Abstract

Federal income maintenance programs for people with mental retardation in the United States were described. Combined SSI and DI spending in fiscal year 2000 totaled an estimated $20.6 billion for people with mental retardation. This population is particularly vulnerable to the vagaries of changing public policy and are particularly reliant upon public support. The relative importance of income programs in the lives of people with mental retardation is discussed and the changing role of federal social welfare policy with regard to these programs analyzed.

Many people with mental retardation exist at the economic and social margins of American society (Edgerton, 2001; Tymchuk, Lakin, & Luckasson, 2001). They are much more likely to live in poverty and have substantially lower employment rates than do people in the general population. Approximately one third of adults with mental retardation lived below the federal poverty level in 1994 as compared with 13% of adults without mental retardation (Larson, Lakin, Anderson, Kwak, & Lee, 2000). Children with mental retardation live in similarly poor economic conditions. In 1994, 33% of children with mental retardation under 6 years of age lived below the federal poverty level compared to 22% of other children (Larson et al., 2000).

There is evidence that people with developmental disabilities face greater hardship than others during economic downturns. In 1991, the last recession for which data are available, Yamaki and Fujiura (2002) found that the median income for adults with developmental disabilities was 20% below the federal poverty level. Fully three quarters of adults with developmental disabilities lived below 150% of the federal poverty level that year (Yamaki & Fujiura, 2002). By contrast, 14% of all Americans lived below poverty in 1991 (Shea, 1995).

Yamaki (1999) found that the unemployment rates for women and men with mental retardation were 76% and 73%, respectively. The unemployment rate of people with all disabilities has consistently ranged between 55% and 77% (Daniels & West, 1998), indicating that people with mental retardation have among the lowest employment rates of any individuals in American society.

A complex network of services funded by federal, state, and local resources provides an array of residential, employment, case management, family support, personal assistance, and other supports to people with mental retardation and their families (Braddock, Hemp, Parish, & Westrich, 1998). However, these services—particularly residential services—are provided to a relatively small minority of people with mental retardation (Fujiura, 1998). Critical service shortages exist in most states (Prouty, Smith, & Lakin, 2001), and demand for residential services will exceed the supply for the foreseeable future (Lakin, 1998).

High poverty rates, low employment, and a lack of available residential services make public income transfers an essential component of the supports received by people with mental retardation. The most significant of these are Disability Insurance (DI) and Supplemental Security Income (SSI) (Boggs, 1994; Braddock, 1987). The other two major disability income programs, veterans' benefits and workers' compensation, do not comprise a significant source of income for people with mental retardation (Braddock, 1987).

Disability Insurance and SSI, the two primary income transfers received by people with mental retardation, have undergone extensive changes in benefit levels and eligibility criteria over the past 2 decades (Social Security Administration, 1999a), and they exist within the wider fabric of American social policy. Debates about the scope and purposes of social welfare are hardly new in the United States (Danziger, 2001; Katz, 1997), but policy changes in the 1990s, notably welfare reform, had especially serious implications for people with disabilities.

These changes and the importance of income transfers to people with mental retardation were the impetus for this analysis as was the paucity of research conducted on the employment and social welfare program utilization of people with mental retardation (Yamaki & Fujiura, 2002).

The following questions are addressed: What is the scope of disability income transfer payments to people with mental retardation in the United States? How are the income supports received by people with mental retardation affected, or likely to be affected, by economic and political forces? How are welfare reform and income transfers connected? Very little research has been conducted on the employment and social welfare program utilization of people with mental retardation (Yamaki & Fujiura, 2002).

Overview of SSI and DI

Income transfer payments administered by the Social Security Administration are provided to people with mental retardation as part of the SSI and DI programs. Supplemental Security Income is a means-tested monthly income program for the elderly and people with disabilities; SSI eligibility for people with disabilities is predicated upon having a disabling condition that results in work incapacity. Individuals with earnings or unearned income are entitled to keep the first $85 of their income without reducing their monthly SSI payment. One-half of earnings above this level directly reduce SSI payments. Eligibility for SSI benefits is also predicated on individuals having resources that do not exceed $2000. Disability Insurance is an income replacement program for people with disabilities (and a subset of their family members) who previously worked and are no longer able to perform so-called substantial gainful activity, defined as monthly earnings over $740 in 2001. Individuals with earnings above this threshold are generally ineligible for benefits (Social Security Administration, 2000d). There are three categories of DI eligibility. Benefits can be paid to (a) adults who became disabled during childhood and who are the children of deceased, retired, or disabled workers; (b) widows and widowers of workers with disabilities; or (c) workers with disabilities themselves. In 2000, 11% of people with mental retardation who received DI did so on the basis of their own work histories (Social Security Administration, 2000b).

For 2001, the maximum monthly SSI benefit payment was $530 (Social Security Administration, 2000b), for an annual rate of $6,360. In 2001, the federal poverty threshold was $8,590 for one person (U.S. Department of Health, 2001). As such, the SSI payment level was approximately 25% below the federal poverty threshold. Twenty-six percent of children receiving SSI lived below the federal poverty level, and 51% of families with an adult SSI recipient lived below the federal poverty level. This indicates, of course, that parental income is critical in families in which a child receives SSI.

Benefits for DI recipients are also quite low. After receiving DI benefits, nearly 19% of families with a worker who had disabilities still lived below the federal poverty threshold (Mashaw, 2000). Disability Insurance benefit levels decline as former workers' earnings rise. For instance, a beneficiary whose annual earnings had been $14,000 will receive DI benefits of $7,420, a replacement rate of 53%. Workers who had previously earned $76,000 annually, however, have their benefits replaced at a rate of 24%, or $18,240 (Mashaw, 2000). People with mental retardation received average annual DI payments of $5,979 in 2000, which was 43% below the $8,563 average received by all beneficiaries. This is not surprising, given the lower earnings and employment rates of people with mental retardation (Yamaki & Fujiura, 2002) as compared to people with disabilities. Table 1 provides a summary of the basic provisions of the SSI and DI programs.

