Consensus is wrong on Social Security fix Raising the retirement age isn't as wise as it sounds.

By Theodore R. Marmor

and Jerry L. Mashaw

An old adage says that every problem has an obvious solution that is both simple and wrong. We fear this applies to the idea of increasing the formal retirement age for Social Security.

The widespread assumption is that the long-term financial health of the Social Security Administration requires raising the age of eligibility for full retirement benefits. This seems obvious for a few reasons.

First, although Social Security today has a huge surplus, projections suggest a shortfall in two decades unless something is done to shore up its finances. Requiring workers to wait longer to collect benefits would surely save money.

Second, Americans are living longer and staying healthier at older ages. So deferring retirement seems like a sensible and relatively painless way to help maintain America's most popular government program.

The difficulty is that the world is not as simple as this suggests, and the apparently painless reform could be quite painful indeed.

Social Security pensions are crucial to most low- and middle-income Americans' retirement income. Two-thirds of retirees get half or more of their retirement income from the program, and one-third are almost totally dependent on it. The average yearly benefit is only $14,000, so any reduction causes real pain in the lives of retirees whose working incomes were in the low to medium range.

Furthermore, benefit reductions are already taking place. The full retirement age is slowly increasing and will reach 67 in 2027. Each year of delay in pension payments results in a reduction in every worker's lifetime benefits of roughly 6.5 percent. Thus, when the current increases in the retirement age are fully phased in, workers will have experienced a 13 percent drop in benefits since 1983, when the retirement age began to creep up.

Meanwhile, premiums for Medicare's outpatient and drug coverage, which are deducted from Social Security payments, have risen much more rapidly than Social Security's cost-of-living adjustments.

Social Security's impact is already being diminished as a result of both developments. A medium earner's Social Security pension replaced roughly 39 percent of his prior earnings in 2005. By 2030, after the retirement age increase is phased in and given predicted Medicare premium increases, that figure is expected to drop to 32 percent.

In short, adequate retirement income for average Americans is already in jeopardy. And this is in an era marked by declining employer pensions and radically reduced real estate values.

Moreover, low and medium earners are least likely to have benefited from the health advances that make raising the full retirement age seem like such an obvious solution. Over the past 25 years, life expectancy for upper-income men has increased by a whopping five years. Men in the lower half of the income distribution, however, have seen their life expectancy increase by only one year. And for lower-income women, it has actually declined. Not all Americans are leading longer, healthier lives, and those who aren't depend on Social Security the most.

Low- and middle-income Americans are also more likely to have jobs that are physically demanding and to face poor working conditions. Indeed, nearly half of workers older than 58 work in such jobs, and more than a quarter of those over 60 report a health condition that limits their ability to work. Many Americans simply will not be able to work longer, and those taking benefits before the full retirement age face large decreases in benefits.

Any decent reform proposal that includes an increase in the retirement age should address the impact on low- and middle-income workers. In addition, we can expect more applications for Social Security disability benefits from older workers who simply cannot keep working until they reach an increased retirement age. The expense of these increased disability benefits, as well as of adjustments to maintain the adequacy of pensions for low- and middle-income workers, would sharply limit the savings to be gained from increasing the full retirement age.

In short, this obvious, simple solution to Social Security's relatively modest long-term financing problems turns out to be, if not wrong, not nearly as right as it appears. There is much pain and only modest gain from further raising Social Security's retirement age. Ordinary Americans, who overwhelmingly oppose the idea, seem to understand that better than our opinion leaders.

---

Theodore R. Marmor is a professor emeritus of political science and public policy at Yale, where Jerry L. Mashaw is a professor of law and management. They can be reached attheodore.marmor@yale.edu and jerry.mashaw@yale.edu.

Social Security: After two-year drought, beneficiaries expected to get a raise

But the increase could be soaked up by insurance premiums

May 31, 2011|By Eileen Ambrose, The Baltimore Sun

After two years without seeing an increase in their Social Security checks, more than 59 million retirees and other beneficiaries can expect a bump up in benefits next year.

The Social Security trustees' annual report released this month estimates that the cost-of-living adjustment in next year's checks will be 0.7 percent. The increase, which will be announced in October, could be higher, depending on where prices head in the coming months.

