Jun 2, 2010 - The authors analyzed data from the 2001 Survey of Income and Program Participation. (SIPP) to determine the extent of a disability-based net ...
Assets and Income: Disability-based Disparities in the United States Susan L. Parish, Michal Grinstein-Weiss, Yeong Hun Yeo, Roderick A. Rose, and Arie Rimmerman The authors analyzed data from the 2001 Survey of Income and Program Participation (SIPP) to determine the extent of a disability-based net worth and income gap among U.S. households.The sample included 4,154 households with an adult with disabilities and 12,365 households without an adult with disabilities. Households with an adult with disabilities had substantially reduced net worth and income as contrasted with households without adults with disabilities, regardless of family structure (married couple, single women, or single men). Policy implications are discussed. Key words: assets; disabilities; income
gap; Survey of Income and Program Participation
A
ssets are resources that families can use to invest for long-term economic and social well-being (Shapiro & Wolff, 2001; Sherraden, 1991). Assets such as homes, saving accounts, and business equity provide stability and offer a cushion in difficult times. Accumulation of assets facilitates long-term financial well-being as well as opportunities for social mobility and increased political participation and power (Building Assets, 2005; Wolff & Zacharias, 2007). There is disturbing evidence of asset inequality in the United States. Recent research found that the top 20% of U.S. income earners hold more than 80% of all U.S. wealth, and the bottom 40% of U.S. income earners hold less than 5% of all U.S. wealth (Wolff, 2004). Moreover, net worth trends suggest that wealth increases have occurred at the top of the income distribution. Although both median and mean net worth increased between 2001 and 2004, median income increased 1.5% compared with the 6.3% increase in mean net worth. As such, the wealthiest households gained much of this increase (Bucks, Kennickell, & Moore, 2006). At the other end of the income distribution, the poorest 15% of households have zero or negative net worth (Caner & Wolff, 2004). Millions of U.S. families have few or no assets. The United States has traditionally used an array of tools to help low-income households. U.S. programs that provide direct payments or support to individuals have tended to focus on a combination of income maintenance, consumption needs (for
CCC Code: et 1070-5309/10 $3.00 National Association of Social Workersin Parish al. / Assets and©2010 Income: Disability-based Disparities
example, food stamps, Medicaid), and work incentives. In recent years, the idea of asset building as a strategy for social and economic development for the poor has gained serious consideration. Although there is considerable evidence about elevated income poverty rates among U.S. adults with disabilities, almost nothing is known about asset holding patterns among this population. Using a nationally representative data set, the purpose of this study was to explore whether the disabilitybased asset gap is comparable to the disability-based income gap for adults and to examine asset holding among different family structures. Literature Review
Disability and Income Poverty
Researchers have investigated income poverty among U.S. adults with disabilities, defined as people with substantial functional limitations or restrictions in their activities of daily living (ADLs) (Steinmetz, 2006). Although income poverty rates differ somewhat depending on the data source, there is convergence that adults with disabilities experience significantly higher rates of income poverty than nondisabled adults (Steinmetz, 2006). Ten percent of nondisabled working-age people were poor in 2000, substantially below the 19% poverty rate for same-age people with disabilities (Waldrop & Stern, 2003). Higher poverty rates for people with disabilities are related to elevated living costs (for example, costs associated with transportation, medical care, and home adaptations) and the fact that public health
the United States
71
insurance and other assistance provided to people with disabilities do not cover a substantial portion of these costs (Elwan, 1999; GAO, 1999). The elevated living costs associated with having disabilities increases the need for income to meet these obligations. Yet the employment rate for people with disabilities is significantly lower than the employment rate of nondisabled, working-age adults (Steinmetz, 2006). Reduced employment among people with disabilities results from persistent disability-based discrimination in both employment and education, which reduces access to high-paying jobs and career advancement (Baldwin & Johnson, 1995; O’Hara, 2004). Income, Assets, and Household Well-Being
