Resolving the Paradox of Payroll-Tax-Based Social Insurance for Disability: Lessons from the Canada Disability Benefit Act

Authors

Mark C. Weber, DePaul University

Document Type

Article

Abstract

This article discusses contributory social insurance for disability—a government program in which employment taxes produce a fund for pensions to workers who experience disability before retirement age. Although widely viewed as a successful policy innovation, disability insurance presents problems. For example, it produces tensions with a tenet of disability rights: that disability arises from the interaction of impairments with the physical and attitudinal environment, necessitating accommodations, not pensions and separation from the workforce. Moreover, social insurance privileges people whose disabilities occur after they amass work histories, providing a higher level of benefits based on earnings rather than meagre amounts allotted to people whose conditions, under current levels of accommodation, keep them at the fringes of employment. This article defends social insurance while acknowledging the inequalities it produces. It considers disability income policy reforms, including the Canada Disability Benefit, and suggests improvements in social insurance inspired by the Canada Disability Benefit.

Creative Commons License

This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Citation Information

Weber, Mark C.. "Resolving the Paradox of Payroll-Tax-Based Social Insurance for Disability: Lessons from the Canada Disability Benefit Act." Osgoode Hall Law Journal 61.2 (2024) : 475-499.
DOI: https://doi.org/10.60082/2817-5069.4018
https://digitalcommons.osgoode.yorku.ca/ohlj/vol61/iss2/7

References

1 Vincent DePaul Professor of Law, DePaul University. Many thanks to Hengameh Saberi and Jinyan Li, as well as the other participants in the “Women with Disabilities: Income Security and Tax Policy” workshop. Special thanks to Ravi Malhotra for his insights and his ever-thoughtful advice. All errors are my own.

2 For additional information about social security programs worldwide, including contributory social insurance for disability, see the United States Social Security Administration, “Social Security Programs Throughout the World,” online: [perma.cc/5ZMP-ZJHR].

3 See generally Mark C Weber, “Disability Rights, Disability Discrimination, and Social Insurance” (2009) 25 Ga St U L Rev 575 [Weber, “Disability Rights”].

4. SC 2023, c 17.

5 This theme is developed at much greater length in Weber, “Disability Rights” supra note 3.

6 Theodore H Tulchinsky, Case Studies in Public Health, (Academic Press, 2018), DOI: https://doi.org/10.1016/B978-0-12-804571-8.00027-5 at 141. See also Paul H Douglas, Social Security in the United States: An Analysis and Appraisal of the Federal Social Security Act, 2nd (McGraw-Hill, 1939) at 242.

7 Edward Berkowitz & Kim McQuaid, Creating the Welfare State: The Political Economy of Twentieth-Century Reform, 2nd (Praeger, 1988) at 46.

8 Ibid at 110-11.

9 Pub L No 74-271, 49 Stat 620 (1935).

10 Douglas, supra note 6 at 69-83. See also Arthur J Altmeyer, The Formative Years of Social Security (University of Wisconsin Press, 1968) at 10.

11 On workers’ compensation and veterans’ benefits in relation to Social Security Disability Insurance, see generally Richard K Scotch, “American Disability Policy in the Twentieth Century” in Paul K Longmore & Lauri Umansky, eds, The New Disability History: American Perspectives (New York University Press, 2001) 375 at 378-79.

12 See 42 USC § 401(b). See generally Robert Silverstein, “Emerging Disability Policy Framework: A Guidepost for Analyzing Public Policy” (2000) 85 Iowa L Rev 1691 at 1700-04.

13 Sources for the history recounted in this paragraph are collected in Weber, “Disability Rights,” supra note 3 at 582-83. See also John R Kearney, “Social Security and the ‘D’ in OASDI: The History of a Federal Program Insuring Earners Against Disability” (2005-06) 66 Soc Security Bull 1.

14 See Ravi Malhotra, “Is the Canada Disability Benefits Program Consistent with the Social Model of Disablement? The Perils and Promises of Equality Rights through Income Support Programs” (5 September 2023), online: [perma.cc/38BH-YYBK] [Malhotra, “CDB”].

15 Ibid at 3.

16 See An Act to Amend the Militia Pension Act, SC 1919.

17 Michael J Prince, Struggling for Social Citizenship: Disabled Canadians, Income Security, and Prime Ministerial Eras (McGill-Queen’s University Press, 2016) at 68, DOI: https://doi.org/10.1515/9780773598812.

