The SSDI “Benefit Offset” Experiment: Landing the Pilots

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Abstract:
The Social Security Disability Insurance (SSDI) program includes transitory incentives that promote the return to work by beneficiaries, but after these incentives end, beneficiaries lose their entire disability benefit for the first dollar earned above a monthly level termed “Substantial Gainful Activity” (SGA). It is widely presumed that this ―cliff‖ restrains employment among beneficiaries. Congress included requirements within the Ticket to Work and Work Incentives Improvement Act of 1999 for a demonstration project that examines the costs and benefits of replacing (―offsetting‖) the SGA cliff with a more gradual reduction in benefits: the SSDI benefit is to be reduced by $1 for every $2 earnings beyond that threshold. Skeptics questioned the ability of the Social Security Administration to administer such an experiment, and even SSA stakeholders acknowledged that conducting the experiment within the context of regular SSA operations posed substantial design and management challenges. SSA launched a pilot project intended to provide experience with new benefit offset administration procedures as well as with the conduct of a randomized trial of the new program. Volunteers for the experiment were recruited from beneficiaries likely to be in the process of returning to work in order to ensure that the pilot would produce experience administering the new program. However, this target group also poses the most serious cost issues because many of them would return to work even in the absence of the incentive and thus would receive a partial benefit under the new program instead of no benefit under the current program. This paper reviews challenges faced in implementing the pilot and the results. The pilot ―delivered‖: Random assignment was completed successfully and the revised benefits computation system was successfully performed for the treatment group, albeit with some informative missteps. The offset produced an increase in the prevalence of earnings above SGA. However, it also increased benefit payments because the savings generated from increases in employment above SGA were smaller than the costs of partial benefit payments to those who would have worked above SGA under the existing program rules. The outcomes underscore the need for a larger experiment that includes a representative sample of all SSDI beneficiaries. Such an experiment, called the Benefit Offset National Demonstration (BOND), will begin in 2011.

Suggested citation:
Wiseman, Michael, Weathers, Robert, and Hemmeter, Jeffrey. “The SSDI Benefit Offset Experiment: Landing the Pilots.” Paper prepared for the Fall 2010 Conference of the Association for Public Policy Analysis and Management, Boston, MA, November 4-6, 2010.

Poverty in the US and the UK: Relative Measurement and Relative Achievement

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Abstract
By the government’s official measure, 18 percent of children in the United States were living in poor families in 2007. In the United Kingdom, where the Labour party has set a 2010 goal to reduce child poverty by 2010 to half the level observed in 1998/99 (and a 2020 goal to eliminate it), the official measure for 2006/2007 was 22 percent. While it may appear at first that US children are in a better position, this is misleading because of differences in procedures for measuring poverty in the two countries. Poverty in the UK is assessed by comparing a broadly defined measure of household income to a threshold amount equal to the 30th percentile of the overall income distribution. When a similar approach is used for US data, the estimated child poverty rate rises to 29 percent. It is likely that the new US administration will alter current procedures for poverty assessment in the US, and UK methods would be usefully studied. At the same time, the UK would benefit from study of American survey procedures and reform proposals.

Suggested citation
Wiseman, Michael, and Shwalb, Rebecca. “Poverty in the US and the UK: Relative Measurement and Relative Achievement.” Paper prepared for the 30th Annual Research Conference of the Association for Public Policy and Management, Los Angeles, CA, November 6-8, 2008.

Opening Up American Federalism: Improving Welfare the European Way

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Abstract
The European Union is experimenting with using an Open Method of Coordination (OMC) for pursuing common social policy objectives in the context of the demographic, economic, and institutional diversity of Member States. OMC involves jointly developed and monitored procedures for benchmarking Member State accomplishments, developing goals for improvement, planning action, and assessing achievement. While American federalism differs from EU governing structures, OMC procedures appear applicable to problems of governance in various US social programs. This is illustrated by outlining changes that might occur were OMC procedures applied to joint federal-state management of the High Performance Bonus in the Temporary Assistance for Needy Families program. OMC techniques would help clarify program objectives, encourage performance orientation, and identify successful practices.

Suggested citation
Wiseman, Michael, and Walker, Robert. “Opening Up American Federalism: Improving Welfare the European Way.” Manuscript, January 4, 2006.