The federal government defines poverty as a household income-to-needs ratio (Blank, 2008; Citro & Michael, 1995) and uses income to determine eligibility for most social welfare benefits (Blank, 2008). Income and assets are associated, but they are different concepts. Income refers to the flow of resources into households and is how families typically meet their daily living expenses. Income generally facilitates consumption (Shapiro & Wolff, 2001; Sherraden, 1991). By contrast, assets are a family’s aggregated wealth, and assets offer resources for investment in long-term economic and social well-being and enable families to improve their living standard and obtain financial well-being (Shapiro, 2001). Asset holding yields improved household economic stability, increased long-term planning, greater educational attainment, reduced intergenerational poverty, and increased civic engagement (Carney & Gale, 2001). The U.S. distribution of wealth is less equal than the distribution of income, in both extent and magnitude (Wolff & Zacharias, 2007). For example, when asset poverty was defined as an individual having net worth equal to or less than three months of income at the federal poverty level, significantly more families were asset poor (26%) than income poor (10%) in 1998 (Haveman & Wolff, 2005). Similarly, wealth indicators may better illustrate the inequities faced by some subpopulations in the United States. For example, using income measures, African Americans earn 59 cents for every dollar white Americans earn. However, the typical white family has a net worth of $81,000, or more than 10 times the $8,000 net worth of a typical African American family (Shapiro, 2004).To date, no research
72
has investigated the extent of a disability-based asset gap in the United States and whether it is similar to that faced by African Americans. Institutional Theory of Saving
Low-income households face challenges in saving and accumulating assets.The institutional theory of saving was developed to explain patterns of reduced saving among low-income families.The institutional theory of saving suggests that access to and knowledge of savings institutions influence saving capacity (Sherraden, 1991). Sherraden, Schreiner, and Beverly (2003) identified five factors that contribute to saving and asset accumulation: access, information, incentives, facilitation, and expectations. Access to basic banking services (that is, checking or savings accounts) is often limited for low-income people because of the scarcity of bank branches in low-income neighborhoods, required minimum balances, and punitive fees for incurring overdrafts or falling below such limits (Barr, 2004; Beverly & Sherraden, 1999). Moreover, low-income individuals often lack access to other institutionalized mechanisms such as employment-based 401(k) accounts. Information refers to the extent to which people understand the process and rewards of saving. Although most Americans have limited financial knowledge, low-income individuals typically have substantially less financial information than others (Beverly & Sherraden, 1999). Incentives increase the likelihood that people will save; however, low-income individuals have less access to asset-building incentives such as mortgage interest tax deductions and employermatched pensions. In addition, the employment settings for most low-income individuals offer few options for mechanisms that facilitate savings, such as automatic payroll deduction savings plans. Last, low-income households may have reduced expectations of saving if they have no experience with seeing others save, which reduces the likelihood that they will save and accrue assets. People with disabilities likely experience significant barriers in all five institutional variables that affect asset accumulation. First, because people with disabilities are less likely to be employed, this group has less access to employment-based institutionalized savings mechanisms, such as direct deposit or automatic payroll savings plans. People with disabilities experience substantial barriers to participating in programs and mechanisms that are targeted toward low-income populations. For example, individual
Social Work Research Volume 34, Number 2 June 2010
development accounts (IDAs) are matched savings accounts developed to promote financial stability of low-income families through asset accumulation. However, IDA eligibility criteria require participants to use earned income for their savings, which impedes access to IDAs because people with disabilities have disproportionately high unemployment rates (Leydorf & Kaplan, 2001). Moreover, disability programs also serve as disincentives to savings for people with disabilities. High unemployment rates lead to reliance on disability income transfers (that is, Supplemental Security Income [SSI], Social Security Disability Insurance [SSDI]), which impose limits on beneficiaries’ income and assets. For example, the asset limit for SSI is $2,000 for individuals and $3,000 for married beneficiaries (Social Security Administration, 2006). If participants’ assets exceed these eligibility thresholds, SSI benefits are reduced or eliminated. Therefore, this asset limit provides a disincentive for saving among low-income people with disabilities (Leydorf & Kaplan, 2001). In addition, people with disabilities may encounter information barriers that prevent their participation in financial planning and savings opportunities. For example, few banking institutions have materials that explain their services in ways that are appropriate for people with intellectual disabilities. Facilitation can be challenging for people with disabilities because many lack access to structured mechanisms, such as direct deposit, or access to programs or banking institutions that accommodate their special needs.Although IDA programs require participants to attend financial education classes, few programs have accommodated individuals with special needs (that is, different learning styles, communication problems, mobility problems) that could facilitate program participation by those with disabilities (Assets for Independence, n.d.) Finally, related to the expectation facet of the institutional theory of saving, the major barriers encountered by people with disabilities when trying to save—combined with their high out-of-pocket expenses (for example, increased medical and therapeutic costs)—likely lead people with disabilities to have significantly reduced expectations about being able to accumulate assets. On balance, this body of research has three major implications. First, the federal income poverty threshold does not fully explain the extent of financial well-being in the United States (Blank, 2008;
