Fall 2007 The Economics of Recovery: How to Understand & Access Government Entitlements

Fall 2007 The Economics of Recovery How to Understand & Access Government Entitlements

Donald M. Fitch, MS

Donald M. Fitch, MS

By Donald M. Fitch, MS
Executive Director
Center for Career Freedom

Several years ago, the Center discovered that by plotting the earnings behavior of persons with psychiatric disabilities over time, then, overlaying key events in their lives to explain them, unlocks the dynamics of consumers in a new way. Their level of emotional functioning could be viewed as related to their level of earnings.

To accomplish this, the Center tracked five-hundred seventy Microsoft Office Applications’ students over a five year period. Over fifty variables were measured including demographics, psychiatric diagnosis, employment history, government benefits received, Microsoft Certification, employment status, current earnings and more.

The students’ annual earnings history was obtained from the Social Security Administrations’ data base using form SSA-7004. Intake applications and personal interviews by the author completed the data gathering.

Of the some fifty variables measured, two factors were found to be critical to unlocking the dynamics:
1) The patterns of work history for Social Security Income (SSI) recipients are significantly different from those of recipients of Social Security Disability Income (SSDI).
2) Government policy varies significantly for SSI and SSDI recipients regarding earned income.

Our research found several dramatic differences between SSI & SSDI recipients. There was a significantly greater earned income across all life stages and events for the SSDI recipients. While the SSDI recipient’s income rose quickly in their 20’s, it rapidly declined in their 30’s following the onset of illness. The initiation of their SSDI benefits halted this free fall and clearly provided a safety net and economic stabilization. (See chart below)

Microsoft Certified SSDI recipients were four times more likely to return to self-sustaining competitive employment, as the SSI Microsoft Certified recipients.

While both, SSI and SSDI recipients are considered by the Social Security Administration (SSA) to be disabled, i.e. unable to engage in competitive employment, generally, SSDI recipients have more than ten years (40 quarters) of work history whereas SSI recipients have much less.

Study variables which may explain this are the significant differences between SSI and SSDI populations in the years of education and competitive employment, severity of functional impairment/diagnosis and barriers of government policy regarding the economics of recovery. (See below)

With a $900/Mo cap on earned income for SSDI recipients, the economics of recovery demonstrates the feasibility of transitioning off disability to selfsustaining taxpayer status following the acquisition of sufficient marketable skills to earn at least $14/hr. and the endurance to work at least 35 hrs a week.

As the chart indicates, SSI recipients, in addition to being challenged to overcome their fewer years of schooling and work experience and, their greater severity of symptoms, are faced with a net loss of earnings even with the Medicaid buy-in elimination of the spend down.

Analysis of the macro-economics of recovery for SSI recipients reveals SSA’s earnings penalties (after 1-2 years), is to deduct one-half of the Consumers’ gross income after eighty-five dollars, each month. HUD’s Section 8 housing program policy requires the consumer to pay 30¢ of each dollar earned.

Together, these two benefit programs take 75¢ out of each dollar earned. Payroll deductions, taxes, etc. and other expenses associated with employment; travel, meals, clothing, personal, etc. create a barrier so formidable that persons on SSI actually loose money when they try to work their way off of Government benefits.


Insure all intake, supported employment, academic research, PRO’s, etc. include data on the various government benefit programs; SSI, SSDI, Section 8/Shelter Plus, Food Stamps, Medicaid/ Medicare, Prescription Drug Benefit, etc. and their earnings/work history. Run these data using analysis of variance, multiple regression and mapping where possible. Mining Social Security’s lifetime earnings tracking system data base (SSA-7004) provides an excellent research venue to verify these findings.

Be aware that combining the SSI, SSDI (and Welfare) populations, whether in research or recovery, averages out their dynamics. The increased clarity in understanding their uniqueness has enabled us to tailor our training, techniques, staff assignments, expectations and timetables to optimize our limited funds.

Legislation to remove significant economic disincentives for SSI recipients is still critical. The Medicaid Buy in, Pass Plan, 1619b, Ticket-to-Work, etc. do not address the enormity of this issue.


From our data, business analysis and experience we have formulated two recovery strategies for these populations. SSDI Recipients: Build upon their education and employment experience, update their work skills and provide extended supported employment, (funded for longer than 90 days).

SSI Recipients: Design a recovery program to address their fewer years of education, work experience and skills, and their more severe functional impairments.

In the US, of the 10 million people 18-64 years with disabilities, reportedly most (70%) would like to return to work. However, about seven million disabled people on SSI cannot because of the cumulative earnings penalties stipulated by the Social Administration and the Housing and Urban Development Corp.

The Social Security Administration estimates that if ½ of 1% of the seven million persons on SSI return to competitive employment, the contribution to the Social Security Trust Fund would be thirty-billion dollars.

Until legislation can be passed to eliminate these barriers, waivers for a model demonstration Back-to-Work program which reduces/eliminates their earnings penalties should be pursued.

Info Graphics Fall 2007 The Economics of Recovery How to Understand & Access Government Entitlements