Table 1

Comparison of Supplemental Security Income (SSI) and Disability Insurance (DI)

Comparison of Supplemental Security Income (SSI) and Disability Insurance (DI)
Comparison of Supplemental Security Income (SSI) and Disability Insurance (DI)

The SSI and DI programs generally play a vital role in reducing recipients' poverty. Two thirds of SSI beneficiaries receive at least half of their total income from SSI, and Social Security is responsible for reducing the poverty gap for SSI recipients by an average of 60% (Grad, 2000).

Scope of SSI and DI Payments for People With Mental Retardation

Based on Social Security Administration data for December 1999 (Social Security Administration, 2000b), I estimate that approximately $20.64 billion was paid in SSI benefits to 4.5 million people with disabilities in the United States in fiscal year (FY) 2000. People with mental retardation comprised 23% of all SSI recipients with disabilities and received 32% of SSI payments, or $6.5 billion. They constituted 9% of all DI recipients with disabilities but received 7% of total payments, or $3.2 billion. Table 2 delineates the range and scope of disability income transfer payments to people with disabilities, specifically those with mental retardation, during FY 2000.

Table 2

Social Security Income Transfers (in $) for People With Disabilities, Fiscal Year 2000

Social Security Income Transfers (in $) for People With Disabilities, Fiscal Year 2000
Social Security Income Transfers (in $) for People With Disabilities, Fiscal Year 2000

The relative value of the number of beneficiaries must also be examined in light of the size of the total population. Using data from the National Health Interview Study, Larson, Lakin, Anderson, Kwak, and Lee (2001) estimated the national population with mental retardation to be .78% of the general, noninstitutionalized population. Although precise determinations of the number of people with disabilities are not possible, because prevalence calculations are generally flawed in some way, this estimate offers a useful metric for understanding the scope of income transfer payments. Using U.S. Bureau of the Census general population data (2001) and the Larson et al. (2001) prevalence rate of .78%, a lower bound estimate of the United States population with mental retardation was 2.13 million in 2000. How extensive, then, are income transfers for people with mental retardation? In 2000, approximately 50% of Americans with mental retardation received SSI benefits and 25%, DI payments.

In 1991, 11% of people with developmental disabilities were found to be dual SSI and DI beneficiaries (Yamaki & Fujiura, 2002). If their estimate was consistent for 2000, Figure 1 depicts the distribution of income transfers among (a lower bound estimate of) the population with mental retardation. At least 38% of the population with mental retardation in the United States did not receive disability income transfers in 2000.

Figure 1

Disability income transfers received by people with mental retardation, FY 2000 (in thousands of dollars)

Figure 1

Disability income transfers received by people with mental retardation, FY 2000 (in thousands of dollars)

Welfare Reform and the Temporary Assistance for Needy Families Program

In 1996, federal legislation ended Aid for Dependent Children (AFDC), the nation's longstanding welfare program, and created Temporary Assistance for Needy Families—TANF (Personal Responsibility and Work Opportunity Reconciliation Act, hereafter called PRWORA, PL 104-193). The AFDC was an open-ended entitlement program. Temporary Assistance for Needy Families is a block grant with strict work requirements for program participants, a 60-month lifetime limit on the receipt of benefits, and considerable state latitude in structuring the program (U.S. Department of Health, 2001).

The main thrust of welfare reform was to compel beneficiaries to work. Although PRWORA mandates beneficiary participation in work activities after receiving assistance for 2 years and limits receipt of benefits to 60 months, states can opt to impose stricter requirements and can sanction participants for noncompliance. States can also reduce the lifetime caps on receipt of benefits, and 20 implemented lifetime limits of 24 to 48 months (Grogger, 2001; Peterson, 2000). Federal regulations compel states to continue their 1994 funding (“maintenance of effort”) levels, yet any costs for families in excess of the 1994 level are borne solely by the states.

There is no debate that welfare reform reduced the number of people receiving cash assistance. Implementation of the reforms, coupled with the nation's strong economy, led to a 57% decline in the number of families across the United States, or nearly 7 million families (U.S. Department of Health, 2001).

Drawing on indirect evidence, there is good reason to believe that people with mental retardation and their families have been affected by welfare reform. First, 75% of people with mental retardation lived below 150% of the federal poverty level in 1991 (Yamaki & Fujiura, 2002), indicating these families were part of the poor targeted by welfare reform initiatives. Second, as estimated previously in this paper, at least 38% of the population with mental retardation did not receive disability income transfers in 2000, indicating many were in need of income support.

Welfare reform is likely to have had different implications for children and adults with mental retardation. For these children, there are two ways that their families were likely impacted by the law, either because their caregivers were compelled to work or their SSI eligibility was reviewed and possibly terminated.

Parents of children with mental retardation face many difficulties in maintaining employment, including the considerable needs of their child and a lack of available childcare for children with disabilities (Rosman, McCarthy, & Woolverton, 2001; Shearn & Todd, 2000). Childcare is critical in understanding the difficulties faced by parents of children with mental retardation. Poor families, overrepresented among those of children with mental retardation (Larson et al., 2000), pay for most childcare out-of-pocket, a burden that substantially contributes to their poverty (Meyers, Han, Waldfogel, & Garfinkel, 2001). In addition, most childcare costs among the poor are borne out-of-pocket (Lukemeyer, Meyers, & Smeeding, 2000; Meyers & Heintze, 1999), which is particularly expensive for families of children with disabilities. Welfare reform included provisions for childcare grants to the states, but fewer than 50% of people who exited welfare obtained childcare subsidies, and more than 40% were unaware that such subsidies existed (Schumacher & Greenberg, 1999).

Prior to enactment of welfare reform, the National Commission on Childhood Disability (1995) recommended exempting one parent of a child with disabilities from mandatory work requirements, excluding parents from eligibility limits for 2 years following a child's termination from SSI, and prohibiting states from counting children's SSI when assessing families' welfare eligibility. These recommendations were not included in the final law.

Under the old AFDC program, caregivers of people with disabilities were generally exempted from work requirements (Thompson, Holcomb, Loprest, & Brennan, 1998). Welfare reform, by contrast, allows states to exempt up to 20% of their welfare caseload from work requirements but gives states the discretion to establish more strict participation rules. Seventeen states broadened their work participation rules to include at least some people with disabilities and their caregivers, and an additional 13 states mandated universal participation, regardless of beneficiaries' disability status or caregiving responsibilities (Thompson et al., 1998).

