Changes in Incentives Influencing Program Size

Introduction

Empirical evidence suggests that the incentives to seek Disability Insurance and Supplemental Security Income are positively related to the size of the benefit. The relationship between the real value of earnings and benefits or payments is one factor that determines the attractiveness of the program.

As will be shown in this section, the increase in wages lagged behind the increase in prices through much of the 1970s and 1980s, and individuals in the disability programs gained relative to those in the workforce. In such periods, the promise that future Social Security benefits will be adjusted for inflation can increase incentives to seek benefits.

Furthermore, disparity in the distribution of income has increased, with low earners realizing proportionately smaller wage gains than high earners. Because the formula used to calculate Social Security benefits is indexed to the average growth in wages, systematic disparities in earnings growth will result in altered incentives. A slower rate of wage growth for low earners than for high earners (that is, widening disparity in the distribution of earned income), as has been reported in recent years, coupled with SSA's calculation of average indexed monthly earnings (AIME), which uses an indexing formula based on average wages, have been hypothesized to result in higher replacement rates and increased incentives among lower earners to apply for benefits.

This section focuses on several changes that may have altered program incentives and program size: indexation of benefits, changes in the replacement rate and maximum SSI cash payments, changes in the level of earnings considered to be substantial gainful activity, and economic conditions as measured by the unemployment rate.

Changes in Prices and Wages

Through much of the 1970s, wages did not grow any faster than prices, and in the late 1970s and early 1980s the increase in wages lagged behind the increase in prices. Individuals in SSA's disability programs gained relative to those in the workforce. The effect has been greater on low earners, and the decline in real wages may be continuing for this group.

Chart 52. Changes in prices and wages, 1970–2003

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Table equivalent for Chart 52. Changes in prices and wages, 1970–2003

Year	Wage index	Price index (CPI-W)
1970	100.00	100.00
1971	105.02	103.27
1972	115.32	106.78
1973	122.53	116.08
1974	129.82	130.40
1975	139.52	139.45
1976	149.15	146.23
1977	158.08	156.03
1978	170.64	170.10
1979	185.56	192.71
1980	202.28	216.83
1981	222.64	236.18
1982	234.90	245.23
1983	246.34	254.52
1984	260.82	264.57
1985	271.93	274.62
1986	280.01	277.64
1987	297.86	289.95
1988	312.53	302.76
1989	324.91	316.83
1990	339.92	336.18
1991	352.58	346.48
1992	370.75	356.53
1993	373.94	366.33
1994	383.97	376.13
1995	399.36	385.68
1996	418.90	398.49
1997	443.34	405.28
1998	466.54	411.81
1999	492.54	422.86
2000	519.78	437.19
2001	532.18	443.97
2002	537.52	454.52
2003	550.66	463.07

SOURCES: Office of the Chief Actuary, Automatic Increases, Average Wage Index Series, available at http://www.socialsecurity.gov/OACT/COLA/AWIgrowth.html; Bureau of Labor Statistics, CPI-W, available at http://www.bls.gov/cpi.

NOTES: 1970 = 100 for both series.

CPI-W = consumer price index for urban wage earners and clerical workers.

Chart 53. Annual percentage change in prices and wages, 1970–2003

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Table equivalent for Chart 53. Annual percentage change in prices and wages, 1970–2003

Year	Wage index	Price index (CPI-W)
1970	4.96	5.57
1971	5.02	3.27
1972	9.80	3.41
1973	6.26	8.71
1974	5.94	12.34
1975	7.47	6.94
1976	6.90	4.86
1977	5.99	6.70
1978	7.94	9.02
1979	8.75	13.29
1980	9.01	12.52
1981	10.07	8.92
1982	5.51	3.83
1983	4.87	3.79
1984	5.88	3.95
1985	4.26	3.80
1986	2.97	1.10
1987	6.38	4.43
1988	4.93	4.42
1989	3.96	4.65
1990	4.62	6.11
1991	3.73	3.06
1992	5.15	2.90
1993	0.86	2.75
1994	2.68	2.67
1995	4.01	2.54
1996	4.89	3.32
1997	5.84	1.70
1998	5.23	1.61
1999	5.57	2.68
2000	5.53	3.39
2001	2.39	1.55
2002	1.00	2.38
2003	2.44	1.88

SOURCES: Office of the Chief Actuary, Automatic Increases, Average Wage Index Series, available at http://www.socialsecurity.gov/OACT/COLA/AWIgrowth.html; Bureau of Labor Statistics, CPI-W, available at http://www.bls.gov/cpi.

