Federal policies keep people with disabilities in a 'poverty trap,' say Cornell experts in urging major reforms

David Stapleton

Although the federal government spends some $87 billion a year on income support for people with disabilities, "today's obsolete policies" force many people with disabilities, whether they work or not, into a "poverty trap." Major policy reforms, therefore, are needed, asserts a trio of Cornell University experts.

Under federal rules, people with disabilities must be unemployed in order to receive benefits. But the support they receive isn't enough to keep them out of poverty. If they do work to supplement their income, they are penalized by losing benefits. "Those with the lowest incomes lose 50 cents for every dollar they earn. That's a higher tax rate than Bill Gates pays," said David Stapleton, director of the Cornell University Institute for Policy Research (CUIPR).

Working-age Americans with disabilities are more than twice as likely to live in poverty than other Americans, Stapleton said, and only half as likely to be employed.

"And the poverty rates of those with disabilities have stayed high during the great economic expansion of the 1990s," he said. "People with disabilities, as a whole, did not benefit from that expansion, unlike other Americans."

A major reason is that today's income-support policies are built on the "outdated premise" that people with disabilities cannot work and must rely on others for support, said Stapleton, a co-author of a new policy paper, "Dismantling the Poverty Trap: Disability Policy for the 21st Century." The paper spells out how current policies create disincentives for people with disabilities to work.

Patricia Podufalski
Kevin Stearns/University Photography
Patricia Podufalski, a financial transaction specialist with the university's Business Service Center, has been in a wheelchair since age 17. She has not applied for and does not receive any disability benefits.

For example, if a person with a disability collects Supplemental Security Income (SSI) but then gets a job, benefits are reduced by one dollar for every two dollars earned. "Many also face reductions in food stamps, housing subsidies and other assistance as their earnings increase," Stapleton said, "and some risk loss of their public health insurance.

"So many people with disabilities -- especially those with relatively limited skills -- can work, receive wages, perhaps obtain some in-kind supports and live in or near poverty. Or, they can severely limit their work, navigate the support system and receive income and in-kind benefits that also leave them in or near poverty," Stapleton said. "They are trapped; there is no option that gets them out of poverty."

Policies must be overhauled, he asserted, so that the benefits that low-wage beneficiaries receive are reduced more gradually and that some in-kind supports make employment pay off.

Stapleton and his co-authors make a dozen recommendations for reforming policies so that they promote, instead of undermine, economic self-sufficiency.

Their recommendations include moving toward a functional definition that separates disability from a presumed inability to work and assuming that many eligible individuals can and want to work to contribute to their support. Other recommendations include coordinating benefits, providing incentives for learning how to improve financial literacy and making assistive technology -- devices, materials and services that make the environment more accessible or improve quality of life -- available to those who need it, whether they work or not. Other co-authors on the policy paper are research associates Bonnie O'Day and Gina Livermore with CUIPR and Andrew Imparato, chief operating officer of the American Association of People with Disabilities.

CUIPR, which was established in 2000 and is located in Washington, D.C., is a collaborative effort of Cornell's vice provost for sponsored research, the College of Human Ecology and the School of Industrial and Labor Relations and collaborates on disability research with faculty in the Department of Policy Analysis and Management and researchers in the Employment and Disability Institute. The research on disability policy is supported by that National Institute for Disability and Rehabilitation Research.


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