Minimum wage is very high right now about $1000 a month. Why is Supplemental Security Income (SSI) only something like $500 and Social Security Disability Insurance (SSDI)not more closely related to the amount of money the person made before they became disabled? That seems to be forcing people into poverty who depend on the government and have no ability to leave poverty. Why are we not putting them in the lower middle class?

  • No it's next to impossible to get the 720. 480 is where it's at @user1873 I expect the government to improve it can do that – user1858 Feb 13 '14 at 0:17
  • congratulations, they are doing better. About $1k per month. – user1873 Feb 13 '14 at 1:53
  • i dont think you read that correctly if you think that ssi recepiants are getting $1k most are getting 480 or 500ish. – user1858 Feb 13 '14 at 3:53
  • " Disability Insurance;Num#=10,971,000;18.9% all SS, Total $10,928,000,000; Average Benefit $996.11". If most are getting $480, why is the average so high? – user1873 Feb 13 '14 at 5:45
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    What benefit are you speaking of? Social Security (pays out at age 65, they collect +10% of your income), Social Security Disability Insurance (pays out if you cannot work after 6+ months until age 65, they collect 1.8% of your income), or Supplemental Security Income (pays out to poor people, who possibly have never worked). These three benefits are all handled by the SSA. You ask specifically, "Why is (SSI) only something like $500 and (SSDI) not more closely related to the amount of money the person made before they became disabled?" SSI is 538 AVG, SSDI is $1,000 AVG, you are confused. – user1873 Feb 13 '14 at 7:16

The basic reason is probably because Social Security benefits are inflation indexed, while the Minimum Wage has to be adjusted manually, which literally requires an Act of Congress.

For example here's a nice lucid statement I found from PBS's News Hour's Business and Economics Correspondent Paul Solman:

In addition to the difficulties of getting benefits, they’re not especially generous. For those who do manage to get disability or supplemental security income, the average yearly benefit as of February 2013 is $13,900.

Okay, now we get to the nub of Big Swed’s question: how does the disability dole compare to a full-time minimum wage income?

As it happens, if you work full-time, it’s pretty close. The federal minimum wage is $7.25. Multiply $7.25 per hour by 40 hours per week and then by 52 weeks per year and you get $15,080. If the minimum were boosted to $9 an hour, however, as the President has proposed, that would bring maximum yearly minimum wage earnings, according to my calculator, to $18,720.

It should be pointed out, however, that only 20 percent of minimum wage earners work 40 or more hours a week, according to the Bureau of Labor Statistics; fully 58 percent work 30 hours or fewer. See this article in the Atlantic for more detail.

(taken from way down in the comments)

Now historically Social Security has automatic benefits adjustments built into it (called a Cost of Living adjustment, or COLA), tied to an economic index for inflation. That means benefits rise roughly inline with inflation unless Congress steps in to change something manually.

By contrast, the Federal Minimum wage has always been a static number, with no built-in mechanism for increase (well, not entirely true. Often when it is raised, it is done in a time graduated manner, but never an open-ended one). That means it stays at the same rate for years, until one fine day Congress decides to step in and bump it back up to what seems (to Congress) a reasonable amount to adjust for inflation in the intervening years. That makes it very "spiky" (when adjusted for inflation) compared to an indexed benefit.

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You could debate the wisdom of this setup from a Public Policy perspective (at least, over on the Politics stack you can), but this is how it has always worked. Currently, it has been at the same rate since July 24, 2009. Looking at it historically, that's definitely past the average amount of time before an adjustment, but far from the record of nearly 10 years in the '80's. It seems more or less in line with the modern (post-1980) trend of increases.

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  • but this isn't right...people on ssi get $480 with a $10 increase each year. i mean how in the world could you think that's anywhere near full time minimum wage work? – user1858 Feb 12 '14 at 15:40
  • i mean if there were only 2 weeks in a month maybe but there are 4 weeks in a month at least...7.25*30*4.2...913.5 how exactly does that equal 480 again? – user1858 Feb 12 '14 at 15:44
  • 8.25*30*4=1039.5 (il)...10.74*30*4.2=1353.24(san fran) – user1858 Feb 12 '14 at 16:45
  • This question doesn't seem to explain why ssi is below minimum wage, in fact, it seems to explain how it might be catching up to the minimum wage. – Sam I am says Reinstate Monica Feb 13 '14 at 22:41

Several reasons come to mind:
1) give people an incentive to look for a job. If social security is at (or near) or higher than minimum wage levels there's no incentive for people on social security to accept a minimum wage job, is there?
2) disability is related to last earned wages for a period, then falls back to social security levels. This is the same as unemployment benefits being related to last earned wages, then falling back to social security. That provides both an incentive to search for a matching job, as well as recognising the fact that the person did not lose their job through their own fault.

The idea is NOT to reward people for not working, but to give them the means to survive until they can find a job they can perform. And do remember that there are many other benefits for people on social security, like often subsidised rent, library memberships, free or subsidised phones, cable tv, food stamps, etc. etc., all of which raise their effective income over the poverty line.

Worse, if you were to hand them more money from a system that's already overstretched seriously, you damage the economy greatly. That money would have to come from a dwindling number of people who do pay taxes, reducing them to poverty for the sake of giving those who don't work more "free stuff", removing their incentive to get out of bed and go to the office/factory in the morning 5-6 times a week and work 8-10 hours for a wage that after taxes would quickly be less than what they see their unemployed neighbours on social security enjoying.

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    but the people on SSI cannot work..thats the whole reason they are on SSI its impossible...no one will hire them – user1858 Feb 12 '14 at 11:17
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    and no you dont get subsidised rent (its neigh impossible to find in certain states, forbidden in certain cities and in others it still costs 30% of income which basically is the same as paying full price) , library membership, free phones (some states do offer a phone for any low income however it has no actual value) , cable tv..where in the world you heard cable tv...in some states you can get $15 to $200 of food stamps/cash assistance...but nothing else – user1858 Feb 12 '14 at 11:24
  • @caseyr547 that depends. People on social security can work, they just have no job. People on disability can't work, but many can possibly take up other work (hence they are regularly retested). Subsidised rent might not exist in the US, in many other countries with similar systems it certainly exists. And anyway, it was just one example of the extras on top of the money they get. – jwenting Feb 12 '14 at 12:02
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    Most ssi in the us isn't regulus reasses because it's exclusively things like blindness, mental illness which do not self resolve – user1858 Feb 12 '14 at 21:51
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    This is true of unemployment and welfare but SSI and SSD are for people who can not work. They are supposed to be the outliers and the exceptions. – SoylentGray Feb 13 '14 at 22:29

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