Benefit Suspensions and "Dry Spells" When Old-Age and Survivors Insurance Beneficiaries Go to Work

* Bureau of Old-Age and Survivors I n surance, Analysis Divis ion . W H E N A BENEFICIARY of o ld -age a n d survivors i n s u r a n c e e a r n s a s m u c h a s $15 i n a m o n t h i n covered e m p l o y m e n t , h i s i n s u r a n c e benefit a n d a n y s u p p l e m e n t a r y benefits based on h i s wage r eco rd m u s t be suspended for t h a t m o n t h . S ince t h e pu rpose of benefi ts is to c o m p e n s a t e for wage loss, t h e r e is n o social jus t i f ica t ion for t h e b e n e fits w h e n s u c h loss does n o t exist . Beneficiar ies h a v e of ten failed t o u n d e r s t a n d or t o comply w i t h t h e p rov i s ions of t h e Social Secur i ty Act w h i c h requ i re t h e m to r e p o r t w h e n t h e i r e a r n i n g s i n a covered job e x ceed $14.99 in a m o n t h . W h e n beneficiaries do n o t r e p o r t p r o m p t l y , t h e deduc t ion for employm e n t c a n n o t be m a d e c u r r e n t w i t h t h e e m p l o y m e n t itself. As a resu l t , w h e n l a t e r t h e y s top work, t h e y m a y h a v e a m o n t h or more w i t h o u t i ncome f rom e i the r benefi ts or wages . M a n y cases of h a r d s h i p d u r i n g s u c h " d r y spe l l s" h a v e been b r o u g h t to t h e Boa rd ' s a t t e n t i o n t h r o u g h t h e field offices a n d by l e t t e r s f rom beneficiaries . T h i s s i t ua t i on a n d s tudy of a d m i n i s t r a t i o n of t h e work c lause h a v e b r o u g h t u p ques t ions conce rn ing t h e e x t e n t a n d r egu l a r i t y of covered e m p l o y m e n t a m o n g beneficiaries a n d t h e e x t e n t t o w h i c h t h e y r e p o r t such e m p l o y m e n t p rompt ly . W a g e a n d c la ims d a t a regular ly compiled by t h e B u r e a u of Old-Age a n d Surv ivors I n s u r a n c e do n o t p r o vide a d e q u a t e answers t o t he se ques t ions . Special surveys of benef ic iar ies 1 give some i n f o r m a t i o n on t h e work h i s to ry a n d economic s t a t u s of t h e beneficiary g roups a s a whole , b u t i t was necessa ry t o know m o r e a b o u t beneficiaries who worked, a n d e s pecial ly those whose benefit d e d u c t ions did n o t coincide w i th t h e t i m e of t h e i r emp loymen t . T o o b t a i n t h e i n f o r m a t i o n necessa ry for a n ana lys i s of t h e g e n e r a l effect of t h e work c lause a n d p e n a l t y provis ion, a s t u d y was m a d e of t h e c la ims records of a s ample g roup of persons receiving p r i m a r y or widow's c u r r e n t benefi ts who were k n o w n to h a v e h a d deduc t ions f rom t h e i r benefits . Fo r th i s g roup , fac ts were compi led o n t h e n u m b e r a n d p a t t e r n of benefit suspensions a n d d e f e r m e n t s for each m e m b e r of t h e b e n e ficiary family s ince t h e d a t e of e n t i t l e m e n t . T h e r a n d o m sample selected for t h e s t u d y consis ted of abou t 20 p e r c e n t of all c l a ims l is ted a s i n suspended or d e f e r r e d p a y m e n t s t a t u s a s of selected d a t e s d u r i n g t h e s u m m e r of 1942.2 At t h a t t ime , f rom 10 to 12 p e r c e n t of t h e p r i m a r y a n d widow's c u r r e n t benefi ts in force were in suspended or d e f e r r e d p a y m e n t s t a t u s . A t o t a l of 5,791 c la ims records of p r i m a r y b e n e ficiaries a n d 1,130 c la ims records of widows receiving c u r r e n t benefi ts were examined to a s c e r t a i n a n y deduc t ions m a d e f rom t h e t i m e m o n t h l y benefits first b e c a m e p a y a b l e — J a n u a r y 1940— t h r o u g h S e p t e m b e r 1943. I t should be r e m e m b e r e d t h a t t h i s s tudy re l a t e s only to beneficiaries w h o worked af ter t h e i r e n t i t l e m e n t , n o t t o t h e whole g roup of pe r sons en t i t l ed t o benefits, t h e m a j o r i t y of w h o m a r e n o t affected by t h e work c lause . T h e s tudy , m o r e over, yields i n f o r m a t i o n only o n t h e e m p l o y m e n t of beneficiaries i n jobs covered by t h e o ld-age a n d survivors i n s u r a n c e sys t em; e a r n i n g s for o t h e r types of work do n o t en ta i l suspens ion of benefi ts . F u r t h e r m o r e , t h e c o n clusions d r a w n f rom t h e d a t a m a y n o t ho ld good for beneficiaries in yea r s w h e n t h e r e is less d e m a n d for older workers .