Another critical component of the welfare reform law for children with mental retardation and their families was the constriction of child SSI eligibility requirements. The law established a new eligibility criterion that eliminated individualized functional assessments and prohibited eligibility based on maladaptive behavior. The new rules for disability determinations predicate child SSI eligibility on the existence of a disabling condition that causes “marked and severe functional limitations” (Social Security Administration, 1997a, p. 1). Using Social Security Administration (1997b, 1998, 1999b, 2000b, 2001) data, I calculated receipt of SSI by children with mental retardation and other disabilities during the 1996–2000 period (Figure 2). The consequences of SSI retrenchment associated with welfare reform have been particularly dire for children with mental retardation and their families. Between 1996–2000, the number of child SSI beneficiaries with mental retardation declined by nearly 76,000, or 22%. Over the same period, SSI receipt by children with all other disabilities declined by 12%. The decline in SSI receipt by children with mental retardation occurred in spite of a review begun in the fall of 1997 by the Social Security Administration for everyone with a primary diagnosis of mental retardation whose benefits had been terminated (Inkelas, Rowe, Karoly, & Rogowski, 1999).

Figure 2

Child SSI recipients, 1996–2000

Figure 2

Child SSI recipients, 1996–2000

To compensate for the loss of their children's SSI income, some parents entered the workforce or increased their work hours (Inkelas et al., 1999). Yet increased work activity did not prevent total income from declining for most families, some of whom received other forms of public assistance to compensate for the loss of SSI (Davies, Iams, & Rupp, 2000; Inkelas et al., 1999).

We must speculate on welfare reform's impact on adults with mental retardation because empirical studies have not been conducted for this group. Two potential outcomes seem likely: Adult welfare beneficiaries with mental retardation may have been diverted to SSI as their cash assistance was terminated, and they may be encountering difficulty meeting the work participation requirements of welfare reform. Some of the research conducted on poor women is instructive to this analysis.

The challenges confronting women trying to leave welfare and find work at living wages are numerous, including lack of affordable childcare, recipients' very low basic skills, substance abuse, disability, and domestic violence (Cancian, 2001; Cancian & Meyer, 2000; Danziger, 2001; Olson & Pavetti, 1996). Recently, Gault, Hartmann, and Yi (1998) reported that states may be reluctant to spend the necessary resources to shore up the supports needed by poor women and their families. Other researchers have found significant employment barriers related to policy implementation issues (e.g., “faulty policy logic, organizational and personnel incompetence, and inadequate inter- and intra-organizational coordination, are significantly more important than human or social capital concerns”—Iverson, 2000, p. 155). In their investigation of TANF implementation in Philadelphia, Iverson and her colleagues found that the infrastructure necessary to implement welfare reform was completely inadequate to the task.

Particularly important for people with mental retardation are recent findings that reductions in the welfare rolls are due to the economic expansion of the late 1990s and that employment does not necessarily result in self-sufficiency for other poor adults. Cancian and Meyer (2000) found that low income women improved their overall income after leaving welfare. However, they also found that for these women, periods of unemployment and part-time work were common. They further observed very low median wages among these women, who were unlikely to escape poverty after exiting welfare. These findings pose particular problems for welfare recipients with mental retardation. Welfare agencies lack experience serving people with disabilities, due to the previous work exemption of such individuals under the old AFDC program (Kramer, 1999), and welfare agencies are, therefore, ill-equipped to assist them, particularly those with cognitive limitations, overcome the barriers they face in securing employment. In addition, the kinds of low-paying positions the women who exited welfare obtained do not generally offer health insurance benefits, an urgent consideration for people with mental retardation.

Among those who remained on welfare, there is evidence that the levels of disadvantage were greater, including greater likelihood of disabilities and health problems and higher levels of domestic violence (Moffitt & Cherlin, 2002). Outcome analyses for individuals who left welfare have been mixed. Between 45% and 75% of former welfare recipients who left welfare were employed (Isaacs & Lyon, 2000; Parrott, 1999). However, their earnings were well below the federal poverty level (Parrott, 1999), indicating welfare reform may have ended cash assistance for many families, but it did not end their poverty (Danziger, 2001). The longer term employment prospects of those who left welfare seem more dismal. Within 6 months of leaving welfare, 10% to 28% of those who left returned, and up to 35% of those who left needed cash assistance within 12 months of first leaving (Isaacs & Lyon, 2000). These data are for all welfare leavers, not just those with disabilities or mental retardation, and they were collected during a time of economic prosperity. As such, people with mental retardation will likely have greater difficulty surviving without cash assistance, particularly during worse economic times.

To examine whether there was an expansion in receipt of SSI as adults with mental retardation left welfare, I calculated the longitudinal trend in receipt of SSI for adults during 1996–2000, using data from the Social Security Administration (1997b, 1998, 1999b, 2000b, 2001). As anticipated, the number of adult SSI beneficiaries with mental retardation increased considerably during this period. Between 1996 and 2000, the number of adult SSI beneficiaries with mental retardation increased by nearly 164,000, or 26%. Over the same period, SSI receipt by adults with all other disabilities increased by 11%. It is not clear if all of the expansion in adult SSI beneficiaries with mental retardation can be attributed to diversion to SSI from welfare, because the Social Security Administration reviewed all SSI terminations in which beneficiaries' primary diagnosis was mental retardation (Inkelas et al., 1999).

Healthcare Linkages

In the United States, public health insurance eligibility for people with disabilities is predicated on eligibility for income transfer programs. People with disabilities comprised 16% of total Medicaid recipients in 1998. Not surprisingly, given the generally higher healthcare costs for people with disabilities, greater resources were spent on their Medicaid use than for the rest of the Medicaid population. Spending for Medicaid recipients with disabilities comprised 42% of total Medicaid spending in 1998 (Social Security Administration, 2000b). In 1998, 13% of Medicare's total enrollment was for beneficiaries with disabilities; the remaining 87% were elderly. Beneficiaries with disabilities consumed slightly more than their proportionate share of Medicare program costs, at 14% of spending (Social Security Administration, 2000b).

