The SSDI Shortfall and the Rhetoric of Crisis

SSDI is a big program. Yet it never quite gets the same attention as Medicare, Medicaid, and other social programs. Disability policy is intricate and specialized. It has traditionally been less ideologically polarized, which makes it less interesting to both liberal and conservative political media.

SSDI faces budget problems because the percentage of working-age SSDI recipients has steadily increased over the past thirty years.

Average Monthly SSDI Beneficiaries

Social Security Administration

Disability experts are coming to some agreement regarding the demographic and economic drivers of these trends. The greatest growth occurred during the 1980s and early 1990s, and in hard economic times. Among men, age-specific applications to SSDI basically stabilized by the mid-1990s, though applications continued to rise and fall with the changes to the national economy. As the bottom falls out of the blue-collar economy, disability programs face increasing pressure to serve workers who have genuine impairments, but who might well have remained in the workforce in more prosperous times. Recipients are also living longer, rarely returning to the paid workforce.

Growth in the SSDI rolls has proved most dramatic among women. They are now more likely to participate in the labor market, and thus gain eligibility for SSDI, than they were just a few decades ago. Women workers now take up SSDI at about the same rates as male workers at the same ages.

Research by Harvard’s Jeff Liebman, first published in the Journal of Economic Perspectives, shows the basic pattern. The two graphs on the left show the sharply increasing rate of actual SSDI applications for men and women over time. The two graphs on the right show the same data, assuming that the age mix of the U.S. population had stayed constant at its 1980 level and that the unemployment rate was held constant at 6.3 percent, the average for this entire period.

The rate of applications increased from the early 1980s to the mid-1990s, and then actually leveled off, remaining surprisingly steady for the past two decades. Yet caseloads continued to increase, driven by an aging population, continuing national economic challenges, and declining death rates among recipients.

The current SSDI system serves about 8.9 million disabled workers (and another two million spouses and children) who live with conditions including stage-IV cancers, spinal-cord injuries, schizophrenia, and and mood disorders.

Much of SSDI’s recent growth has occurred among recipients suffering from musculo-skeletal conditions and mental disorders. Data taken from the Annual Statistical Report on the Social Security Disability Insurance Program from 1996 to 2013 confirm the trend, although not its causes.

The labor market consequences of these conditions are hotly contested, and likely vary with the state of the economy. Most other categories—including ones you might have suspected would have grown such as diabetes or intellectual and developmental disabilities—have remained far more stable over time.