Puzzle of heads

Disability Applications Spike in Recession

During the Great Recession, the record numbers of Americans who applied for disability included many people who lost their jobs – and it might happen again as the COVID-19 recession plays out.

A 2018 study estimated that 1 million people applied who would not have done so if there hadn’t been a recession. By October 2009, as the jobless rate was peaking, the additional applicants increased the total applications to the U.S. Social Security Administration by 16.5 percent.

The average age of these applicants was 53, and they tended to have impairments that were musculoskeletal or cognitive in nature. Because these impairments are less severe, they were more likely to be denied benefits, often resulting in an appeal.

In contrast, the people who would’ve sought disability benefits even in a strong economy tended to have serious medical conditions such as Crohn’s or chronic kidney disease that usually qualify them automatically under the disability program’s vetting system.

Ultimately, among the applicants who applied in response to the recession, 42 percent were awarded benefits, according to the study funded by the Social Security Administration and based on an analysis of the agency’s disability records.

When they did receive benefits, they were more often awarded on the basis of having a functional limitation and no transferable skills. As a result, many people who used to work were nevertheless approved for benefits, because their options for transferring their skills from their old job to a new job were limited.

Adding so many people to the disability system carried a steep price in terms of an increase in administrative and benefit costs. But the formerly productive workers also paid a price.

“Once people qualify” for disability benefits, the researchers said, “they rarely re-enter the labor force.” …Learn More

Cars in line at a food back in Austin Texas

Money, Virus Angst Combine for Low-Paid

There’s COVID-19 stress, and then there’s money stress. The combination of the two is becoming too much for many low-income workers to bear.

Two out of three people in families that earn less than $34,000 a year told the U.S. Census Bureau in April that they are “not able to control or stop” their worrying several days a week or more. The feelings are the polar opposite for families earning more than $150,000: two out of three of them said they are not worried at all.

The daily blast of pandemic news has pushed U.S. inequality into the spotlight, exposing the financial pressures low-income Americans are dealing with. Despite the unprecedented $3 trillion in financial assistance passed by Congress, the anxiety was probably a contributing factor in the protests that erupted in dozens of U.S. cities last week.

When governors shut down their economies to control the pandemic, the lowest-income workers – disproportionately African-American and Latino – had barely recovered from the previous recession. Yet nearly half of the increase in incomes for all U.S. families over the past decade has gone to the 1 percent of families with the highest earnings. One glaring example of this disparity is homeownership, which is usually the largest form of wealth by the time people reach retirement age. Homeownership rates across the board declined after the financial crisis, but African-American and Latino rates fell more and are still below 2007 levels.

Low-income workers are now bearing the brunt of the current downturn. Economists estimate the true U.S. unemployment rate could be as high as 20 percent. The layoffs have been concentrated among low-wage workers: nearly 40 percent of people living in households earning less than $40,000 have lost their jobs.

The fundamental challenge of surviving from day to day is evident in the miles-long lines of cars at some U.S. food banks. About a third of Americans are having problems paying for all kinds of essentials – rent, utilities, or food – but the number rises to almost half for African-Americans and Latinos, according to a Kaiser Family Foundation poll in mid-May. Children are being disproportionately impacted by rising food insecurity.

Spotty health care coverage is another layer of stress. Workers on the front lines in nursing homes, meat processing plants and grocery stores are more at risk of contracting COVID-19 but less likely to have health insurance from their employers. They may avoid seeing a doctor, even if they have symptoms, out of fear of being unable to afford the charges. …Learn More

Home Care Reform’s Outcome a Surprise

Image of nursing home staff

Medicaid pays for care for six out of 10 nursing home residents.

To reduce the program’s costs, the Affordable Care Act (ACA) encouraged states to expand the care that people over 65 can receive in their homes or through community organizations. The hope was that they would delay or – even better for them – avoid moving into a nursing home if they had easier access to medical and support services.

