleged an unusually high receipt of disability benefits.  Other researchers have noted this geographic variation — and implied that it’s evidence of a problem-ridden program.  Not quite.

Nationwide, about 6 percent of the nation’s working-age population receive disability payments from Social Security or Supplemental Security Income (SSI), but some southern and Appalachian states have much higher rates — over 10 percent.  This disparity, though, mostly reflects a few key demographic and economic factors:

• Less-educated workforce. This is by far the most powerful factor:  states with low rates of high-school completion generally have high rates of disability receipt, as you can see by comparing the two maps below.  For older workers, SSI and Social Security disability insurance explicitly consider vocational and educational factors in determining eligibility, since less-educated people whose physical or mental impairments are so severe that they can’t do their previous work are less able to adapt to other employment than better-educated people are.

• Older workforce. The risk of disability rises sharply with age.  The typical disability insurance beneficiary is in late middle age — 70 percent are over age 50, and 30 percent are 60 or older.  New England and Appalachia have a higher median age than most of the rest of the country, which boosts their rates of disability receipt compared with the “young” Southwest and West.

• Fewer immigrants. Immigrants, especially recent arrivals, are far less likely than native-born citizens to collect disability benefits.  States with large foreign-born populations — notably California, New Jersey, Nevada, New York, Florida, and Texas — have fewer disability recipients than you’d expect based solely on their age and educational characteristics.

• Industry-based economy. States where much of the workforce is employed in forestry, mining, and manufacturing — such as the industrial Midwest and many southern and Appalachian states — tend to have more disability recipients than states with more service-oriented economies, all else being equal.  Such jobs are often physically demanding and involve skills that don’t transfer readily to other forms of work — two factors that the programs’ eligibility rules for older applicants take into account.

Some people expect other factors, such as poverty and unemployment rates, to explain the variation of disability rates across states.  But statistically, they’re less important than the four factors listed here.

National Public Radio (NPR) is running a series of stories about the Social Security Disability Insurance (DI) program.  Its first was extremely unbalanced and repeated some of the oft-claimed myths about DI.  Here’s the truth.

DI provides modest but vital benefits to workers who become unable to perform substantial work due to a serious medical impairment, as I testified last week before a House subcommittee.

Most of the recent rise in DI’s rolls stems from demographic factors:  the aging of the baby boom generation, the growth in women’s employment, and Social Security’s rising retirement age.  In fact, when you adjust for these factors, the program has grown only modestly (see chart).  Other factors — including the economic downturn — also have contributed to the program’s growth, but its costs and caseloads are generally in line with past projections.

The typical DI beneficiary is in his or her late 50s — 70 percent are over age 50, and 30 percent are 60 or older — and suffers from a severe mental, musculoskeletal, circulatory, respiratory, or other debilitating impairment.  His or her earnings fell sharply in the years before applying to the program.  Only a minority of beneficiaries can do any work, and even fewer are able to do substantial work (enough to support themselves without help), studies generally conclude.

The Social Security trustees project that the DI trust fund — which is legally separate from the Old Age and Survivors Insurance (OASI) trust fund for the Social Security retirement and survivors’ programs — will become insolvent in 2016; the Congressional Budget Office concurs.  If policymakers do not bolster the fund, beneficiaries’ checks will have to be cut by about one-fifth after that.  But the fund’s anticipated insolvency should come as no surprise; when policymakers last changed the allocation of taxes between DI and OASI in 1994, they expected the DI fund to run dry in 2016.

Policymakers should address DI’s pending depletion in the context of overall Social Security solvency.  Both DI and OASI face fairly similar long-run shortfalls; DI simply requires action sooner.  Key features of Social Security are similar or identical for the two programs, and most DI recipients are near or even over Social Security’s early-retirement age.

Tackling DI in isolation would leave policymakers with few — and unduly harsh — options, and lead them to ignore the strong interactions between the disability and retirement programs.  A balanced solvency package would also be an opportunity to make sorely needed improvements in the needs-tested Supplemental Security Income (SSI) program, which is distinct from Social Security but has important intersections.

If policymakers don’t agree in time on a sensible solvency package, however, they should reallocate taxes between the retirement and disability funds — a traditional and noncontroversial action that they’ve taken often in the past.

And policymakers should give the Social Security Administration enough money to weed out beneficiaries who’ve recovered from their impairments — an important effort that legislators have consistently underfunded.

We’ll take a closer look at some of NPR’s other misguided claims about disability in future posts.

In testimony today before a House Ways and Means subcommittee, CBPP Senior Fellow Kathy Ruffing explained that the expectation that the Social Security Disability Insurance (DI) trust fund will become insolvent in 2016 comes as no surprise and should not be considered evidence that the program is out of control.

Here’s an excerpt from her testimony:

While researchers cannot fully dissect all of the reasons for the program’s growth, it’s clear that the bulk of it comes from demographic factors, women’s entry into the labor force in large numbers, and the increase in the Social Security retirement age (see chart), and that the DI program’s growth will taper off in the next decade.

DI is an integral part of the Social Security program, and legislators should address it in the context of overall Social Security solvency.  The common features and interactions of DI and [the Old-Age and Survivors Insurance program] would make efforts to fix the two programs separately a mistake.

Because Social Security’s finances are fairly predictable, it is not difficult to craft revenue and benefit proposals that would place the program on a sound long-term footing.  The best proposals would protect vulnerable workers and beneficiaries and give all participants ample warning of future changes to this vital program.  That will enable them to plan their work, savings, and retirement with confidence — while continuing to count on Social Security’s protection in the event of early death or disability.

If policymakers are unable to agree on a well-rounded solvency package before DI faces depletion, they should reallocate taxes between the two programs as a stopgap, as they have done multiple times in the past, while intensifying efforts to develop a long-term solvency package that restores the program’s financial health for decades to come.