NOTE: CPI-W = consumer price index for urban wage earners and clerical workers.

Chart 52 shows that, in the aggregate, increases in wages kept pace with price increases during much of the 1970s, leaving no real wage growth. Then, in the late 1970s and early 1980s, wage growth actually lagged behind price increases.

Chart 53 shows that the annual percentage change in price and wage indexes over the 1970–2003 period has not had a consistent pattern, with greater wage growth and price increases alternating from year to year. However, large ad hoc increases in Social Security benefits in the early 1970s, followed by automatic cost-of-living adjustments beginning in June 1975, may have increased incentives to apply for Social Security disability benefits during this period and contributed to the growth experienced by the program in the late 1970s and early 1980s. Furthermore, these charts do not show the impact that price increases have had on real wages of low earners, who have continued to see declining real wages over time.

Replacement Rates for Disabled Workers

Replacement rates for disabled workers increased significantly from 1970 to the late 1970s or early 1980s. Congressional action in 1977, 1980, and 1981 resulted in reductions in DI benefits and replacement rates, which have since stabilized.

Chart 54. Median and quartile replacement rates for newly entitled disabled workers, 1970–2000

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Table equivalent for Chart 54. Median and quartile replacement rates for newly entitled disabled workers, 1970–2000

Year	Lowest quartile	Median	Highest quartile
1970	35	48	66
1971	37	51	70
1972	39	51	72
1973	42	59	81
1974	44	63	86
1975	45	66	90
1976	46	66	91
1977	47	67	93
1978	48	68	95
1979	49	68	95
1980	51	66	89
1981	51	66	85
1982	48	63	83
1983	46	60	78
1984	46	60	82
1985	46	60	81
1986	45	59	80
1987	46	59	79
1988	45	59	81
1989	46	58	81
1990	47	62	84
1991	47	62	83
1992	46	60	83
1993	46	60	82
1994	46	59	81
1995	46	59	81
1996	46	60	81
1997	46	58	80
1998	45	59	81
1999	45	57	80
2000	46	57	80

SOURCE: Unpublished data compiled by the authors using the 1% Continuous Work History Sample.

NOTE: Replacement rates are based on average indexed monthly earnings.

Chart 55. Percentage of newly entitled disabled workers with high replacement rates, 1970–2000

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Table equivalent for Chart 55. Percentage of newly entitled disabled workers with high replacement rates, 1970–2000

Year	Percent
1970	12.50
1971	15.80
1972	18.00
1973	26.30
1974	30.50
1975	34.00
1976	35.00
1977	37.50
1978	39.00
1979	37.60
1980	32.80
1981	29.20
1982	28.10
1983	23.70
1984	26.40
1985	25.90
1986	24.50
1987	24.40
1988	25.60
1989	25.70
1990	28.20
1991	28.10
1992	27.70
1993	27.10
1994	26.10
1995	25.50
1996	26.10
1997	25.20
1998	26.20
1999	25.00
2000	25.40

SOURCE: Unpublished data compiled by the authors using the 1% Continuous Work History Sample.

NOTE: Replacement rates are based on average indexed monthly earnings. High replacement rates are those that exceed 80 percent of predisability earnings.

A better sense of the relationship between benefits and earnings is provided by examining replacement rates, which is the ratio of workers' DI benefits to predisability earnings. ¹ This simple measure provides a glimpse of the adequacy, equity, and incentives associated with disability benefits.