Many states historically did not use Medicaid funding to pay for home care. The ACA’s Balancing Incentive Payments Program required the 15 states that chose to participate in the reform, including Nevada, Texas, Florida, Illinois, and New York, to increase spending on home and community care to half of their total Medicaid budgets for long-term care. By the end of the program, the states had met their goals of more balanced spending on home care versus nursing home care.

But four years after the reform went into effect in 2011, the states’ nursing home population had not changed, compared with the states that did not expand their services, according to a University of Wisconsin study for the Retirement and Disability Research Consortium. The researchers said one possible reason the reform didn’t reduce nursing home residence was that people who were never candidates for this care were the ones taking advantage of the alternative forms of care.

The analysis did find other unintended consequences of the shift in Medicaid funds to home and community care. First, somewhat more older people moved out of a family member’s house and were able to live on their own.

Second, as more people moved into their own place, costs may have increased for a different federal program: Supplemental Security Income (SSI) for low-income people. The increase had to do with how this program calculates financial assistance. SSI’s monthly benefits are based on an individual’s income. When retirees decide to live on their own, the housing, meals and other supports the family once provided are no longer counted as income. The drop in a retiree’s income means a bigger SSI check.

On the other hand, the Medicaid reform may have financial benefits for caregiving families, the researchers said.

The greater availability of home and community care for seniors – whether they live with family or on their own – frees up time for their family members to earn more money at paying jobs. …
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Photo of preschoolers playing

Moms of Kids with Disabilities Get Help

Finding child care is difficult for any working parent. It is an even bigger challenge when the child has a disabling condition.

About 1.2 million children under the age of six in the United States are disabled. A new study suggests that federal child care programs may be helping to keep their mothers employed either by meeting their need for care through programs like Head Start or by subsidizing their child care expenses. These supports are particularly important to low-income, single mothers in precarious financial situations.

Preschool children with disabilities were actually more likely to have regular care – at least 10 hours per week – than children without disabilities. And although disabled children’s care arrangements were more likely to be part-time – as was their mother’s employment – they had higher rates of enrollment in child care centers, rather than being in a relative’s care. In the best situations, the centers provide the specialized care these children need.

Their child care costs were also significantly lower, perhaps due to the federal subsidies. For example, families of four-year-olds with disabilities spend less, on average, than the families of children without disabilities, according to research for the Retirement and Disability Research Consortium.

Mothers who stay home to care for infants usually start migrating back to work when the children become toddlers or are approaching kindergarten age.

The researchers gauged the effectiveness of the federal child care programs for disabled preschoolers by comparing their mothers’ employment patterns with other working mothers. The analysis, based on data from U.S. Department of Education interviews with parents, found that both groups had similar changes in their work behavior during these challenging early years.

Federal child care policies, the researchers concluded, “may be adequately supporting employment for parents of children with disabilities.” …Learn More

Nursing home sign

How COVID-19 Spreads in Nursing Homes

The coronavirus has pulled back the curtain on longstanding problems in nursing homes. In 2014, the Inspector General for the U.S. Department of Health and Human Services had reported that more than one in five seniors in skilled nursing facilities experienced “adverse events.” These included poor medical care, patient neglect, and inadequate infection control, which frequently sent residents to the hospital.

Now, some nursing homes have become COVID-19 hotspots. This has contributed to disproportionate numbers of deaths among people over age 70, who may also have weakened immune systems that make them more susceptible to the virus or underlying medical conditions that increase their mortality rate.  

Anthony Chicotel, a staff attorney with California Advocates for Nursing Home Reform, discussed what he’s seen in nursing homes in the months since the pandemic began.  

Briefly, Tony, name the big three underlying problems you feel caused the virus to spread. 