18 Malhotra, “CDB,” supra note 14 at 5-6.

19 Daniel S Gerig & Robert J Myers, “Canada Pension Plan of 1965” (1965) 28 Soc Security Bull 3.

20 Ibid.

21 Ibid at 4-5.

22 Ibid at 6.

23 Ibid at 11.

24 Ibid at 12.

25 The United States Social Security Administration, “Social Security Tax Rates,” online: [perma.cc/3X5N-V7SP]. All amounts cited with respect to American programs are in United States dollars.

26 The United States Social Security Administration, “Fact Sheet: 2023 Social Security Changes” (2023), online: [perma.cc/7ZET-VV6N] [United States Social Security Administration, “Fact Sheet”].

27 42 USC § 423(d)(1)(A). The standard is somewhat relaxed for visually impaired individuals fifty-five and older. Ibid, § (d)(1)(B).

28 Sources for the program description in this paragraph are collected in Weber, “Disability Rights,” supra note 3 at 580-81.

29 United States Social Security Administration, “Fact Sheet,” supra note 26. The test for substantial gainful activity has some additional quirks not relevant to the current discussion.

30 The United States Social Security Administration, “Disabled workers in current payment status,” online: [perma.cc/6KSB-F6KF].

31 The United States Social Security Administration, “Disabled worker average benefits,” online: [perma.cc/SWC6-A85G].

32 United States Social Security Administration, “Fact Sheet,” supra note 26.

33 SSI also serves the elderly poor without disabilities.

34 See Edward Berkowitz, “The Other Welfare: Supplemental Security Income and U.S. Social Policy” (National Academy of Social Insurance seminar on the history and promise of SSI delivered at the Corporation for Enterprise Development, 18 July 2013), DOI: https://doi.org/10.7591/cornell/9780801451737.001.0001.

35 The United States Social Security Administration, “SSI Federal Payment Amounts,” online: [perma.cc/22HQ-LEH9].

36 US, The United States Social Security Administration, Annual Report of the Supplemental Security Income Program (21235-0001) (Baltimore, MD: 2022) at Executive Summary.

37 See The United States Social Security Administration, “Understanding Supplemental Security Income SSI Income – 2022 Edition,” online: [perma.cc/5RQD-2YTS].

38 See Berkowitz, supra note 34 (further noting that people with mental disorders were the largest category of initial enrollees in SSI, and that people with intellectual disabilities counted for more than half of that cohort, despite the anticipation among policy makers that the program would target the elderly poor without the work history to qualify for any significant Social Security old-age benefits).

39 Government of Canada, “Canada Pension Plan disability benefits Overview” (2 May 2023), online: [perma.cc/G582-V9ZK].

40 Ibid.

41 Ibid.

42 See Ibid.

43 Ibid. See Government of Canada, “Canada Pension Plan disability benefit toolkit” (18 September 2023), online: [perma.cc/W5MW-DYEJ]. All amounts cited with respect to Canadian programs are in Canadian dollars.

44 Government of Canada, “Canada Pension Plan disability benefits: How much you could receive” (28 December 2022), online: [perma.cc/L882-2AGF].

45 See CPP Investments, “About Us” (2023), online: [perma.cc/S32U-5DAN].

46 Government of Canada, “Canada Pension Plan (CPP) – Number of CPP recipients by benefit type and gender” (1 December 2016), online: [perma.cc/S97B-A3D5].

47 See Malhotra, “CDB,” supra note 14 at 9, n 35.

48 Four provinces have disability-specific assistance programs. Michael J Prince, “Stitching the Canada Disability Benefit into the Social Security System: Expectations, Patchworks, and Goals” (2024) 61 Osgoode Hall LJ 609 at 623.

49 Ibid at 13.

50 See Weber, “Disability Rights,” supra note 3 at 592-600. See also Malhotra, “CDB,” supra note 14 at 16-17. For early applications of this idea, see e.g. Paula E Berg, “Ill/Legal: Interrogating the Meaning and Function of the Category of Disability in Antidiscrimination Law” (1999) 18 Yale L & Pol’y Rev 1 at 9-10 (discussing “socio-political model”); Michelle Fine & Adrienne Asch, “Disability Beyond Stigma: Social Interaction, Discrimination, and Activism” (1988) 44 J Soc Issues 3 at 6-14 (discussing “minority group model”), DOI: ; Jacobus tenBroek & Floyd W Matson, “The Disabled and the Law of Welfare” (1966) 54 Cal L Rev 809 at 814 (discussing “integrationism”), DOI: https://doi.org/10.2307/3479428.

51 For a development of this argument, see Mark C Weber, “Disability and the Law of Welfare: A Post-Integrationist Examination” (2000) U Ill L Rev 889 at 915-21 [Weber, “Law of Welfare”].