Although there are many caveats related to taxes, multiple sources of disability income, and other factors, high replacement rates for DI benefits increase incentives for individuals to apply for benefits rather than to continue working. High replacement rates also reduce incentives to beneficiaries to return to self-supporting work. Replacement rates in the United States vary with workers' earnings histories and earnings levels, because the Social Security benefit formula is designed to replace a higher fraction of earnings for low earners than for high earners, thus giving low earners a higher replacement rate than that for high earners.

Charts 54 and 55 show trends of replacement rates for newly entitled DI beneficiaries from 1970 to 2000 that are based on a measure of actual lifetime earnings up to the year before the year of disability onset. The numerator is the amount of DI benefits paid to the worker and to any dependents.

As can be seen from these charts, replacement rates rose from the early to late 1970s, declined in the early 1980s, and have stabilized considerably since. The reduction in replacement rates resulted from Congressional action to stem the increase in replacement rates after the program experienced significant growth in the mid-1970s. Replacement rates began to rise dramatically after Congress passed automatic cost-of-living adjustments (COLAs) in 1972. The rise in replacement rates was partially the result of the method used to index benefits, which overcompensated new DI beneficiaries for the effects of inflation. In 1977, Congress enacted legislation intended to stabilize replacement rates by "decoupling" the COLA increase for current beneficiaries from the calculation of benefits for new beneficiaries. Current DI beneficiaries would receive COLA adjustments for price increases, and new beneficiaries would have their benefits based on wage-indexed earnings and on a benefit formula that was adjusted for increases in average wages. The new benefit calculation generally applied to disabled-worker beneficiaries becoming eligible in January 1979 and later. This legislation also froze the minimum benefit at its 1979 level.

In 1980, Congress took further action to limit replacement rates for disabled workers, targeting younger workers and those with dependents. That legislation made the formula for these workers less generous and placed caps on family benefits. In 1981, Congress eliminated the minimum benefit for all Social Security beneficiaries and placed an offset for multiple sources of public disability benefits (except veterans and means-tested programs) to ensure that replacement rates from all disability benefits would not be excessive. Replacement rates have not been a subject of controversy or legislation since that time.

Maximum SSI Payment Amount

The maximum federal SSI payment, known as the federal benefit rate, is fixed and indexed to the cost of living, and the real value does not change over time. Thus federal SSI payment amounts are stable and do not correlate with changes in applications for benefits and awards.

Chart 56. Incidence of SSI applications and new adult entrants (aged 18–64) and the maximum monthly federal SSI payment amount for individuals and couples, 1980–2003

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Table equivalent for Chart 56. Incidence of SSI applications and new adult entrants (aged 18–64) and the maximum monthly federal SSI payment amount for individuals and couples, 1980–2003

Year	Benefits (2003 dollars)		Rates (number per thousand)
	Individual	Couple	Application	New entrant
1980	5.08	7.62	7.17	2.06
1981	5.19	7.78	4.49	1.60
1982	5.37	8.05	4.98	1.39
1983	5.54	8.30	5.34	1.79
1984	5.50	8.26	5.56	2.18
1985	5.48	8.23	6.60	2.18
1986	5.60	8.41	7.03	2.53
1987	5.43	8.14	5.92	2.46
1988	5.41	8.14	5.75	2.26
1989	5.38	8.08	6.00	2.41
1990	5.32	7.98	6.71	2.82
1991	5.44	8.15	7.68	3.21
1992	5.48	8.22	8.53	4.01
1993	5.49	8.24	9.12	3.89
1994	5.49	8.24	8.86	3.52
1995	5.50	8.25	7.90	3.40
1996	5.46	8.19	7.30	3.11
1997	5.53	8.30	6.18	2.67
1998	5.55	8.33	6.32	2.81
1999	5.48	8.22	6.36	2.79
2000	5.43	8.15	6.42	2.69
2001	5.54	8.30	6.63	2.77
2002	5.55	8.32	7.20	2.90
2003	5.52	8.29	7.40	2.90

SOURCES: SSI Annual Statistical Report, 2003, Table 1; 2004 Annual Report of the Supplemental Security Income Program, Tables IV.A1, IV.B1, and IV.B2.

