This document discusses how changes in demographics and labor markets affect eligibility criteria for Social Security Disability Insurance (SSDI). It notes that SSDI outlays and participation have doubled in recent decades. While the aging workforce partly explains this, disability rates have remained flat. The document also discusses how a growing share of SSDI awards are decided based on vocational factors like age, education, and experience rather than medical conditions alone. However, it argues these vocational criteria are outdated and no longer reflect today's labor market which has shifted away from manual work to more sedentary, service jobs. The document recommends eliminating or modifying vocational criteria in SSDI eligibility determinations to better align with modern labor market realities.

1. Modernizing the SSDI
Eligibility Criteria: Trends in
Demographics and Labor Markets
Affecting Workers in the “Grid”
Presentation by Mark J. Warshawsky, Ph.D.
to
SSA National Disability Forum
Washington, D.C.
November 20, 2015

2. Background
• Social Security Disability Insurance program
outlays have increased rapidly, roughly
doubling in real terms over the past
fifteen years.
• Participation in program (as % of labor-force)
has doubled over the past twenty years.
• Determining the cause of this rapid rate of
growth is essential for setting the program on
a sustainable, long-term responsible path.
1

3. Disability and Workforce Composition
• The increased take-up of disability benefits
amongst insured population may seem intuitive
with aging workforce.
• But Burkhauser et al (2014) and Kaye (2013) have
shown that actual workforce and elderly disability
prevalence rates have remained flat or fallen over
past four decades.
• Moreover, even after adjusting for long-expected
changes in age and gender composition of the
labor force, program take-up has increased
significantly in recent years.
2

4. 3

5. Vocational Grid
• Over time, a greater percentage of awards have
been decided with consideration of vocational
factors: age, education (including language
ability), and experience.
• In the context of award process, this means that a
growing percentage of claims are awarded at
step five, the “vocational grid.”
• A growing percentage of awardees do not have
conditions in the listing of Impairments (or of
equal severity); vocational consideration allows
for lesser severity of disability.
4

6. Source: Annual Statistical Report on the Social Security Disability Insurance Program, 2013. 5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percentage Distribution of Reasons for SSDI
Allowance, 1992-2010
Other
Medical and vocational factors considered
Equals level of severity of listings
Meets level of severity of listings

7. Econometric Evidence
• The ease of SSDI applicants to obtain awards if
they are in the grid can also be shown by formal
analysis.
• Rupp (2012) uses a random sample of 1,736,554
disability determinations made during the 1993-
2008 period to determine the probability of
award by age, controlling for area of residence,
medical diagnosis, year, etc. He finds that the
probability of initial award spikes past age 50.
6

8. 7

9. Modern Relevance of Grid Criteria
• The vocational factors considered for the “grid” are
based on the supposition that older workers, poorly
educated workers, etc. need a “break” because of
external labor market conditions or because it is more
difficult for them than otherwise similarly situated,
somewhat disabled, workers to adjust.
• But conditions in the labor market have changed
considerably since the rules’ creation in the 1970s ,
which based on even earlier experience.
• Technological advances also mean that some
disadvantages once deemed worthy of consideration by
SSA should have much less weight in awarding DI
benefits.
8

10. Changes in Labor Force Over Time
• Since the creation of the vocational grid, the
labor force has largely moved away from
manual, labor-intensive occupations and
toward managerial and service-sector jobs.
• Over the past twenty years alone, the share of
“sedentary occupations” has risen from 42%
to 56%, according to BLS.
• Moreover, even production jobs are less
physically demanding.
9

11. Changes in Life Expectancy
• Since the experience underlying current
vocational rules, life expectancy has lengthened
considerably.
• A male fifty-year-old in 1960 could expect to live
for 23 more years, while his male counterpart in
2010 could expect 29.6 more years. Life
expectancy for female fifty-year-olds increased
from 27.7 to 33.2 during this period.
• The grid designation of age 50 as “closely
approaching advanced age” is almost laughable.
10

12. Rise of Educational Attainment
• Rules on education reflect an era where college was
exception, not norm, and high school completion
was far from universal.
• High-School diploma attainment has nearly doubled
over past fifty years; four-year degree completion
has tripled.
• Grid’s focus on “limited education”- those with less
than 12th grade education- also fails to take into
account rise of vocational programs, rise of
substitutes to traditional education.
• Think about Bill Gates and Steve Jobs, both of whom
did not finish college.
11

13. 0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
PercentofPopulation Educational Attainment, 25 Years and Over, 1964-
2014
At Least Four Years of HS
At Least Four Years of College
Source: U.S. Census Bureau, Current Population Survey. 12

14. Relevance of Language Ability
• Rules granting leeway to poor-proficiency English
speakers come from an era where American
workforce almost universally spoke English;
“language late-comers” were punished in the
labor market.
• This has changed; foreign-born composition of
work-force has more-than tripled since 1970.
• Immigrants with poor English tend to self-select
into large ethnic enclaves (Bauer et al, 2002),
where English proficiency has little/no
relationship with earnings (Hwang et al, 2010).
13

15. 0
2
4
6
8
10
12
14
16
18
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Percent
Foreign-Born Workers as Percentage of Labor Force,
1970-2014
Source: U.S. Bureau of Labor Statistics. 14

16. Changes in Labor Force Participation
• Labor force participation among adults 55 and over is
on a thirty-year-upward trend, in contrast to the
stable-or-declining participation of all other age
groups. Participation for the 55+ group has increased
by roughly a third since 1985.
• Even as increased educational attainment is pushing
the age of initial entry into the labor force later and
later, adults are disengaging from the labor force later
as age-related maladies become more manageable.
• Policy changes such as the liberalization of Social
Security’s retirement earnings test, older NRA, and the
widespread switch to defined contribution plans have
also been behind the trend toward later retirement.
15

17. 0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2009
2010
2011
2012
2013
2014
2015
Percent
Labor Force Participation by Age Group, 1970-2015
16-19
20-24
25-34
35-44
45-54
55 and Over
Source: U.S. Bureau of Labor Statistics.
16

18. Recommendations
• Grid criteria of age, education, and language
ability should be eliminated.
• Sole focus should be on the residual functional
capacity; disability examiners should determine if
applicant can do any job in the national economy.
• Alternatively, some slight consideration could be
given to age, but this should be done in tandem
with conversion of all disability benefits into
retirement benefits at ERA (age 62).
17