Receipt of SSI, and the Medicaid health insurance that accompanies it, however, are inadequate for families trying to meet the disability-related costs of caring for their children. Families report that certain of their child's needs go unmet due to an inability to pay for services (General Accounting Office, 1999).

Welfare reform severed the eligibility links between Medicaid and receipt of cash assistance. Under the old AFDC program, families who received cash assistance were automatically eligible for Medicaid. The PRWORA required states to continue Medicaid for those who would otherwise have been eligible for cash assistance before passage of the law. However, the cessation of welfare benefits resulted in the loss of Medicaid for hundreds of thousands of families (Families USA Foundation, 1999; Schott & Mann, 1998). Although the U.S. Department of Health and Human Services directed states to conduct more aggressive outreach to families who are eligible for Medicaid (Westmoreland, 2000), undercoverage and uninsurance remain critical issues.

Return to Work and Employment Barriers for People With Disabilities

Barriers to work for people with disabilities include SSI and DI program components that impede return to work, difficulty determining who can work, and Social Security Administration's low prioritization of facilitating employment (General Accounting Office, 1996). The design and implementation of SSI and DI obstruct the identification and enhancement of beneficiaries' productive capacities. The General Accounting Office (1996, 1997) contends that the disability determination process itself, which forces claimants to prove they cannot work, is incompatible with return to work goals. Basing disability determinations on an impairment category presumes that certain disabling conditions automatically preclude work, despite widespread agreement that diagnoses are inadequate predictors of work ability (Mor, 1998).

Employer-sponsored health plans cover most nonelderly Americans (Employer Benefits Research Institute, 1998), and the relationship between work and health insurance underpins a key employment barrier for people with disabilities. The National Academy of Social Insurance has identified three critical issues that impede work for people with disabilities. First, employers may be reluctant to hire such people due to fears of increasing overall health premiums if coverage is extended to them. Second, work is not economically feasible for people with disabilities who cannot obtain health insurance on the open market because the premiums are too costly. Finally, gaps in private healthcare coverage can be significant for people with disabilities (Mashaw & Reno, 1996). Between 1988–1992, the number of people without health insurance increased by 5 million people. During this same period, coverage for chronic conditions declined in employer-sponsored health insurance (Daniels & West, 1998). Concerns about the loss of Medicare or Medicaid are an enormously important barrier to employment for people with disabilities As a result of the powerful link between healthcare and employment, the National Academy of Social Insurance (1996) has recommended the expansion of Medicare and Medicaid to allow low-income working people with disabilities to buy into the programs:

The Social Security disability benefit programs do not pose strong incentives for Americans with disabilities to seek benefits in lieu of working. Rather, the strict and frugal design of these programs makes remaining at work preferable to benefits for those who are able to work. … While neither DI nor SSI cash benefits pose strong incentives for Americans to seek these benefits in lieu of working, constraints on access to healthcare and related services can. (pp. 2, 4)

Advocates have argued that people with mental retardation encounter considerable barriers in obtaining work, and these barriers require careful policy approaches. People with mental retardation and their allies must be cautious about the loss of benefits that can accompany employment because their earned income is often insufficient to obviate their poverty (Yamaki & Fujiura, 2002). One state planning council (Illinois Planning Council, 1991) has argued:

The realistic fear of loss of eligibility for SSI and DI is a major barrier which prevents many individuals with developmental disabilities from becoming employed. … for those wage earners with developmental disabilities who require support services, the monetary value of such support services should not be counted as part of the individual's income when determining eligibility for services and benefits, and the maximum allowable income for services and benefit eligibility should be sufficiently high so as to reflect the increased cost of living borne by people who require services and/or adaptive equipment. (p.19)

One of the Social Security Administration's employment initiatives has been increasing the threshold “substantial gainful activity” level, which was raised from $500 in 1998 to $740 in 2001 (Social Security Administration, 2000c). This type of initiative, which allows beneficiaries to earn more income before losing benefits, may provide people who have mental retardation with income stability as they attempt to find permanent employment. The Social Security Administration also offers other incentives to assist SSI recipients return to work. Under Section 1619 of the Social Security Act, recipients who are otherwise eligible for SSI and whose earnings exceed the substantial gainful employment threshold can continue to receive Medicaid.

One long-standing component of the nation's return-to-work strategy for people with disabilities is vocational rehabilitation. Vocational rehabilitation departments, which exist in every state, spend joint federal–state funds to provide an array of employment and training services to people with disabilities. The use and impact of vocational rehabilitation is limited for people with disabilities who receive SSI or DI benefits. In 1993, 300,000 (4%) of the 7 million SSI and DI beneficiaries were referred for vocational rehabilitation, and 6,000 were rehabilitated (General Accounting Office, 1995). Neither vocational rehabilitation services nor the Social Security Administration's programs were significant factors in DI beneficiaries return to work (General Accounting Office, 1998). In 1997, a total of 58,358 people with mental retardation exited states' vocational rehabilitation systems; 48% did so with employment outcomes, including enclave or mobile crew positions (D. Teimouri, Rehabilitation Services Administration, personal correspondence, February 11, 2000).

The most recent legislative attempt to address employment issues for persons with disabilities was passage of the Ticket to Work and Work Incentives Improvement Act of 1999 (PL 106-170), which became effective in January 2001. The Ticket to Work Act contains two major sets of provisions that address barriers to employment. Under Title I of the Act, persons with disabilities can receive a “ticket” or voucher that enables them to purchase employment services from vendors, which include state vocational rehabilitation agencies as well as private providers. This portion of the Act also contains provisions that reward providers for better employment outcomes by paying enhanced rates.

The second title of the Act is intended to remove barriers that force persons with disabilities to choose between work and healthcare. States are given the option of providing Medicaid coverage to working persons with disabilities ages 16 to 64. States can opt to allow working individuals with disabilities whose incomes are above 250% of the poverty level to buy Medicaid coverage. This portion of the Act also creates a new Medicaid buy-in demonstration project funded at $250 million for FYs 2001 to 2006 and offers $150 million in federal funding for improvements to the Medicaid infrastructure.