NOTES: Incidence is the number of SSI applicants and new entrants aged 18–64 per 1,000 in population aged 18–64. The reference population is the "Selected Social Security Area Population" of the appropriate age group and includes the population of the United States and several additional areas. See the glossary for a complete definition.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

Many SSI recipients have limited or no earnings history, so replacement rates are not as relevant a measure for the SSI program. Less than one-quarter of recipients had sufficient work experience to qualify for even a small Social Security benefit. Furthermore, the federal benefit amount for SSI is relatively static over time, as the benefit is indexed to inflation. Chart 56 illustrates that the inflation-adjusted benefits are fairly stable over time, and changes in applications and awards of SSI payments do not correlate with benefit amounts. The periods of growth and contraction in applications and awards seem to follow patterns similar to those observed for the DI program. The patterns seem to have some correlation with economic and policy changes, but the precise relationship is not known.

One other factor may contribute to incentives to seek SSI payments: the income and resource test. SSI limits the amount of assets, earned income, and unearned income the individual may have and still qualify for benefits. The asset limit ($2,000) has not been increased since 1984, and the disregards for earned and unearned income ($65 and $20 per month, respectively) have not been changed since the program began. The effect that inflation has had on the real level of these tests may have served to tighten eligibility criteria, although spend-down provisions, under which individuals must divest themselves of assets to qualify for SSI, may have lessened the impact of the asset test.

Changes in Substantial Gainful Activity Level

For long periods, the monthly level of substantial gainful activity for the nonblind, in nominal dollars, did not change. Since 2001, the level automatically increases as a consequence of changes in the wage index.

Chart 57. Maximum and minimum SGA amounts for the nonblind and the SGA level for the blind, 1970–2003

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Table equivalent for Chart 57. Maximum and minimum SGA amounts for the nonblind and the SGA level for the blind, 1970–2003 (nominal dollars)

Year	Maximum SGA amount	Minimum SGA amount	SGA for the blind
1970	140	90	. . .
1971	140	90	. . .
1972	140	90	. . .
1973	140	90	. . .
1974	200	130	. . .
1975	200	130	. . .
1976	230	150	. . .
1977	240	160	. . .
1978	260	170	334
1979	280	180	375
1980	300	190	417
1981	300	190	459
1982	300	190	500
1983	300	190	550
1984	300	190	580
1985	300	190	610
1986	300	190	650
1987	300	190	680
1988	300	190	700
1989	300	190	740
1990	500	300	780
1991	500	300	810
1992	500	300	850
1993	500	300	880
1994	500	300	930
1995	500	300	940
1996	500	300	960
1997	500	300	1,000
1998	500	300	1,050
1999	700	300	1,110
2000	700	300	1,170
2001	740	300	1,240
2002	780	. . .	1,300
2003	800	. . .	1,330
NOTE: . . . = not applicable.

SOURCE: Annual Statistical Supplement to the Social Security Bulletin, 2004, Table 2.A30.

The level of substantial gainful activity (SGA) has long been established by regulation. Before 2002, there was a maximum and minimum SGA amount. Monthly earnings (minus impairment-related work expenses) that fell below the minimum SGA amount were not considered to constitute SGA. Monthly earnings between the maximum and minimum SGA amounts required that consideration be given to all circumstances related to work activities to determine whether the work activity was SGA. Work activity that resulted in monthly earnings that were above the maximum SGA amount was automatically determined to be SGA. Beginning in 1978, the SGA level for the blind was tied to the early retirement test exempt amount and has thus been automatically adjusted for changes in the average wage. Until 2001, the SGA level for the nonblind had been subject to ad hoc increases as determined to be appropriate by the Commissioner of Social Security, with the last two ad hoc increases occurring in 1990 and 1999. Since 2001, the SGA level for the nonblind has also been subjected to automatic adjustments for changes in the wage series, albeit at a lower absolute level than that established for the blind. For 2006, the monthly SGA amount is $1,450 for statutorily blind individuals and $860 for nonblind individuals.

Substantial Gainful Activity Level and Application Rates

Changes in the real (price-adjusted) SGA level for nonblind individuals suggests that increasing the real value of substantial gainful activity may influence the application rates for the DI and SSI programs.

