Social Security, Work and Poverty

Marta Russell


is a tight labor market and tight labor markets traditionally threaten to give

workers more bargaining power from which to secure significant wage increases.

Wall Street and investors get nervous about tight labor markets. They reckon

that the inflationary pressures may upset their profit margins, so it is not

surprising that in the current uptick of employment, that the corporate state

has intervened to protect the status quo income distributive system. I am

referring to two recent actions taken by government, the ending the federal

entitlement to AFDC or Welfare Reform which forced millions of women into the

low end labor market and current efforts to entice some of the 4 million

disabled persons receiving Social Security Disability Insurance (SSDI) into the

workforce through the Social Security Return to Work program.


$720 is the average per month SSDI benefit it follows that many disabled persons

would prefer to attempt work over a disability check but work remains a risky

proposition because of disincentives built into the Social Security benefit

system. Amongst many obstacles to employment lay disabled persons well-founded

concerns that taking a job or becoming self-employed will result in the loss of

one’s public health care and/or the loss of disability benefits even though

one is not earning enough to survive.


Security, for instance, pronounces one “able to work” when one earns what it

calls “substantial gainful activity” (SGA) or $700 in one month period (for

blind persons, it is significantly higher). The work rules are so arcane and

complex that it would take a degree in Social Security policy, if there were

such a thing, to get them straight. Those who act as advocates for disabled

persons contesting Social Security rulings know what I am talking about (others

try reading the Social Security Red Book!). I don’t want to focus much on

these details but briefly, there is a Trial Work Period that extends over a five

year period in which one can earn more than $700 but once one hits a tenth month

where one earns $700, one is subject to being completely severed from disability

benefits and Medicare. What essentially happens is that disabled persons are

shoved off an earnings cliff although they are not making the kind of money it

actually takes to survive with no supports.


Social Security proposed some changes to the Work Incentives “to provide

greater incentives for many beneficiaries to attempt to work or, if already

working, to continue to work or increase their work effort.” Social Security

proposes to make automatic adjustments each year to the current SGA level at

$700 for individuals with impairments (other than blindness), based on any

increases in the national average wage index. SGA was originally set at $300 in

the 1960s and it has only been changed twice: in 1990 SGA was raised to $500 and

in 1999 it was raised to $700.


this proposed reform is better than what exists now, the fact is that no one in

Y2000 can support themselves on $700 per month in California, New York,

Connecticut and most states in the country and live independently. The $700 SGA

cut off is an at-poverty level subsistence. The Federal poverty guideline for

one is $8,350. SGA works out to $8,400 per year (assuming one would be

consistently working for a full year).


current system of measuring poverty dates back to the 1960s with no allowance

for changes occurring over the last thirty years. Research showed the average

family spent a third of its income on food, therefore a "poverty

income" was determined to be three times what experts thought the minimum

food budget should be. Even so, that economy food plan was "for temporary

or emergency use when funds are low" and was only 75 to 80 percent of a

"low cost food plan" of the Department of Agriculture, which, "if

strictly followed," could "provide an acceptable and adequate

diet" (Mollie Orshansky 1965).


the equation has never been adjusted to take into account the sharp rise in

housing, medical care, and child care costs of the following four decades which

have altered the average household’s economic picture. A 1990 study by Patricia

Ruggles of the Urban Institute for the US Bureau of the Census concluded that in

order to be comparable to the original threshold, the poverty level would have

to be at least 50 percent higher than the current official standard. If basic

needs were re-figured to the modern market, almost a quarter of the American

people would be deemed living in poverty.


disabled persons off disability benefits when they earn just $700 does not lift

one out of poverty, much less give one a chance to achieve a decent standard of

living. Labor market discrimination is a steady reality for most significantly

disabled persons and those who experience labor market discrimination are more

likely to need public assistance. Studies show, for example, that most disabled

persons work sporadically or part time — that means that income is meager and

inconsistent. One may earn something in one month and have no income for several

months, yet the regulations will continue to allow Social Security to cut a

disabled person off the benefits system if they earn $700 for JUST ONE month

past a 9 month trial work period. The trial work period extends over 5 years –

that is 60 months! Social Security is not making a realistic attempt to ensure

that the person will be earning at least $700 per month either consistently or

for a prolonged period of time before shoving them off the cliff.


one companero from No CA who has multiple sclerosis writes “as I sink farther

into debt while trying to stay active on the civil rights front, my bitterness

and anger towards the ignorance and contempt we all daily face grows and grows

and grows. I would like to work as a HICAP program manager part-time but I have

got to have a living wage and healthcare. It’s hard enough coming up with money

for Rxs and co-payments and shoes and shoe upkeep and just plain living. They

build a system that you can never climb out of, they exclude you from

participating, and then have the gall to blame you for what my friend Cynthia

calls "disability oppression." Didn’t you know — we’re all Welfare



is a case to be made for never ending disability benefits once one qualifies and

is placed on benefits. I offer just two points here. Disabled persons are nearly

three times as likely to live below the current poverty line — 29 percent

disabled live in poverty compared to 10 percent of nondisabled persons (National

Organization on Disability/Harris 2000). During 1999, nearly 600,000 households

filed for bankruptcy in the aftermath of a serious accident or illness. Those

who manage to successfully Return to Work will never be able to make up for the

financial losses suffered during years of lost employment.


SGA and work rules fall way short of enabling one to get to the stage where one

can earn a living wage and sustain what it actually takes to feed, house, cloth

and cover other necessities of life for a prolonged period of time. The SGA

level at $700 per month, even with yearly adjustments, remains archaic and

unnecessarily punitive. At the very least, Social Security needs to take into

account a revised poverty level adjusted to the current market, the living wage

factor and an add-on to compensate for extra expenses related to disablement.


overcome the labor market disadvantage affixed to disablement, disabled persons

need more support from government, not the threat of an earnings cliff that

will, if they aren’t rules-educated and extremely careful, send them over the

bureaucratic edge — with no one counting the casualties.


Security is accepting public comment until October 10. You can email them at

[email protected]


Russell is the author of Beyond Ramps: Disability at the End of the Social

Contract. http://disweb.org/