The Economic Status of People with Disabilities and Their Families since the Great Recession

• Date: 01 May 2021
• Author: Olivia Lofton,Leila Bengali,Robert G. Valletta,Mary C. Daly
• Published date: 01 May 2021
• DOI: 10.1177/00027162211022693
• Subject Matter: Population Outcomes

ANNALS, AAPSS, 695, May 2021 123

DOI: 10.1177/00027162211022693

The Economic

Status of People

with Disabilities

and Their

Families since

the Great

Recession

By

LEILA BENGALI,

MARY C. DALY,

OLIVIA LOFTON,

and

ROBERT G. VALLETTA

1022693ANN THE ANNALS OF THE AMERICAN ACADEMYECONOMIC STATUS OF PEOPLE WITH DISABILITIES

research-article2021

People with disabilities face substantial barriers to sus-

tained employment and stable, adequate income. We

assess how they and their families fared during the long

economic expansion that followed the Great Recession

of 2007 to 2009, using data from the monthly Current

Population Survey (CPS) and the March CPS annual

income supplement. We find that the expansion bol-

stered the well-being of people with disabilities and, in

particular, their labor market engagement. We also find

that federal disability benefits fell during the expansion.

On balance, our results suggest that sustained eco-

nomic growth can bolster the labor market engagement

of people with disabilities and potentially reduce their

reliance on disability benefits.

Keywords: disability; employment; income; program

participation

People with disabilities face significant barriers

to sustained employment and stable, adequate

income. Severe physical or cognitive impairments

often prevent work and can lead to persistent or

permanent receipt of government assistance via

disability benefit programs. Less severe impair-

ments may not completely preclude work but

nonetheless sharply limit it. As such, people with

disabilities often struggle to maintain labor market

engagement and obtain adequate incomes for

themselves and their families. In other words,

people with disabilities face challenges to leading

comfortable “working-class” lives.

Leila Bengali is an economist at the UCLA Anderson

Forecast, part of the UCLA Anderson School of

Management. Her research includes work in the fields

of labor economics, public finance, and behavioral eco-

nomics.

Mary C. Daly is the president and CEO of the Federal

Reserve Bank of San Francisco. As a voter on the

Federal Open Market Committee, she helps to set

American monetary policy that promotes a healthy and

stable economy. Her research is primarily in labor eco-

nomics, with a recent focus on increasing inclusion

throughout the economy.

Correspondence: Mary.Daly@sf.frb.org

124 THE ANNALS OF THE AMERICAN ACADEMY

In this article, we examine the economic status of people with disabilities since

the Great Recession of 2007 to 2009. We focus in particular on whether their

relative economic status and labor market engagement improved during the sub-

sequent sustained expansion and historically tight labor market reached near its

end. Research has found this to be true for other disadvantaged groups, although

not all (Aaronson etal. 2019; Akee, this volume; Finlay and Mueller-Smith, this

volume). Trends and cyclical patterns in the status of people with disabilities are

important in part because of the costs of federal disability benefit programs. Past

research suggests that rising incidence of disability claims in prior decades

reflects adverse labor market developments and the rising value of disability pay-

ments relative to wages (Case and Deaton 2015; Autor and Duggan 2003).

Declining disability benefit claims and program participation in recent years sug-

gest that this trend may have been offset or reversed by the long expansion.

We conduct our analyses using data on self-reported disability status from the

monthly Current Population Survey (CPS) and the CPS Annual Social and

Economic Supplement (ASEC). We also use administrative data on applications

and awards for receipt of federal disability benefits, specifically Social Security

Disability Insurance benefits (SSDI) and Supplemental Security Income (SSI).

Our results indicate that the overall well-being of people with disabilities

improved substantially during the most recent economic expansion (as suggested

in Shambaugh and Strain, this volume), particularly in comparison with their

more limited gains during the 1990s expansion. Our analyses of state panel data

indicate that strong labor market conditions that led to increases in overall labor

force participation substantially bolstered labor market engagement for people

with disabilities relative to those without. We also examine applications and

awards for receipt of federal disability benefits and find that they respond to

changes in aggregate economic conditions but show somewhat less responsive-

ness to changes in economic conditions at the state level.

The monthly CPS data extend through late 2020 at the time that this article

was written. We, therefore, undertake a partial, initial assessment of the effects

of the COVID-19 pandemic and recession on people with disabilities. The crisis

to date has not undermined the relative labor market engagement of people with

disabilities, and we do not observe increased applications for disability claims,

although delays in the processing of those claims could be a key explanation for

this finding.

Olivia Lofton is a research associate in the Economic Research Department at the Federal

Reserve Bank of San Francisco. She regularly provides research support to staff economists

and has served as a coauthor on publications examining labor market issues.

Robert G. Valletta is associate director in the Economic Research Department at the Federal

Reserve Bank of San Francisco. His research is primarily in the field of labor economics,

including topics such as unemployment, income inequality, and the impacts of public support

programs on labor market outcomes and well-being.

NOTE: The views expressed in this article are solely those of the authors and are not attribut-

able to the UCLA Anderson Forecast, the Federal Reserve Bank of San Francisco, or the

Federal Reserve System.