Disabled left behind by economic expansion

October 31, 2000

ITHACA, N.Y. -- While many Americans enjoyed extraordinary gains in economic well-being in the past decade, one group has been left far behind: the nearly 10 percent of the working-age population with disabilities. According to a Cornell University/Federal Reserve Bank study, this group has suffered an unprecedented decline in employment. "This is very disturbing. Most Americans reaped higher incomes from an economy that created a record number of new jobs in the 1990s, while the employment of Americans with disabilities fell steadily," says Richard V. Burkhauser, the Sarah Gibson Blanding Professor of Policy Analysis and Management at Cornell. "Despite receiving higher Social Security disability payments, many working-age people with disabilities lost economic ground while most other Americans gained over the 1990s."

Burkhauser prepared a recent policy brief reporting these findings for the Federal Reserve Bank, which was coauthored by Andrew J. Houtenville, a researcher with the Cornell Program on Employment and Disability, and Mary C. Daly of the Federal Reserve Bank of San Francisco.

During the 1980s, the economists report, the employment of all American workers slipped with the declining business cycle, then peaked in 1989 and slipped again during the early 1990s. Since then the country has enjoyed seven years of continuous economic growth (1992-1998) and the employment of workers without disabilities has fully recovered. "In contrast, the employment rates of men and women with disabilities continued to fall during this expansion period so that by 1998, they were still below the 1992 business trough-year level," says Burkhauser, a leading economist and policy scholar who specializes in labor market policy.

"In 1999, the household income of the median man and woman with disabilities finally returned to its 1989 peak level, but this is because lost earnings have been boosted by dramatic increases in government disability payments," says Burkhauser. The economists' findings are based on data from the Bureau of Labor Statistics, March Current Population Surveys, an annual survey of a nationally representative sample of more than 50,000 U.S. households.

The reasons for this decline in employment are far from clear, says Burkhauser. One hypothesis is that the Americans with Disabilities Act, which became law in 1992, has backfired with lawsuits and costly workplace accommodations that have made employers less rather than more willing to hire workers with disabilities. An alternative hypothesis is that many Americans with disabilities have dropped out of the labor force because fewer jobs offer employer-sponsored health insurance policies and because relaxed governmental eligibility standards for Social Security Disability Insurance and Supplemental Security Income make it easier to receive benefits. These programs provide cash benefits to individuals who are unable to work because of severe disabilities.

"Whatever the root cause, the United States experienced substantial growth in its disability rolls in the 1990s, and a greater share of young people than ever are receiving disability payments in this country. We need new national policies to turn this trend around and reintegrate young people with disabilities into the labor force," Burkhauser says.

The federal Ticket to Work/Work Incentives Improvement Act of 1999 is a step in the right direction, says Burkhauser, who sits on a presidential panel mandated by the legislation to advise Congress and the commissioner of Social Security on work-incentive programs and planning and assistance for individuals with disabilities. The legislation provides new opportunities for adults receiving public benefits to pursue work without fear of losing all benefits. "Work-oriented legislation like 'ticket to work' is likely to enable more working-age people with disabilities to successfully reenter the work force," Burkhauser believes. The economists' research will be published in the forthcoming book, co-edited by Peter Budetti, Burkhauser, Janice Gregory and H. Allan Hunt, Ensuring Health and Security for an Aging Workforce , (2001, W.E. UpJohn Institute for Employment Research).

Related World Wide Web sites: The following sites provide additional information on this news release. Some might not be part of the Cornell University community, and Cornell has no control over their content or availability.
For information on Richard Burkhauser, http://www.human.cornell.edu/faculty/facultybio.cfm?netid=rvb1&facs=1

Contact: Susan S. Lang
Office: 607-255-3613
E-Mail: SSL4@cornell.edu

Cornell University

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