Chart 58. Application rates for disabled-worker benefits and SSI blind and disabled adult payments and real SGA level, 1970–2003

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Table equivalent for Chart 58. Application rates for disabled-worker benefits and SSI blind and disabled adult payments and real SGA level, 1970–2003

Year	Disabled-worker application rate (number per thousand)	SSI blind and disabled adult application rate (number per thousand)	Real SGA level (2003 dollars)
1970	11.67	. . .	648.29
1971	12.13	. . .	627.79
1972	12.18	. . .	607.11
1973	13.27	. . .	558.48
1974	15.97	9.12	710.21
1975	15.07	7.42	664.14
1976	14.16	6.47	728.33
1977	13.83	6.64	712.27
1978	12.64	6.53	707.80
1979	12.12	6.74	672.80
1980	12.58	7.10	640.67
1981	11.31	5.94	588.19
1982	9.76	5.26	566.50
1983	9.67	5.57	545.80
1984	9.68	5.74	525.07
1985	9.73	6.87	505.86
1986	10.02	7.13	500.36
1987	9.77	6.86	479.12
1988	8.80	6.40	458.84
1989	8.34	6.39	438.46
1990	8.89	7.07	688.71
1991	9.95	8.12	668.24
1992	10.86	8.93	649.40
1993	11.46	9.49	632.03
1994	11.44	9.06	615.56
1995	10.43	8.18	600.33
1996	9.82	7.53	581.02
1997	8.92	6.54	571.30
1998	8.68	6.51	562.23
1999	8.76	6.47	766.55
2000	9.57	6.80	741.44
2001	10.65	7.25	771.83
2002	11.78	8.08	794.66
2003	13.05	8.72	800.00
. . . = not applicable.

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 2.A30, 4.C1, and 6.C7; 2004 Annual Report of the Supplemental Security Income Program, Table IV.A1; SSI Annual Statistical Report, 2003, Table 41.

NOTES: Application rates are per 1,000 disability-insured workers for disabled workers and per 1,000 in population aged 18–64 for SSI blind and disabled adults. The reference population for SSI adults is the "Selected Social Security Area Population" of the appropriate age group and includes the population of the United States and several additional areas. See the glossary for a complete definition.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

The changes in the real (price-adjusted) SGA level for nonblind individuals during the period 1970 to 2003, along with trends in the rate of applications for disabled-worker benefits and SSI disabled adult benefits (aged 18–64), suggest that increasing the real value of SGA may influence the application rates for both programs. However, the policy decisions to raise the SGA level in 1990 and in 1999 came at peaks in the economic cycle, just as the economy was tilting toward recession, and it is difficult to determine the extent to which the change in SGA influenced applications or to what extent the tightening labor market did.

Unemployment Rate and Application and Incidence Rates for Disabled Workers

Disabled-worker application rates and incidence rates have tended to rise in periods of increasing unemployment and fall in periods of decreasing unemployment with the exception of the early 1980s, when the program was tightened and the benefits were reduced.

Chart 59. Rate of disabled-worker applications per 1,000 disability-insured workers and the unemployment rate, 1970–2003

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Table equivalent for Chart 59. Rate of disabled-worker applications per 1,000 disability-insured workers and the unemployment rate, 1970–2003

Year	Application rate (number per thousand)	Unemployment rate (percent)
1970	11.67	4.90
1971	12.13	5.90
1972	12.18	5.60
1973	13.27	4.90
1974	15.97	5.60
1975	15.07	8.50
1976	14.16	7.70
1977	13.83	7.10
1978	12.64	6.10
1979	12.12	5.80
1980	12.58	7.10
1981	11.31	7.60
1982	9.76	9.70
1983	9.67	9.60
1984	9.68	7.50
1985	9.73	7.20
1986	10.02	7.00
1987	9.77	6.20
1988	8.80	5.50
1989	8.34	5.30
1990	8.89	5.60
1991	9.95	6.80
1992	10.86	7.50
1993	11.46	6.90
1994	11.44	6.10
1995	10.43	5.60
1996	9.82	5.40
1997	8.92	4.90
1998	8.68	4.50
1999	8.76	4.20
2000	9.57	4.00
2001	10.65	4.70
2002	11.78	5.80
2003	13.05	6.00

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 2.A30, 4.C1, and 6.C7; Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/prev_yrs.htm.