Citro & Michael, 1995) and may be particularly erroneous in families with a disabled member (Parish, Rose,Andrews, Grinstein-Weiss, & Richman, 2008). Assets should also be considered (Wolff & Zacharias, 2007). Second, asset poverty places millions of U.S. households at risk because they lack the assets to maintain a financial safety net during difficult times, such as job loss (Haveman & Wolff, 2005). Finally, low-income families lack the assets to invest in their futures through education, home ownership, or business development (Building Assets, 2005). Deficits in the existing research on asset holding related to people with disabilities led us to investigate the following two research questions: (1) Is there a disability-based gap in net worth among different household structures (married, single women, and single men)? (2) If there is such a gap, is it comparable to the disability-based income gap? We note that identifying the causes of such gaps is beyond the scope of the present descriptive study. Method
Data and Measures
The Survey of Income and Program Participation (SIPP) is a longitudinal panel survey that has been fielded by the U.S. Census Bureau since 1984. The SIPP collects information three times per year from a nationally representative sample. The core SIPP survey is conducted with each interview period and collects basic sociodemographic data for each individual living in a household. In addition, each SIPP wave includes at least one additional topical questionnaire. Data for the cross-sectional analyses conducted in this study were obtained from the 2001 SIPP and its topical modules on disability (wave 8) and on financial resources and assets (wave 9). These data were collected between June 2003 and January 2004, from approximately 25,000 households.The topical module on financial resources and assets obtained detailed information on household assets, debts, net worth, and the sources and amounts of income.The module on disability contained questions related to specific measures of impairment. The SIPP has important advantages related to our research questions. First, it contains relevant, highquality information on both income and assets. In contrast to other U.S. population surveys, SIPP collects detailed information on monthly (not annual) income.The SIPP also collects specific information on the various types of assets and debts that make up
Parish et al. / Assets and Income: Disability-based Disparities in the United States
73
a household’s net worth.The SIPP collects relatively detailed information about an adult’s disability status based on functional limitations. Finally, the SIPP is a nationally representative sample of the civilian noninstitutionalized population living in the United States age 15 years and older. Sample
Consistent with previous research on assets (for example, Carney & Gale, 2001), the unit of analysis here was the household.The SIPP defines households as all people living together in a single housing unit. Although the SIPP collects information on all people living in the household, one person is the reference person, designated as the householder.The householder either owns the housing unit or holds the lease in his or her name. In households with married partners, either spouse may be identified as the householder. Sociodemographic variables in this study (age, education, marital status, race, and ethnicity) refer to the householder. Data were analyzed for 4,214 households in which at least one adult had disabilities and 12,544 households in which all adults had no disabilities. When weighted, the sample represented 18.3 million and 57.7 million U.S. households with and without an adult with disabilities, respectively. Households with total monthly income that exceeded $50,000, or those with total net worth below $100,000 or above $2,000,000, were outliers and were excluded from the analyses.These 170 households represented 1% of the total sample. The sample was restricted to working-age householders (those ages 18 to 64) who were part of a married couple, single women, or single men. Cohabiting other family types were not analyzed due to small samples. The full sample is described in Table 1, which indicates statistically significant differences between three types of households with and without a disabled adult: those headed by a married couple, those headed by a single woman, and those headed by a single man. As is evident from Table 1, heads of households in which there was a disabled adult were less educated, were less likely to be employed full-time, were less likely to live in a metropolitan area, were older, and had fewer children than households without a disabled adult. There were no differences in the race or ethnicity between the married and single women households. Single men with disabilities, however, were more likely to be black than were single men without disabilities.