Advocates with disabilities have hailed the new legislation as the first major attempt by Congress to address some of the serious barriers to employment that confront persons with disabilities. They have also expressed concerns that because much of the law's new provisions are optional, states will need to be pressured to adopt the new programs. The provisions in the Ticket to Work that expand eligibility for Medicaid to workers with disabilities are likely to discourage growth in DI and SSI because it addresses the healthcare–employment link that encourages persons with disabilities to keep their SSI or DI in order to keep their health insurance (Mashaw & Reno, 1996).

The Economic Context

By 2000, the unprecedented economic growth of the 1990s culminated in the lowest poverty rates since data collection began and the lowest unemployment rates in decades (Center on Budget, 2001). This widely heralded economic expansion affected different families in different ways, however. Economic growth disproportionately benefited the most wealthy Americans, and economic inequality reached its highest levels (Congressional Budget Office, 2001). Although income grew 51% for the wealthiest households, it grew 4% for the poorest families and the middle class during 1993–1997 (Congressional Budget Office, 2001).

We have no empirical evidence to indicate how people with mental retardation specifically fared during the economic boom of the 1990s. The strong economy would seem to have supported an expansion in their employment because low unemployment rates led to strong competition for labor. However, people with disabilities generally did not benefit in large scale from the economic expansion of the 1990s and seem likely to be particularly hard-hit in the recent economic downturn. As Burkhauser, Daly, and Houtenville (2000) noted:

Although economic expansion since 1992 has improved the economic well-being of most working-age people, the gains have been much smaller for working-age people with disabilities than for the rest of the working age population. Furthermore, although the gains through 1998 have returned the average person with a disability to his or her level of economic well-being in the peak year of the 1980s business cycle, the income of a large fraction of the population with disabilities in 1998 remained well-below that of their 1989 counterparts. Finally, we find that despite a robust economic expansion, men and women with disabilities became less involved in the labor market and more dependent on public transfers during the 1990s. (p. 3)

The structure of the nation's economy has fundamentally changed over the last few decades, and the impact on people with disabilities has been significant. The decline of the manufacturing sector has been accompanied by a rise in service industries and an increase in skilled, computer-reliant work (Mashaw & Reno, 1996). Technological advances have offered new opportunities to skilled people with physical disabilities, but the outcomes for people with cognitive limitations, such as mental retardation, are less auspicious, given the new emphasis on higher levels of education, flexibility, and intellect (Mashaw & Reno, 1996).

Welfare reform is widely being touted as having effectively reduced cash assistance for millions of Americans (U.S. Department of Health, 2001). What is also clear, however, is that welfare reform did not significantly reduce poverty in the United States (Danziger, 2001), and many families who exited welfare remain in serious economic hardship (Parrott, 1999). It is difficult to know what will happen to these families when they have exhausted their 60-month (or less) benefit limit, particularly if the demand for labor continues to be much lower than it was when welfare reform was enacted. Some evidence that severe deprivation is occurring as unemployment and the stoppage of benefits coincide has been reported anecdotally (Ehrenreich & Piven, 2002), but the implications for people with mental retardation and their families are not clear.

The current weak economy has implications for state budgets, which in turn have implications for welfare practices. As of April 2002, many analysts have forecasted a general improvement in the national economic outlook over the next few months (National Association of State Budget Officers, 2002). However, economic prospects for the states are much more bleak. State revenues are expected to continue to be depressed for at least another year (National Association of State Budget Officers, 2002) and will be under particular pressure from rising Medicaid costs. The crisis in the states, which must balance their budgets and cannot run deficits, is precipitating difficult decisions about cuts in spending, many of which are directed at social programs (National Association, 2002). The National Association of State Budget Officers has noted that states generally exempt the following programs from budget cuts in times of economic hardship: “education, Medicaid, debt service, public safety, and aid to towns and cities,” which results in disproportionate levels of burden on remaining programs, particularly given the “political pressure against tax increases” (National Association of State Budget Officers, 2002, p. 1).

Although state budget problems will not reduce the SSI or DI spending, because both are financed by the federal government, they may result in reductions in Medicaid or welfare spending. To control Medicaid spending, states have eliminated certain optional services, such as podiatry and dental care, among others (National Association). The 1996 welfare reform law compels states to continue their 1994 welfare spending levels, but there is evidence that states are not spending all the law intended on programs for the poor. A number of states have engaged in so-called supplantation, which redirects federal welfare payments to other programs, replacing existing state general revenue funds in those areas, instead of being directed toward welfare (Neuberger, Parrott, & Primus, 2002). The problem here, of course, is that the state fiscal crises, which compel budget cuts in social service programs, coincide with the exhaustion of welfare limits, at a time when more families are losing unemployment benefits than ever before (Center on Budget, 2002). For people with mental retardation and their families, who already are among the most impoverished and have the lowest employment rates, the outlook is bleak.

The Nation's Changing Demography

Changing demographic forces will exert important influence on the problems confronting policymakers in the years to come. The most significant of these include the aging of the nation, the population's increasing ethnic and racial diversity, and the changing structure of the American economy. The aging of the population, spurred by the baby boom generation, is the most pressing force that will shape the context of policy in the United States in the next decades. The leading edge of the baby boom will turn 65 in 2010, and the percentage of the elderly population will continue to increase for decades to come. There is considerable disagreement among economists and demographers of the eventual impact of this trend on American society. It is unclear how baby boomers will fare in terms of their long-term health and, therefore, the costs they will impose on the nation. Some have predicted that the federal budget will be strained as healthcare, retirement, and disability benefit costs soar (Lee & Skinner, 1999). Others have theorized that this cohort of older Americans are the healthiest, wealthiest, and most educated in history, and their lesser needs for healthcare, retirement, and disability benefits, coupled with productivity and tax revenue increases, will leave the nation unscathed (Lee & Skinner, 1999).

Projections formulated for Social Security's 2000 Trustee Report, using a moderate (as compared to a conservative or optimistic) set of assumptions, indicate that for the next decade, at least, DI assets at the beginning of the year will be adequate to fund projected expenditures. With 100% as an adequate level of assets as compared to projected expenditures, the DI program is expected to have 210% of expenditures in 2009. The number of DI beneficiaries is expected to steadily rise for the rest of the decade, peaking at nearly 8 million in 2010 (Donkar, 2000).