52 See Weber, “Disability Rights,” supra note 3 at 590-92. See also K Walter Hickel, “Medicine, Bureaucracy, and Social Welfare: The Politics of Disability Compensation for American Veterans of World War I” in Longmore & Umansky, supra note 11 at 236. Hickel makes a point with respect to disabled veterans at 239.

53 Walter Y Oi, “Employment and Benefits for People with Diverse Disabilities” in Monroe Berkowitz, Richard V Burkhauser, Virginia P Reno & Jerry L Mashaw, eds, Disability, Work and Cash Benefits (WE Upjohn Institute for Employment Research, 1996), at 113. For more recent data see note 79 below.

54 See Frank S Bloch, “Medical Proof, Social Policy, and Social Security’s Medically Centered Definition of Disability” (2007) 92 Cornell L Rev 189 at 228-31.

55 42 USC § 12102.

56 29 CFR § 1630.2(j)(3)(iii).

57 US, Liana E Fox & Kalee Burns, The Supplemental Poverty Measure: 2020 (P60-275) (United States Census Bureau, 2021) at 26 (reporting that roughly 18 per cent of working-age people with disabilities in the United States live in poverty, even counting government benefits, compared with about 8 per cent of nondisabled people of the same age group).

58 Nanette Goodman, Stephen McGarity, Michael Morris & Zachary Morris, The Extra Costs of Living with a Disability in the U.S. — Resetting the Policy Table (National Disability Institute, October 2020) at 7. The report states: “If we were to adjust the FPL [federal poverty level] for adults with disabilities for the additional costs of disability … the poverty rate for households including an adult with a work-disability would rise from 24 percent to 35 percent.”

59 For a discussion on Marta Russell’s criticisms of the Americans with Disabilities Act and other aspects of disability policies as free market civil rights to diminish government support of people with disabilities and increase the supply of contingent workers, see Ravi Malhotra, “The Legal Politics of Marta Russell: a Castoridian Reading” in Ravi Malhotra, ed, Disability Politics in a Global Economy (Routledge, 2017) 3 at 7-8, DOI: https://doi.org/10.4324/9781315714011.

60 See Zach Richter, “Autonomism and the Disabled and Able Working Classes: A Class Composition Approach to Histories of Resistance and Destruction,” in ibid 148 at 149. Richter states: “Theorizing disability and class together means redefining class to be based on a shared economic fate that comes about from a shared appraisal within the managerial organization of work and then redefining disability to mean the negative appraisal of the labor power of impaired workers.”

61 See generally Ruth Colker, American Law in the Age of Hypercapitalism: The Worker, the Family, and the State (New York University Press, 1998). See also Jihan Abbas, “Economy, Exploitation, and Intellectual Disability” in Malhotra, supra note 59 at 135: “[N]eoliberalism aggressively reshapes disability policy, and, in turn, reinforces dominant social constructions of disability that center on economic normality.”

62 See Sunny Taylor, “The Right Not to Work: Power and Disability,” Monthly Review 55 (March 2004), DOI: https://doi.org/10.14452/MR-055-10-2004-03_2. See Jennifer L Erkulwater, Disability Rights and the American Social Safety Net (Cornell University Press, 2006) at 242, DOI: https://doi.org/10.7591/9781501727153. Erkulwater states: “Orienting the focus of disability policy so squarely on the right to equal access and to work to the exclusion of the right to welfare risks making gainful employment and economic self-sufficiency the overriding measure of personal worth.”

63 See Noah D Zatz, “What Welfare Requires From Work” (2006) 54 UCLA L Rev 373 at 389, n 64. Zatz states: “[F]ar more concern is directed at the potential earning disincentive effects of government transfers than at the analogous possibility that inheritance or intrafamilial transfers will diminish work effort.”

64 See IMDb, “The Idle Rich (1929),” online: [perma.cc/RXM7-4ZES].

65 See Berkowitz & McQuaid, supra note 7 at 136 (noting insurance companies’ refusal to sell new disability insurance policies when claims on existing policies skyrocketed during the Great Depression).

66 See Arthur Seibold, Sebastian Seitz & Sebastian Siegloch, Privatizing Disability Insurance (CESifo, 2022) at 13, DOI: https://doi.org/10.2139/ssrn.4232708.

67 See Mark C Weber, “Social Insurance for Disability: Contemporary Challenges and Insights from Disability Civil Rights,” in Malhotra, supra note 59 at 25.

68 See Theodore R Marmor & Jerry L Mashaw, “Understanding Social Insurance: Fairness, Affordability, and The ‘Modernization’ Of Social Security and Medicare” (2007) 15 Elder LJ 123 at 126. Marmor and Mashaw state: “Looked at historically, social insurance is a deeply conservative idea, the major viable alternative to state socialism.”