Still, experts say, retirees could see all or some of that raise eaten up by higher Medicare premiums.

News of the potential rise in benefits didn't generate much excitement last week among seniors at the Allen Center in Federal Hill, although some retirees say they would be grateful for any boost.

"If it was $5 more, I would be happy," Frances McCready, 69, a retired cashier, says about her monthly benefit. "I would dance a jig."

The past two years have been "very bad," says McCready, who receives $616 a month from Social Security and about $400 working as a paid volunteer with the Department of Aging.

She says she lives with her son and his wife, who help her pay her bills.

"If it wasn't for them, no way in the world could I make it," she says.

The Social Security trustees projected the cost-of-living adjustment using inflation assumptions from December. Since then, the price of gas has spiked upward and then pulled back. If fuel prices tick up again, beneficiaries could see as much as a 2 percent increase.

The actual cost-of-living increase will be based on the inflation rate in July, August and September, and how it compares with the rate during the third quarter of 2008 — the last time inflation caused the government to award an increase.

Back in the summer of 2008, gas prices skyrocketed and Social Security beneficiaries enjoyed a 5.8 percent increase the following year— the biggest jump since 1982. But fuel prices quickly plunged, and it's taken this long for inflation to surpass that 2008 level.

In the two years that benefits remained flat, Medicare premiums also were frozen for the three-quarters of retirees with low to moderate incomes. But if their benefits go up, so will their Medicare premiums, which are taken out of Social Security checks.

(Story continued here)

Ready and Able:

People with disabilities can work and want to work. Given the growing body of evidence that

demonstrates that workers with disabilities meet or exceed the job performance of co-workers

without disabilities, the continuing high unemployment rate and low labor force participation

rate of people with disabilities deprive the nation of a valuable pool of talent. Increasing the

employment of people with disabilities produces significant benefits to the economy, the

nation, and people with disabilities themselves.

The National Technical Assistance and Research (NTAR) Leadership Center at Rutgers

University chose to address this issue by conducting research on employer and marketdriven initiatives to recruit, hire, train, and retain people with disabilities. Using a case study

approach, NTAR Leadership Center researchers selected 13 diverse examples from around the

nation of partnerships — between employers and trusted workforce intermediaries — with a

track record of helping employers recruit, hire, train, and retain employees with disabilities.

Over the course of six months, researchers conducted in-depth research and interviewed

and visited leaders and practitioners at the heart of these business-public collaborations. The

goal of this research was to identify successful elements of these strategies and offer lessons

that can be learned by employers and employer organizations, workforce development and

disability service organizations, and federal, state, and local policymakers.

While each partnership has its own distinctive qualities, NTAR Leadership Center researchers

found several overall themes, identified as key Ready and Able findings:

Employers respond to a business case for employing people with disabilities.

Employers believe that people with disabilities who possess the skills needed for the job

add value to the employer and positively affect the “bottom line.” Successful experiences

with qualified workers with disabilities increase the employer’s willingness to expand

employment opportunities. Because employers tend to listen to each other, business-tobusiness marketing of the value of employing people with disabilities is most powerful.

Innovative collaborations with and between workforce-supplying organizations

enable employer efforts to recruit, hire, train, and support employees with disabilities.

Employers do not want to have to maintain relationships with many varied workforcesupplying organizations — they find it daunting to learn the intricacies of the workforce

and disability service worlds. Accordingly, they prefer a single point of contact to

coordinate needed assistance and supports they require to recruit and hire. In some cases,

intermediaries organize and coordinate supports and provide technical assistance on

workforce issues, including disability-specific issues.

Collaborations ensure that workers are qualified and productive. Many effective

projects feature internships and mentorships, encouraging hands-on guidance and work

experience. Others provide opportunities for workers to earn credentials and degrees for

jobs with good wages and benefits, or offer access to career ladders, workplace training, and skills. Needed supports and accommodations are provided to enable employees to be

successful once on the job.

Successful collaborations nurture and reward continuous leadership. Leaders in the

partnerships studied showed a willingness to develop, coordinate, nurture, and manage

the collaboration.

