About one-third of the workforce has twice the risk of disability as the other two-thirds. So what drives these people to work in such risky occupations? And how does this affect the Social Security Disability Insurance (SSDI) program?
Economist David Wiczer of the St. Louis Fed and Assistant Professor Amanda Michaud of Indiana University in Bloomington examined these questions in an article in The Regional Economist. Using the University of Michigan Health and Retirement Study, they grouped workers by their primary lifetime occupations, then computed the fraction who reported some difficulty with one of the Activities of Daily Living (ADLs) during their working life before age 65.1
Wiczer and Michaud found that most workers belonged to a group that had low disability rates. However, another group of occupations had workers who were twice as likely to have had some disability. The table below shows samples of risky and safe occupations.
Wiczer and Michaud noted that those in high-risk occupations were more likely to apply for and receive SSDI. In fact, 21 percent of the workers in riskier occupations received SSDI benefits versus 12 percent from other occupations.
The authors found that workers in riskier occupations, while less educated than those in safe occupations, were paid relatively well. After controlling for education and other demographics, workers in risky occupations made $5,000 more per year compared with workers with similar education and demographic characteristics.
However, these workers also had lower savings than those in safer occupations. Wiczer and Michaud noted, “From the perspective of a simple theory of precautionary savings, this was puzzling: If workers in certain occupations faced a much higher risk of disability, with its corresponding loss of income and increased expenses, we would expect them to save a larger fraction of their income.”
They offered one potential explanation that people in risky occupations may simply put a higher value on their current welfare, which would explain two aspects of this puzzle if true:
The authors noted that understanding the reasons that people work risky jobs is important for the design and assessment of the SSDI program:
Ultimately, Wiczer and Michaud concluded that more research is needed: “Although the rolls of those receiving disability benefits have been rising quickly, we do not have a good benchmark for what should be their optimal size, nor do we know the effects of the availability of disability insurance on individuals in the job market.”
1 ADLs are basic self-care activities such as eating, bathing, dressing and walking across a room.
The St. Louis Fed uses Disqus software for the comment functionality on this blog. You can read the Disqus privacy policy. Disqus uses cookies and third party cookies. To learn more about these cookies and how to disable them, please see this article.
Get notified when new content is available on our On the Economy blog.
The St. Louis Fed On the Economy blog features relevant commentary, analysis, research and data from our economists and other St. Louis Fed experts.
Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.
For media-related questions, email mediainquiries@stls.frb.org. For all other blog-related questions or comments, email on-the-economy@stls.frb.org.
- Vulgar, obscene, profane or otherwise disrespectful or discourteous
- For commercial use, including spam
- Threatening, harassing or constituting personal attacks
- Violating copyright or otherwise infringing on third-party rights
- Off-topic or significantly political
The St. Louis Fed will only respond to comments if we are clarifying a point. Comments are limited to 1,500 characters, so please edit your thinking before posting. While you will retain all of your ownership rights in any comment you submit, posting comments means you grant the St. Louis Fed the royalty-free right, in perpetuity, to use, reproduce, distribute, alter and/or display them, and the St. Louis Fed will be free to use any ideas, concepts, artwork, inventions, developments, suggestions or techniques embodied in your comments for any purpose whatsoever, with or without attribution, and without compensation to you. You will also waive all moral rights you may have in any comment you submit.