Chicotel: No. 1 is chronic understaffing to meet the needs of the residents and to perform all the basic functions required every day. No. 2 would be a tolerance for poor infection control practices. This flows from No. 1 because good infection control requires time, and it’s one of the things that gets cut when you’re pressed for time. No. 3 might be the practice of staff working in multiple facilities. Because they are often low-paid, it’s not unusual for them to work for two different companies that do nursing home care, or they might also work for an assisted living provider. This cross-pollination contributes to the spread of the virus among facilities. We’ve also learned that most of the staff who had the coronavirus have been asymptomatic.

The problems in nursing homes are not new?

Chicotel: I think we should’ve anticipated this. Coronavirus has brought all this out into the open but the Centers for Disease Control cites a a pre-pandemic study that found that up to 388,000 nursing home residents die each year resulting from poor control of infections such as Methicillin-resistant bacteria (MRSA) and urinary tract and respiratory infections. We’ve just accepted this staggering breakdown of infection control for a long time. I’m an advocate, and it wasn’t something I really focused on either. It’s been begging to be addressed in a significant way for some time.

Talk about infection control. In this pandemic, everyone is aware that hand washing is critical to stopping the virus. You cited a report by the Centers for Medicare and Medicaid Services (CMS) that 36 percent of long-term care facilities do not comply with hand-washing protocols and 25 percent do not comply with protocols for personal protective equipment (PPE).  Learn More

Lost Wealth Today vs the Great Recession

For older workers starting to think about retiring, the economic maelstrom the coronavirus set in motion is a reminder of that sinking feeling they experienced just over a decade ago.

In 2008, the stock market plunged nearly 40 percent, accelerating the steep decline that was underway in U.S. house prices. The unfolding 2020 recession is playing out differently. But both downturns have one thing in common: Social Security as a stabilizing influence on older workers’ retirement finances.

Baby Boomers lost wealthA 2011 study of the change in baby boomers’ finances during the Great Recession found that total wealth dipped by 2.8 percent, on average, between 2006 and 2010 for households between ages 51 and 56.

The 2.8 percent decline in wealth at the time was a significant setback for baby boomers. In more normal times, earlier generations had increased their wealth by 3 percent to 8 percent at comparable ages.

Nevertheless, things could have been so much worse for baby boomers were it not for the substantial wealth they had built up over several decades in their future Social Security benefits – an amount that is unaffected by the collapse of financial and housing markets. The average value of these future Social Security benefits was 30 percent of boomers’ wealth.

Wealth in the study also included home equity and retirement plan accounts.

This time around, it’s too early to determine the severity of the downturn’s effects on older workers. Unlike the previous recession, though, this one has had little impact on house prices so far, and the stock market, after sinking in March, has regained about half of its losses thanks to aggressive action by the Federal Reserve.

The major worry is unemployment. The jobless rate approached 15 percent in March – well above the 2009 peak of 10 percent – and economists expect it to keep rising.

But, in any recession, Social Security is a stabilizing force. Today, it represents a large share of older workers’ wealth just as it did a decade ago. And lower- and middle-income workers’ benefits are a much larger share of wealth, because they are far less likely to have substantial assets in 401(k)s. …Learn More

The Profound Financial Pain of COVID-19

It was hard to miss the news last year that four out of 10 people couldn’t come up with $400 if they had an emergency. The coronavirus is that emergency – on steroids.

A wave of new surveys asking Americans about their personal finances reveal the depth of a crisis that has suddenly befallen untold numbers of people. And the worst, economists say, is probably still ahead of us.
Financial Stress chart
As of last week, 36.5 million people had filed for unemployment benefits, and that doesn’t include some workers who were furloughed or have not yet been able to file their applications for benefits. The Federal Reserve said nearly 40 percent of people living in households earning less than $40,000 have lost their jobs.

As the virus tore through the country in April, most adults cited a lack of savings as the reason for their financial stress in a survey by the National Endowment for Financial Education.

What many people have, instead, is debt. In recent years, consumers loaded up on credit card and other debt – for bigger houses, new cars, vacations. This is what people do when the job market is strong and confidence is riding high. …Learn More