ƒ

The chapters in this report are organized to highlight different partnership models.

(Click Here For The Full Article)

Ohio disabled work for under minimum wage

COLUMBUS, OHIO

Thousands of Ohio adults with developmental disabilities earn less than the minimum wage -- a situation that critics say exploits workers and supporters say provides more opportunities for the disabled to have jobs.

At least 14,600 disabled Ohioans make less than the minimum wage, and the number is likely much higher, but wage information is not public in 18 of Ohio's 88 counties, The Columbus Dispatch reported. The newspaper analyzed federal wage documents from 69 of the 70 counties that support workers with developmental disabilities through taxpayer-funded agencies and operate employment centers.

A provision in the federal wage law allows employers to pay less than minimum wage if adults have disabilities limiting their productivity, the newspaper reported in the first two parts of a series that began Sunday.

Curtis Decker, director of the Washington, D.C.-based National Disability Rights Network, says "it's immoral."

Norma Williams says her autistic son's low-wage job in Columbus allows him to have a purpose in life.

"He has a place to go and a reason to get up in the morning," she said. "I don't care about the money."

Statewide, about 21,000 disabled Ohioans receive services through their counties and are employed, and most of the low-wage earners are employed in sheltered workshops -- quasi-industrial settings resembling factories that bid on jobs with government agencies and private companies for contract work, the newspaper reported.

More than 80 percent of the low-wage work force earns an hourly wage of $3.70 or less, with about 35 percent of them -- or 5,200 workers -- making less than $1 an hour, the newspaper reported. Nearly 1,000 make less than 25 cents an hour.

The federal minimum wage is $7.25 an hour.

"It's concerning in terms of overall numbers," said John Martin, director of the Ohio Department of Developmental Disabilities that oversees the statewide system. "But I don't have a concern that people are being taken advantage of."

County officials say federal requirements do not allow room for error or subjectivity, and some say that their budgets and the revenue generated by the contracts cannot support higher wages.

Troy Thompson, 30, has autism and works at an art studio at one of Franklin County's sheltered workshops, where he earns commissions of about $80 a month based on the work sold. Thompson gets some government benefits and earns $5 an hour as a janitor.

"I want to find higher-paying jobs," he said.

The economy also has worked against disabled workers, decreasing the contract work on which workshops have relied.

Advocates for the disabled also believe more can be done in Ohio to help find community-based work for disabled adults that would pay better.

"I think our challenge is convincing employers that people have skills, even with disabilities," said Jed Morison, superintendent of the Franklin County Board of Developmental Disabilities.

John Pekar, superintendent of the developmental-disabilities boards in Fairfield County and Vinton County, and has helped art studios to grow in both counties.

"A lot of it is knocking down stereotypes," he said.

------

Information from: The Columbus Dispatch, http://www.dispatch.com

Moving From Disability Benefits to Jobs

By MOTOKO RICH

In an article today, I explore why Social Security is strained by the number of workers who now collect disability benefits, and why it is so difficult for these beneficiaries to go back to work.

Many, of course, suffer such severe disabilities that it is all but impossible to work. For them, the benefits provide an essential lifeline. For others, some work is possible, and economists and advocates for the disabled argue that if these people were provided with the right assistance and workplace accommodations, they might be able to work enough to leave the benefit rolls.

But some economists and policy analysts argue that many beneficiaries who might work are discouraged from doing so because of the so-called “cash cliff” that stipulates that workers who earn even $1 more than $1,000 a month — a level deemed “substantial gainful activity” — will lose all their cash benefits once a nine-month trial period is completed.

According to a paper submitted to The Journal of Rehabilitation by Tim Tremblay, Alice Porter and James Smith of the Vermont Division of Vocational Rehabilitation and Robert Weathers of the Social Security Administration, this cash cliff is a “substantial disincentive to work.”

Let’s say a disabled beneficiary goes back to work part-time, and earns $13 an hour for 15 hours a week. His total monthly earnings would be $845. Because that amount falls below $1,000, he would be able to keep a total of $1,845 a month. But if he upped his hours to 20 hours a week, he would then be earning $1,127 a month, which would put him over the threshold for collecting benefits. After the nine-month trial period, he would be stripped of benefits and thus would have only $1,127 in earnings. So by working five more hours a week, he loses $718 a month.