69 It may be noted, however, that the Supreme Court of the United States upheld a slight boost for the benefits of female DI recipients over male recipients against an equal protection challenge. See Califano v Webster, 430 US 313 (1977). The disparity was eventually repealed.

70 Interestingly, according to a report from some years ago, Israel covered homemakers in its disability program. See Remarks of Monroe Berkowitz, “50th Anniversary of Social Security Disability Insurance” (21 June 2006) [transcript on file with author].

71 Mitchell Barnes, Lauren Bauer, Wendy Edelberg, Sara Estep, Robert Greenstein & Moriah Macklin, The Social Insurance System in the U.S.: Policies to Protect Workers and Families (The Hamilton Project, 2021) at 29 (noting as well that workers who earned lower wages receive larger benefits in proportion to earnings due to progressive payment levels).

72 This is true even though a flat percentage rate is used. Needless to say, the same percentage of large and small incomes yields greater dollar revenues from higher incomes.

73 Larry DeWitt, “Luther Gulick Memorandum re: Famous FDR Quote” (21 July 2005), online: [perma.cc/E5VE-UDKD].

74 See Dan Bouk, Democracy’s Data (Farrar, Straus & Giroux, 2022) at 180. Bouk states: “In 1939, only 3.9 million individuals paid any income taxes—well under 5 percent of the entire [United States] population.”

75 Jennifer Robson & Lindsay Tedds, “The Canada Disability Benefit: Battling Ableism in Design and Implementation” (2024) 61 Osgoode Hall LJ 577. The article advances predictions as well as some recommendations regarding all these features of the CDB program. For information on the ongoing development of the CDB, see Government of Canada, “Overview of the Canada Disability Benefit – Supporting Canadians with disabilities” (15 February 2024), online: [perma.cc/6TX8-QWCF].

76 See Matthew Diller, “Dissonant Disability Policies: The Tensions Between the Americans with Disabilities Act and Federal Disability Programs” (1998) 76 Tex L Rev 1003 at 1076-77.

77 See Emily R D Murphy, “Brains Without Money: Poverty as Disabling” (2022) 54 Conn L Rev 699 at 741-45.

78 Nanette Goodman, Stephen McGarity, Michael Morris & Zachary Morris, supra note 58, at 7. The authors state: “Households containing an adult with a work-disability are estimated to require, on average, 28 per cent more income (or an additional $17,690 a year for a household at the median income level) to obtain the same standard of living as a comparable household without a member with a disability.” For an insightful discussion of the costs of obtaining accommodations for work, see Katherine Macfarlane, “Accommodation Discrimination,” (2023) 72 Am U L Rev 1971.

79 Weber, “Disability Rights,” supra note 3 at 600. See Rebecca Vallas, Kimberly Knackstedt, Hayley Brown, Julie Cai, Shawn Fremstad & Andrew Stettner, “Economic Justice is Disability Justice” (21 April 2022), online: The Century Foundation [perma.cc/ZM34-J8VE]. The authors state that:

“America’s Social Security disability programs utilize one of the strictest definitions of disability in the developed world and are notoriously difficult to successfully apply for, due to lengthy and complicated forms and a byzantine multi-step disability determination process that leaves many lost in red tape. Fewer than 4 in 10 applications are approved, even after all levels of appeal—and nearly one in five beneficiaries die within five years of receiving benefits.”

80 See generally Doron Dorfman, “Re-Claiming Disability: Identity, Procedural Justice, and the Disability Determination Process” (2017) 42 Law & Soc Inquiry 195, DOI: https://doi.org/10.1111/lsi.12176.

81 See Mark C Weber, “Law of Welfare,” supra note 51 at 943-47. See also Weber, “Disability Rights,” supra note 3 at 602-604.

82 See Erkulwater, supra note 62, at 236-37 (discussing programs in Germany and Sweden in contrast to the United States).

83 With regard to veterans, see Hickel, supra note 52, at 240 (describing fractional disability ratings).

84 See Weber, “Law of Welfare,” supra note 51 at 945.

85 See Malhotra, “CDB,” supra note 14.

86 See Weber, “Law of Welfare,” supra note 51 at 947-50.

87 Ibid at 953-54. See also Mark C Weber, “Home and Community-Based Services, Olmstead and Positive Rights: A Preliminary Discussion” (2004) 39 Wake Forest L Rev 269 at 282-90 (discussing Americans with Disabilities Act-based claims to community-based services to prevent institutionalization).

88 Weber, “Law of Welfare,” supra note 51 at 951. Starting fresh, the CDB may be able to avoid some of the problems of the American SSI program, notably the very low asset limit and benefit scale, as well as the challenges of the application process that it shares with the DI program.