74
The mean number of adults with disabilities in each household was 1.2 (married), 1.1 (single women), and 1.2 (single men). To answer our first research question about the net worth and income within different types of households, we stratified these households by whether an adult in the family had disabilities and by family structure. Among the sample of households that included an adult with disabilities, there were 2,260 married couples, 1,231 single women, and 663 single men.When weighted, these data represented the households of 10.1 million married partners, 5.0 million single women, and 3.0 million single men. The sample of households with nondisabled adults included 7,336 married couples, 2,883 single women, and 2,146 single men.When weighted, these data represented the households of 33.8 million married partners, 45.1 million single women, and 10.4 million single men, respectively. Measures
Dependent Variables. Our two primary dependent variables were household net worth and income. Total wealth was computed by summing assets from 10 SIPP sources: total home equity, total vehicle net equity, total business equity, total interest-earning assets in bank, total interest-earning assets in other financial institutions, total stock and mutual fund equity, total equity in real estate other than one’s home, total individual retirement account or Keogh equity, total 401(k) and Thrift savings accounts equity, and total other equity. Total debt was computed by summing total secured debts (that is, those secured by an asset or collateral like a home mortgage or auto loan) and total unsecured debts (that is, those not secured with collateral, like credit card debt). Total net worth, the measure we report here, was computed by subtracting total unsecured debt from total wealth. Secured debt (mostly mortgages) was not included for calculation of total net worth because the asset measures already accounted for secured debt (for example, measure for home equity values accounts for mortgage amounts). Household income was obtained from the SIPP variable for total monthly income aggregated from all sources, including earned and unearned income and receipt of income transfers (that is, SSI). Disability and Family Structure Measures. Our primary independent variable was disability status, stratified by family structure. We categorized households as having an adult with disabilities on
Social Work Research Volume 34, Number 2 June 2010
8 25 31 35 76
618 1,852 2,265 2,601 5,587
SD
74 11 15
5,418 799 1,119
M
87 7 5 10
%
6,415 542 379 763
n
Nondisabled (n = 7,336)
M
324 715 711 510 1,606
1,244 267 749
1,958 190 112 218
n
SD
14 32 31 23 71
55 12 33
87 8 5 10
%
Disabled (n = 2,260)
Married Partners
Note: Dashes indicate that those variables were not included in the model. *p < .05. **p < .01. ***p < .001.
Age (years) 43.31 10 48.9 9.9 Age of oldest in household 45.13 11 51.6 10.6 Age of youngest in household 18.68 18 27.4 20.9 No. of adults in household 2.40 1 2.6 1.0 No. of children in household 1.25 1 0.9 1.2 No. of disabled adults in [household?] — — 1.2 0.5 Total monthly income ($) 6,664 5,419 5,298 4,433 Total net worth ($) 216,622 293,887 184,351 279,972
Race White Black Other Hispanic ethnicity Employment Full time (≥35 hours/week) Part time Not employed Education