Significant concerns exist about the long-term financial viability of the Medicare and Social Security Trust funds as well. As the population ages, fewer workers are available to pay into the system, thereby creating a situation where depletion of the trust funds is possible. Current estimates indicate that barring Congressional action, the Medicare Trust fund will be depleted in 2025 (Social Security Administration, 2001). The Old-Age Survivors Disability Insurance Trust is estimated to be depleted in 2038, again barring Congressional action (Social Security Administration, 2001).

The outcome of these projected long-range shortfalls is far from clear. There is a notorious unwillingness in Congress to tamper with Social Security because such moves are considered to be politically dangerous due to the political power of the older population's lobby (Hager, 1993). Given the relatively even split that currently exists between the political parties in Congress, compromises will be difficult to negotiate. The shared power dynamic in Congress and the lobby may make it unlikely that difficult Social Security issues will be addressed.

There is sound evidence that the prospects for longevity are good, and baby boomers will experience a generally healthier old age, not added years of frailty and poor health. On the other side, there is also considerable evidence that barring Congressional action, the Medicare and Social Security trust funds will face significant fiscal problems early in this century, despite difficulties associated with making accurate long-term projections (Lee & Skinner, 1999).

Increasing diversity is also likely to strain the social service system, as attempts are made to address unmet needs of culturally and ethnically diverse groups. In 2000, racial minorities and Hispanics comprised 29% of the population. By 2050, this percentage is expected to grow to 47%, with the greatest growth coming from Hispanics (U.S. Census Bureau, 2000). Concerted efforts must be mounted to meet the needs of diverse populations. People from different cultures approach their service needs in various ways, and significant diversity exists regarding the definition of family, willingness to seek out-of-home placement, decision-making, permanency planning, and a host of other issues related to the support needs of individuals with mental retardation and their families (e.g., Heller & Factor, 1988; Magaña, 1999).

Conclusions

Two separate imperatives have been underscored. First, there is a great need for income transfer policies that are sensitive to the life situation of people with mental retardation and their families. Second, there is a clear need for expanded research on the implications and experiences of poverty for people with mental retardation and their families.

Existing disability income transfers, and their accompanying health insurance, are terminated if recipients work more than a limited amount. Yet, the cash payments offered under welfare reform are time-limited, and compulsory work provisions may pose extraordinary hardships for both adults with mental retardation and parents of children with mental retardation.

For adults with mental retardation, low employment rates are evidence of a low demand for their labor. For parents of children with mental retardation, their caregiving responsibilities may interfere with their ability to secure stable, long-term employment. The evidence presented here, and by other researchers, indicates that existing social policy is inadequate in mitigating the poverty and low employment facing many people with mental retardation and their families.

The need for increased research efforts is also critical. We cannot say with any certainty how poor adults and children with mental retardation are living, because little research has been conducted in this area. The present results demonstrate the need for a research agenda to answer two central questions: What are the support needs of impoverished families where an adult or child has mental retardation? How do present social policies constrain or facilitate the well-being and economic survival of poor families with a member who has mental retardation? Addressing these questions and understanding a host of complex issues related to the poverty experiences of people with mental retardation and their families will require a thoughtful research expansion.

Policymakers should consider the consequences of welfare reform on people with disabilities and their families. For adults with mental retardation, welfare reform reauthorization should include provisions to extend cash assistance in times of economic downturns, when the demand for their labor is likely to decline most dramatically. Their low rates of employment during economic recessions (Yamaki & Fujiura, 2002) coupled with low rates of receipt of disability income transfers, make them particularly vulnerable to economic hardship.

For poor families whose children have mental retardation, an extensive array of supports is required to facilitate their full workforce participation. Jobs are needed that can accommodate greater flexibility so parents can meet needs for medical appointments and therapy and a greater likelihood of child illness as well as their more extensive caregiving responsibilities. Expanded childcare resources are critical for these families, including access to subsidies and accessible childcare that meets the needs of children with disabilities in integrated settings. During an economic downturn, when states are compelled to take often extraordinary measures to balance their budgets, the expansion of needed resources is unlikely.

In this article some of the political and economic factors that influence the provision of income transfers have been explicated. Self-advocates, their families, allies, and policymakers will need to be vigilant to ensure that the economic vulnerability of people with mental retardation does not increase as the shifting priorities dictated by the economic recession, expanded service needs of older Americans, and anti-terrorism efforts consume increasing shares of the nation's resources.

Acknowledgments

NOTE:

The author thanks Amy Pomeranz Essley for her research assistance and appreciates the helpful comments of Steven Taylor and three anonymous reviewers on an earlier draft. Part of an earlier draft was prepared with David Braddock for the National Academy of Sciences' Committee on Disability Determination for Mental Retardation.

