Effect of substantial gainful activity level on disabled beneficiary work patterns

Analysis of disabled beneficiaries' earnings records from the 1-percent Continuous Work History Sample over a 15-year period indicates that increases in the substantial gainful activity (SGA) level in 1966, 1968, and 1974 were not followed by incremental increases in beneficiary earnings. This article examines the flow of disabled-worker beneficiaries through the disability program in relation to their work history and earnings patterns. The recovery rate dropped steadily during the late 1960's and early 1970's. The earnings patterns indicate that about 10 percent of the beneficiaries were employed; about 3 percent had earnings above the SGA level. Median annual earnings remained well below $1,000, whatever the SGA level. Findings of the study suggest that policy considerations on changing the SGA level should not center on the implications for marginal part-time employment. Most of the evidence from beneficiary work and earnings patterns indicates that the SGA level has not operated as an effective work incentive. The program-flow analysis suggests that the allowance process rather than termination of benefits for recovery after sustained work holds the key to controlling program growth.