Chart 60. Age-adjusted incidence rates for disabled workers, by sex, and the unemployment rate, 1975–2003

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Table equivalent for Chart 60. Age-adjusted incidence rates for disabled workers, by sex, and the unemployment rate, 1975–2003

Year	Men	Women	Unemployment rate
1975	7.72	6.18	8.50
1976	7.19	5.57	7.70
1977	7.41	5.57	7.10
1978	6.49	4.76	6.10
1979	5.71	4.16	5.80
1980	5.43	3.85	7.10
1981	4.80	3.28	7.60
1982	4.24	2.86	9.70
1983	5.39	3.59	9.60
1984	4.96	3.31	7.50
1985	4.93	3.35	7.20
1986	4.88	3.36	7.00
1987	4.76	3.30	6.20
1988	4.64	3.24	5.50
1989	4.69	3.37	5.30
1990	5.04	3.63	5.60
1991	5.62	4.12	6.80
1992	6.48	4.82	7.50
1993	6.26	4.75	6.90
1994	5.97	4.76	6.10
1995	5.84	4.94	5.60
1996	5.38	4.82	5.40
1997	4.83	4.53	4.90
1998	4.80	4.63	4.50
1999	4.74	4.61	4.20
2000	4.64	4.46	4.00
2001	5.01	4.84	4.70
2002	5.29	5.11	5.80
2003	5.36	5.14	6.00

SOURCES: Tim Zayatz, Social Security Disability Insurance Program Worker Experience, Actuarial Studies No. 114 (June 1999) and No. 118 (June 2005) (Washington, DC: Social Security Administration, Office of the Chief Actuary), Table 4; Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/prev_yrs.htm.

NOTE: Incidence rates are the number of awards of disabled-worker benefits per 1,000 disability-insured workers.

Economic changes influence applications to the DI and SSI programs. Historically, when unemployment rises, applications and awards for the DI program have increased as well. Disabled-worker application rates have tended to rise in periods of increasing unemployment and fall in periods of decreasing unemployment, with the notable exception of the early 1980s, when unemployment approached 10 percent and the rate of applications declined dramatically (Chart 59). However, at the same time, a tightening of the program and reductions in benefits were taking place and may have had a greater influence that resulted in declining application rates. The incidence rate for DI workers (awards per 1,000 in the disability-insured population) also tends to follow the unemployment rate (and application rate), with the same caveat about the period of the early 1980s (Chart 60).

Economic factors in addition to the unemployment rate may also influence applications, awards, and the size of the DI program. These factors could include changes in the wage distribution and changes in the occupational structure of the economy, as well as a multitude of other factors. Quantifying such changes is difficult and beyond the scope of this book; however, it is clear that the distribution of income and wages has widened and that low-income workers are falling behind higher-income workers.² The occupational structure in the United States has moved away from manufacturing and toward service jobs, which has an indeterminate effect on applications and awards. Although service jobs tend to be less physically demanding, the mental and cognitive requirements are greater.

Unemployment Rate, SGA, and Application Rates for Disabled Workers

Although the application rate seems to follow the same trends as changes in real substantial gainful activity level (in 2003 dollars) and the unemployment rate, it is difficult to determine the factors that affect growth and to disentangle the effects of those factors.

