New research by Mathematica’s Jody Schimmel Hyde and April Wu confirms what many of us in the Social Security Disability field, already know. That is, older applicants (defined as 50 or older) struggle in the labor market if they are denied Social Security Disability benefits and try to return to work.
This disproves the common myth that Social Security Disability system is filled with fraud and that it is easy to get disability benefits. In fact, the evidence proves that Social Security Disability standards are incredibly stringent. In fact the United States has some of the most stringent eligibility criteria for disability among advanced economies. Social Security requires that applicants have a severe impairment(s) (mental or physical) that not only prevents them from doing their past relevant work (last 15 years of jobs) but also prevents them from doing any other jobs in the economy.
It’s not easy to switch job fields. It is particularly difficulty for older workers and those who already have the disadvantage of a disability. Employment rates fell most sharply for those applicants who were denied because Disability Determination Services deemed they were too severely impaired to return to their past work but capable of switching to other work.
In their study, researchers Hyde and Wu people who had their Social Security Disability applications rejected at the initial level. Their study was limited to people aged 50 and older. The average age was 59. All applicants had worked enough quarters to be insured for Social Security Disability benefits. For this group, approximately 50% of the applications were approved. Of those who had their applications denied, 50% went on to receive/be awarded Social Security disability or early retirement benefits before their full retirement age in any of the following ways: successfully appealing their denial, being approved on a new disability application or electing to receive early retirement benefits.
These findings support prior research, including the 1989 Government Accountability Office study which found that people denied SSDI benefits rarely worked again and if they did work, suffered significant earnings declines, and had high rates of poverty. More recent studies in 2011 and 2015 also found significant drops in work and earnings among rejected SSDI applications. When persons with severe impairments are denied disability benefits it’s uncommon that they are able to successfully transition to other employment and the suffer significant economic distress as a result.