The authors of the paper suggested that many beneficiaries work just up to the threshold in order to maintain benefits. They suggested that a gradual reduction in benefits, rather than an abrupt cutoff, would spur more beneficiaries to work and earn more.

Many disabilities entail “a gradual road to full employment,” Mr. Smith said in a telephone interview. “You’re not going to go from being severely ill to being fully employed in nine months. So we think that the emphasis of the program should be on offering people an easy exit ramp, versus this sudden and dramatic cutoff.”

Since 2005, the Social Security Administration has conducted a pilot program in four states — Connecticut, Utah, Vermont and Wisconsin — in which a test group of randomly assigned disabled worker beneficiaries saw their benefits reduced by $1 for each $2 they earned at work above the substantial gainful level for up to six years. That way, they preserved some benefits as they eased back to work, rather than losing them all after just nine months. A control group did not receive the gradual reduction, losing all benefits if their earnings were above the threshold after nine months.

A preliminary study of the pilot program showed that in Connecticut and Vermont, beneficiaries who were given the gradual reduction in benefits were much more likely to work and earn more than the threshold amount. In Utah, the effects were less striking, and in Wisconsin, there were no statistically significant differences between the pilot and control groups.

Mr. Smith said that although the results were preliminary, the data from Connecticut and Vermont suggested that giving beneficiaries a longer-lasting safety net would encourage more of them to work and earn enough to reduce their benefits. Even if Social Security continued to pay out some benefits for the rest of their working lives, Mr. Smith argued, that would be better than paying full benefits to a vast majority of beneficiaries.

With the disability trust fund headed for insolvency by 2018, it’s a thought.

---

This post has been revised to reflect the following correction:

Correction: April 8, 2011

Because of incorrect information supplied by one of the authors, an earlier version of this post misidentified the journal to which three researchers submitted a study on the effect of Social Security disability policy on work incentives. It is The Journal of Rehabilitation, not The Journal of Vocational Rehabilitation.

For Job Seekers With Disabilities, Glimmer Of Hope

By SHAUN HEASLEY

May 6, 2011Text Size A A

For the first time in three months, the unemployment rate for Americans with disabilities eased somewhat in April.

The Department of Labor said Friday that unemployment fell to 14.5 percent for those with disabilities in April, down from 15.6 percent the previous month.

However, the change could be due at least in part to fewer people with special needs seeking work.

Meanwhile, the general population continued to fare significantly better than those with disabilities as the economy added 244,000 jobs. Unemployment for that group rested at 9 percent for the month.

The Department of Labor began tracking employment among people with disabilities in October 2008. There is not yet enough data compiled to establish seasonal trends among this population, so statistics for this group are not seasonally adjusted.

Data on people with disabilities covers those over the age of 16 who do not live in institutions. The first employment report specific to this population was made available in February 2009. Now, reports are released monthly.

2011 Workforce Recruitment Program for College Students with Disabilities (WRP)

Do you need highly qualified candidates for jobs at your office? The Workforce Recruitment Program can help! The WRP is a recruitment and referral program that connects federal and private sector employers nationwide with highly motivated postsecondary students and recent graduates with disabilities who are eager to prove their abilities in the workplace through summer or permanent jobs. Co-sponsored by the U.S. Department of Labor's Office of Disability Employment Policy (ODEP) and the U.S. Department of Defense with the participation of many other federal agencies and sub-agencies, the WRP has provided employment opportunities for over 5,500 students since 1995.

Annually, trained WRP recruiters from federal agencies conduct personal interviews with interested students on college and university campuses across the country. Students represent all majors, and range from college freshmen to graduate students and law students. Information from these student interviews is compiled in a searchable database that is available through this website to federal Human Resources Specialists, Equal Employment Opportunity Specialists, and other hiring officials in federal agencies. You can request a password here. If you are an employer in the private sector, or a student interested in private sector employment, you can take advantage of the WRP program through the National Employer Technical Assistance Center at www.askEARN.org.