Chart 61. Rate of disabled-worker applications per 1,000 disability-insured workers, real SGA level, and the unemployment rate, 1970–2003

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Table equivalent for Chart 61. Rate of disabled-worker applications per 1,000 disability-insured workers, real SGA level, and the unemployment rate, 1970–2003

Year	Application rate	Real SGA level	Unemployment rate
1970	11.67	6.48	4.90
1971	12.13	6.28	5.90
1972	12.18	6.07	5.60
1973	13.27	5.58	4.90
1974	15.97	7.10	5.60
1975	15.07	6.64	8.50
1976	14.16	7.28	7.70
1977	13.83	7.12	7.10
1978	12.64	7.08	6.10
1979	12.12	6.73	5.80
1980	12.58	6.41	7.10
1981	11.31	5.88	7.60
1982	9.76	5.66	9.70
1983	9.67	5.46	9.60
1984	9.68	5.25	7.50
1985	9.73	5.06	7.20
1986	10.02	5.00	7.00
1987	9.77	4.79	6.20
1988	8.80	4.59	5.50
1989	8.34	4.38	5.30
1990	8.89	6.89	5.60
1991	9.95	6.68	6.80
1992	10.86	6.49	7.50
1993	11.46	6.32	6.90
1994	11.44	6.16	6.10
1995	10.43	6.00	5.60
1996	9.82	5.81	5.40
1997	8.92	5.71	4.90
1998	8.68	5.62	4.50
1999	8.76	7.67	4.20
2000	9.57	7.41	4.00
2001	10.65	7.72	4.70
2002	11.78	7.95	5.80
2003	13.05	8.00	6.00

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 2.A30, 4.C1, and 6.C7; Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/prev_yrs.htm.

a. Unemployment rate in percent; real SGA level in hundreds of 2003 dollars.

This chart shows the application rate for disabled-worker benefits along with the unemployment rate (an external factor) and the level of substantial gainful activity in constant dollars (an internal factor). It is interesting that the unemployment rate and the real SGA level follow similar trends, perhaps because, in the past, SGA levels received ad hoc increases near the peak in the economic cycle. Although these data are suggestive of relationships, it is difficult to determine the factors that affect growth and to disentangle the effects of those factors.

Unemployment Rate and SSI Application and Incidence Rates for Adults (18–64)

Because of the limited work history of SSI applicants, one might not expect their rates of applications and new entrants to follow unemployment rates in the same pattern as the rates for DI applicants, who have a substantial work history. The patterns, however, are quite similar.

Chart 62. Rates of SSI applications and entry for blind and disabled adults per 1,000 in population aged 18–64 and the unemployment rate, 1980–2003

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Table equivalent for Chart 62. Rates of SSI applications and entry for blind and disabled adults per 1,000 in population aged 18–64 and the unemployment rate, 1980–2003

Year	Unemployment rate	Application rate	New entrant rate
1980	7.10	7.17	2.06
1981	7.60	4.49	1.60
1982	9.70	4.98	1.39
1983	9.60	5.34	1.79
1984	7.50	5.56	2.18
1985	7.20	6.60	2.18
1986	7.00	7.03	2.53
1987	6.20	5.92	2.46
1988	5.50	5.75	2.26
1989	5.30	6.00	2.41
1990	5.60	6.71	2.82
1991	6.80	7.68	3.21
1992	7.50	8.53	4.01
1993	6.90	9.12	3.89
1994	6.10	8.86	3.52
1995	5.60	7.90	3.40
1996	5.40	7.30	3.11
1997	4.90	6.18	2.67
1998	4.50	6.32	2.81
1999	4.20	6.36	2.79
2000	4.00	6.42	2.69
2001	4.70	6.63	2.77
2002	5.80	7.20	2.90
2003	6.00	7.40	2.90

SOURCES: 2004 Annual Report of the Supplemental Security Income Program, Tables IV.A1, IV.B1, and IV.B2; Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/prev_yrs.htm.

NOTE: The reference population is the "Selected Social Security Area Population" of the appropriate age group and includes the population of the United States and several additional areas. See the glossary for a complete definition.

The SSI program tends to serve persons with no, or very limited, work history. As demonstrated in Chart 13, the proportion of SSI recipients who concurrently receive a DI worker's benefit increased from 16 percent in 1981 to about 20 percent in 1993 and has remained near that level ever since. This would seem to suggest that the SSI program would be less influenced by economic conditions than would the DI worker program. The application rate of disabled adults and the rate of new entrants to the SSI program follow a pattern similar to that of DI workers, with rates of applications and incidence tracking the unemployment rate after the mid-1980s, but not in the early 1980s.