Practical Problem Solving in Business

Relationship between unemployment rate and new disability pensions in the US
Overview of the topic
Persistent high unemployment rates have remained a cause of great concern both in America and other developed nations, with US unemployment rates reaching a never-before-seen high since the 30’s Depression, in the mid-70’s – early-80’s period. But the years 1983-84 witnessed a renewed decline in unemployment rates (Reno & Price, 1985). In spite of unprecedented unemployment peaks in the course of the last ten years, employment rates have increased from the 1970 figure of 80.8 million labor force members to 102.5 million (1983) (Reno & Price, 1985). Cyclical disability insurance only cropped up in the disability insurance termination era of the early-to-mid 80s (Cutler, Meara, & Shubik, 2012).
Rationale for selecting the topic
Premature retirement with decreased actuarial benefits prior to 65 years of age first became available in the years 1961 (males) and 1965 (females) under the social security system. Ever since, no program modification has expanded premature retirement options. Females’ option of claiming benefits at 62 years of age was largely prompted by concerns for expanding benefits and covering married females usually not sufficiently old to be entitled to them at the time of their husbands’ retirement, and those widowed prior to 64 years of age (Reno & Price, 1985). While the United States Congress realized the fact that older females had limited job opportunities, this change wasn’t essentially a reaction to the unemployment issue (Reno & Price, 1985).
Delineate a brief history of this area of study and the relevancy of this topic in today’s business world.
Premature retirement benefit was granted to males in the year 1961, when the nation was undergoing a period of recession and unemployment rates had gone up to 7% (Reno & Price, 1985). The early retirement provision was one means of reducing unemployment in the older worker population. This change was partly in response to lasting technological unemployment, with the realization of the fact that individuals losing jobs at an older age may never find work again. Reduced benefits associated with premature retirement were because premature retirement implied receipt of benefits for a longer period; long-range benefit payment costs if benefits were claimed at 62 years of age would roughly be equal to costs associated with claiming benefits at 65 years of age. Medicare, which offers healthcare and hospital insurance, was first enacted for elderly individuals in the very same year. The reform in 1972 expanded Medicare protection and started covering individuals on disability insurance for no less than a couple of years. It offered a universal 20% benefit rise to all retired and disabled persons and their survivors and dependents, besides offering ad hoc rises of 11% (in total) in the succeeding two years. From the year 1975 onwards, it provided automatic CPI (Consumer Price Index)-based cost-of-living related benefit increases. Lastly, it came up with a supplemental federal-level security income initiative providing disabled and elderly individuals a national income floor (Reno & Price, 1985).
Devise one or more business-related problems related to the chosen topic
Relationship between social security disability insurance (SSDI) and high unemployment
In the year 2009, 3.9% of working-age individuals (7.8 million labor force members) were SSDI recipients. Within six years, this figure rose to 4.4% of working-age individuals (i.e., 8.9 million). The 1985 SSDI rate stood at 1.7% (Wiczer, 2017). But this association cannot account for the nation’s SSDI rate increase from 2009 to 2015, marked by an average drop in unemployment rate in a majority of counties (Wiczer, 2017). Rather, SSDI receipt has been growing in concentration and is maximum in areas with the poorest economic prospects.
With the drop in national-level unemployment rate, elevated unemployment has resulted in even greater SSDI receipt rates. Thus, SSDI growth in this period represents a phenomenon linked to increased SSDI concentration and geographic inequality between counties. It is reasonable for SSDI to react to economic situations as it is, in fact, designed using a collection of job-linked conditions. Moreover, such vocational concerns have been increasing with novel benefit recipients (Wiczer, 2017).
The study author will collect information from both prior researches and published governmental reports on the subject. Numerous research works depict comprehensive statistics and surveys explaining the issue as it has developed over time, which will be utilized in the study.






Bibliography
Cutler, D. M., Meara, E., & Shubik, S. R. (2012). Unemployment and Disability: Evidence from the Great Recession . NBER, 2.
Reno, V. P., & Price, D. N. (1985). Relationship Between the Retirement, Disability, and Unemployment Insurance Programs: The U.S. Experience . Social Security Bulletin, 24-36.
Wiczer, D. (2017). The Connection Between Social Security Disability Insurance and High Unemployment. Economic Synopses.