References

References
Burkhauser
,
R. V.
,
M. C.
Daly
, and
A. J.
Houtenville
.
2000
.
How working age people with disabilities fared over the 1990s business cycle.
Paper presented at the National Academy of Social Insurance Conference, Ensuring Health and Income Security for an Aging Workforce, Washington, DC
.
Center on Budget and Policy Priorities.
2002
.
Number of workers exhausting unemployment insurance benefits sets record level for a December.
Washington, DC: Author
.
Cancian
,
M.
and
D. R.
Meyer
.
2000
.
Work after welfare: Work effort, occupational and economic well-being.
Social Work Research
24
:
69
86
.
Center on Budget and Policy Priorities.
2001, September 26
.
Poverty rates fell in 2000 as unemployment reached 31-year low.
Washington, DC: Author
.
Congressional Budget Office.
2001
.
Historical effective tax rates, 1979–1997.
Washington, DC: Author
.
Daniels
,
S.
and
J.
West
.
1998
.
Return to work for SSI and DI beneficiaries: Employment policy challenges.
In K. Rupp & D. Stapleton (Eds.), Growth in disability benefits: Explanations and policy implications (pp. 359–371). Kalamazoo, MI: Upjohn Institute for Employment Research
.
Danziger
,
S.
2001
.
Welfare reform policy from Nixon to Clinton.
In D. Featherman & M. Vinovskis (Eds.), Social science and policy making (pp. 137–164). Ann Arbor: University of Michigan Press
.
Davies
,
P.
,
H.
Iams
, and
K.
Rupp
.
2000
.
The effect of welfare reform on SSA's disability programs: Design of policy evaluation and early evidence.
Social Security Bulletin
63
:
3
11
.
Donkar
,
E. N.
2000, December 15
.
The Social Security Disability Insurance Program: Projections for the coming decade.
Paper presented at the National Academy of Social Insurance Conference, Disability Income Policy: Opportunities and in the Next Decade, Washington, DC
.
Edgerton
,
R.
2001
.
The hidden majority of individuals with mild mental retardation and developmental disabilities.
In A. J. Tymchuk, K. C. Lakin, & R. Luckasson (Eds.), The forgotten generation: The status and challenges of adults with mild cognitive limitations (pp. 3–20). Baltimore: Brookes
.
Ehrenreich
,
B.
and
F. F.
Piven
.
2002, May/June
.
Without a safety net.
Mother Jones.
.
Employer Benefits Research Institute.
1998
.
Sources of health insurance and characteristics of the uninsured: Analysis of the March 1998 Current Population Survey, EBRI Brief No. 204.
Washington, DC: Author
.
Families USA Foundation.
1999, May
.
Losing health insurance: The unintended consequences of welfare reform.
Washington, DC: Author
.
Fujiura
,
G. T.
1998
.
Demography of family households.
American Journal on Mental Retardation
103
:
225
235
.
Gault
,
B.
,
H.
Hartmann
, and
H.
Yi
.
1998
.
Prospects for low-income mothers' economic survival under welfare reform.
Publius
28
:
175
193
.
General Accounting Office.
1995, March
.
Social Security: New functional assessments for children raise questions (General Accounting Office/HEHS-95–66).
Washington, DC: Author
.
General Accounting Office.
1996, April
.
Social Security Administration disability: Program redesign necessary to encourage return to work (General Accounting Office/HEHS-96-62).
Washington, DC: Author
.
General Accounting Office.
1997, March
.
Social Security: Disability programs lag in promoting return to work (General Accounting Office/HEHS-97-46).
Washington, DC: Author
.
General Accounting Office.
1998, January
.
Social Security Disability Insurance: Multiple factors affect beneficiaries' ability to return to work (General Accounting Office/HEHS-98-39).
Washington, DC: Author
.
General Accounting Office.
1999, June
.
SSI children: Multiple factors affect families' costs for disability-related services (General Accounting Office/HEHS-99-99).
Washington, DC: Author
.
General Accounting Office.
2000a, March
.
Medicaid managed care: Challenges in implementing safeguards for children with special needs (General Accounting Office/HEHS-00-37).
Washington, DC: Author
.
Grad
,
S.
2000, December 15
.
The role of disability benefits in the economic well-being of beneficiaries.
Paper presented at the National Academy of Social Insurance Conference, Disability Income Policy: Opportunities and Challenges in the Next Decade, Washington, DC
.
Grogger
,
J.
2001, March
.
The effects of time limits and other policy changes on welfare use, work, and income among female-headed families (Working paper 8153).
Cambridge, MA: National Bureau of Economic Research
.
Hager
,
G.
1993, January 2
.
Entitlements: The untouchable may become the unavoidable.
Congressional Quarterly Weekly Report
51
:
22
30
.
Heller
,
T.
and
A.
Factor
.
1988
.
Permanency planning among black and white family caregivers of older adults with mental retardation.
Mental Retardation
26
:
203
208
.
Illinois Planning Council on Developmental Disabilities.
1991, June
.
Policy statements of the Illinois Planning Council on Developmental Disabilities.
Springfield, IL: Author
.
Inkelas
,
M.
,
M.
Rowe
,
L.
Karoly
, and
J.
Rogowski
.
1999
.
Policy evaluation of the effects of the 1996 welfare reform legislation on SSI benefits for disabled children: First round case study findings.
Santa Monica, CA: Rand
.
Isaacs
,
J. B.
and
M. R.
Lyon
.
2000, August 1
.
A cross-state examination of families leaving welfare: Findings from the ASPE-funded leavers studies.
Paper presented at the conference of the National Association for Welfare Research and Statistics, Scottsdale, AZ
.
Katz
,
M.
1997
.
In the shadow of the poorhouse: A social history of welfare in America.
New York: Basic Books
.
Kramer
,
F. D.
1999
.
Serving welfare recipients with disabilities.
Issue Notes
3
/
1
:
1
15
. (
Published by the Welfare Information Network
).
Lakin
,
K. C.
1998
.
On the outside looking in: Attending to waiting lists in systems of services for people with developmental disabilities.
Mental Retardation
36
:
157
162
.
Larson
,
S.
,
K. C.
Lakin
,
L.
Anderson
,
N.
Kwak
, and
J. H.
Lee
.
2000
.
Prevalence of mental retardation or developmental disabilities: Analysis of the 1994/1995 NHIS-D. MR/DD Data Brief 1 (2).
Minneapolis: University of Minnesota, Research and Training Center
.
Larson
,
S.
,
K. C.
Lakin
,
L.
Anderson
,
N.
Kwak
, and
J. H.
Lee
.
2001
.
Prevalence of mental retardation or developmental disabilities: Estimates from the 1994/1995 National Health Interview Survey Disability Supplements.
American Journal on Mental Retardation
106
:
231
252
.
Lee
,
R.
and
J.
Skinner
.
1999
.
Will aging baby boomers bust the federal budget?
Journal of Economic Perspectives
13
:
117
140
.
Lukemeyer
,
A.
,
M. K.
Meyers
, and
T.
Smeeding
.
2000
.
Expensive kids in poor families: Out of pocket expenditures for the care of disabled and chronically ill children and welfare reform.
Journal of Marriage and the Family
62
:
399
415
.
Magaña
,
S. M.
1999
.
Puerto Rican families caring for an adult with mental retardation: Role of familism.
American Journal on Mental Retardation
104
:
466
482
.
Mashaw
,
J.
2000, December 15
.
The crucial but bounded role of disability income policy.
Paper presented at the conference of the National Academy of Social Insurance, Disability Income Policy: Opportunities and Challenges in the Next Decade, Washington, DC
.
Mashaw
,
J.
and
V.
Reno
. (
Eds.
).
1996
.
Balancing security and opportunity: The challenge of disability income policy. Report of the Disability Policy Panel.
Washington, DC: National Academy of Social Insurance
.
Meyers
,
M. K.
,
W. J.
Han
,
J.
Waldfogel
, and
I.
Garfinkel
.
2001
.
Child care in the wake of welfare reform: The impact of government subsidies on the economic well-being of single-mother families.
Social Service Review
75
:
29
59
.
Meyers
,
M. K.
and
T.
Heintze
.
1999
.
The child care subsidy shortfall: Is the subsidy system working?
Social Service Review
73
:
37
64
.
Moffitt
,
R.
and
A.
Cherlin
.
2002, February
.
Disadvantage among families remaining on welfare.
Paper presented at Joint Center for Poverty Research Conference The Hard to Employ and Welfare Reform, Washington, DC
.
National Association of State Budget Officers.
2002, March 25
.
Budget shortfalls: Strategies for closing spending and revenue gaps.
Washington, DC: Author
.
National Commission on Childhood Disability.
1995, October
.
Supplemental Security Income for children with disabilities: Report to Congress.
Washington, DC: Author
.
Neuberger
,
Z.
,
S.
Parrott
, and
W.
Primus
.
2002, February 7
.
Funding issues in TANF reauthorization.
Washington, DC: Center on Budget and Policy Priorities
.
Olson
,
K.
and
L.
Pavetti
.
1996
.
Personal and family challenges to the successful transition from welfare to work.
Washington, DC: Urban Institute
.
Parrott
,
S.
1999
.
Welfare recipients who find jobs.
Washington, DC: Center for Law and Social Policy
.
Peterson
,
J.
2000
.
Welfare reform and inequality: The TANF and UI programs.
Journal of Economic Issues
34
:
517
526
.
Prouty
,
R. W.
,
G.
Smith
, and
K. C.
Lakin
.
2001
.
Residential services for people with developmental disabilities: Status and trends through 2000.
Minneapolis: University of Minnesota, Research and Training Center on Community Living
.
Rosman
,
E.
,
J.
McCarthy
, and
M.
Woolverton
.
2001
.
Child care: Adults with mental health needs and children with special needs.
Washington, DC: Georgetown University, Child Development Center
.
Schott
,
L.
and
C.
Mann
.
1998
.
Assuring that eligible families receive Medicaid when TANF assistance is denied or terminated.
Washington, DC: Center on Budget and Policy Priorities
.
Schumacher
,
R.
and
M.
Greenberg
.
1999
.
Child care after leaving welfare: Early evidence from state studies.
Washington, DC: Center for Law and Social Policy
.
Shea
,
M.
1995
.
Dynamics of economic well-being: Poverty, 1990 to 1992. U.S. Bureau of Census, Current Population Reports, Household Economic Studies, Series P70-42.
Washington, DC: U.S. Government Printing Office
.
Shearn
,
J.
and
S.
Todd
.
2000
.
Maternal employment and family responsibilities: The perspectives of mothers of children with learning disabilities.
Journal of Applied Research in Intellectual Disabilities
13
:
109
131
.
Social Security Administration.
1997a
.
Welfare reform and SSI childhood disability.
Washington, DC: Author
.
Social Security Administration.
1997b
.
Annual statistical supplement, 1996.
Washington, DC: Author
.
Social Security Administration.
1998
.
Annual statistical supplement, 1997.
Washington, DC: Author
.
Social Security Administration.
1999a, March 11
.
Social Security and Supplemental Security Income Disability programs: Managing for today, planning for tomorrow.
Washington, DC: Author
.
Social Security Administration.
1999b
.
Annual statistical supplement, 1998.
Washington, DC: Author
.
Social Security Administration.
2000a
.
Social Security Administration's revisions to the listing of impairments—An update (Office of Disability, Pub. No. 64-040, Issue III-2000, No. 27).
Disability Notes, 2. Washington, DC: Author
.
Social Security Administration.
2000b
.
Annual statistical supplement, 1999.
Washington, DC: Author
.
Social Security Administration.
2000c
.
Cost-of living increase and other determinations for the year 2001.
Federal Register
65
:
63663
63668
.
Social Security Administration.
2000d
.
Final rules.
Federal Register
65
:
82905
82912
.
Social Security Administration.
2001
.
Status of the Social Security and Medicare programs: A summary of the 2001 annual reports.
Washington, DC: Author
.
Thompson
,
T. S.
,
P. A.
Holcomb
,
P.
Loprest
, and
K.
Brennan
.
1998
.
State welfare-to-work policies for people with disabilities: Changes since welfare reform.
Washington, DC: Urban Institute
.
Tymchuk
,
A. J.
,
K. C.
Lakin
, and
R.
Luckasson
.
2001
.
Life at the margins: Intellectual, demographic, economic, and social circumstances of adults with mild cognitive limitations.
In A. J. Tymchuk, K. C. Lakin, & R. Luckasson (Eds.), The forgotten generation: The status and challenges of adults with mild cognitive limitations (pp. 21–38). Baltimore: Brookes
.
U.S. Census Bureau.
2000
.
Projections of the resident population by age, Hispanic origin, and nativity: Middle series.
Washington, DC: Author
.
U.S. Department of Health and Human Services.
2001, March
.
Indicators of welfare dependence: Annual report to Congress.
Washington, DC: Assistant Secretary for Planning and Evaluation
.
Westmoreland
,
T.
2000, April 7
.
Letter to state Medicaid directors: Regarding efforts to improve eligible families' ability to enroll in Medicaid [Available at: http://www.hcfa.gov/medicaid/letters/smd40700.htm]
.
Yamaki
,
K.
1999
.
Employment and income status of adults with developmental disabilities living in the community.
Unpublished doctoral dissertation, University of Illinois at Chicago
.
Yamaki
,
K.
and
G. T.
Fujiura
.
2002
.
Employment and income status of adults with developmental disabilities living in the community.
Mental Retardation
40
:
132
141
.

Author notes

Author: Susan L. Parish, PhD, School of Social Work, University of North Carolina-Chapel Hill, 301 Pittsboro St., CB 3550, Chapel Hill, NC, 27599-3550. parish@email.unc.edu