Earnings of Black and Nonblack Workers Who Died or Became Disabled in 1996 and 1997

by Greg Diez
Research and Statistics Note No. 2000-01 (released November 2000)

This note was prepared by Greg Diez, Division of Earnings Statistics and Analysis, Office of Research, Evaluation, and Statistics, Office of Policy. Beverly A. Smith and Creston M. Smith made significant contributions to the research and analysis.

The findings and conclusions presented in this paper are those of the author and do not necessarily represent the views of the Social Security Administration.

Social Security solvency proposals may affect blacks as a group differently than those of other races because of differences in earnings, mortality, and rates of disability.1 To provide some background for understanding this issue, this note examines the earnings of workers by age and race, comparing those who recently died or became entitled to Social Security disability benefits with those still alive. It does not analyze any specific proposal for changing benefits.

Findings

Comparing black workers with those of other racial and ethnic backgrounds, we find that:

Sources of Data

Our analysis is based on an extract file of all workers with Social Security taxable earnings in 1996 taken from the Social Security Administration's (SSA's) 1 percent Continuous Work History Sample (CWHS), a longitudinal sample of earnings, benefit, and demographic data. We updated information on death in our extract file with data from other SSA data files.

Tables 1–8 show the number of workers, average lifetime taxable earnings, average number of years with taxable earnings, and average annual taxable earnings by age, race, and vital status (alive or deceased) at the end of 1997. Because there is more than one way to measure the incidence of disability and death, we tabulated the data in two different manners:

Our sample is incomplete for workers who became entitled to disability benefits in 1997. The data include benefit awards posted in our file through June 1998, but awards are sometimes not made for several years after filing because of the extended appeals process. We estimate that about half of the workers becoming eligible for disability benefits in 1997 did not make the cutoff for our data. Nevertheless, even though the data are incomplete, they are useful for comparative purposes.

Classification by Race and Age

SSA collects data on race and ethnicity from Form SS-5 (Application for Social Security Card). Responses to the question on race and ethnicity are voluntary. From 1936 to about 1980, SSA limited the racial/ethnic designations to white, black, and other. After that, SSA revised the form to have five racial/ethnic designations in response to Office of Management and Budget (OMB) Directive No. 15 (May 12, 1977), "Race and Ethnic Standards for Federal Statistics and Administrative Reporting." Those designations are white, not of Hispanic origin; black, not of Hispanic origin; Hispanic; Asian or Pacific Islander; and American Indian or Alaska Native. OMB has recently promulgated still another scheme for classifying race and ethnicity.2

Because most of the racial data in SSA's records are based on the pre-1980 reporting scheme, we have combined the data into two groups: black and all other. The "all other" category includes a small number of blacks recorded in SSA's data as Hispanic. We also categorized workers by 10-year age groups: under 30, 30–39, 40–49, 50–59, and 60 or older.

The data show that black workers in each age bracket are more likely to die or become eligible for Social Security disability benefits than are those of other racial groups. For example, of workers aged 50–59 with earnings in 1996, 0.84 percent of blacks but only 0.51 percent of nonblacks had died by the end of 1997 (Table 1). Of workers in the same age bracket who had earnings in 1996 but were not retired, disabled, or deceased at the end of that year, 1.09 percent of blacks but only 0.59 percent of nonblacks started to receive disability benefits in 1997 (Table 5).

Lifetime Earnings

To compute lifetime earnings, we indexed and summed earnings over the 46 years from 1951 to 1996. We did not include earnings from 1937 to 1950 because they are available in the CWHS only as an aggregate for each individual and are not easily indexed. To put the earnings in 1996 terms, we indexed earnings using the same factors that Social Security uses to index earnings used in calculating benefits.3 Note that the measure of lifetime earnings used in this analysis is not the same as the one used in determining Social Security benefits.

Comparison of lifetime earnings between age groups by race seems straightforward. For the most part, blacks had lower average lifetime Social Security taxable earnings by age group and vital status (alive, nondisabled; deceased; or disabled) than nonblacks (Tables 2 and 6). Caution is needed, however, when making comparisons between alive and deceased persons within age categories.

At first glance, a comparison between 10-year age groups shows higher lifetime earnings for workers who died than for those who were still alive (Tables 2 and 6). That comparison is misleading, however, because the two groups are not of the same age. Within each age bracket, those who die tend to be older than those who survive. The deceased therefore have more years of work and higher lifetime earnings—a result that is most pronounced for the oldest age group (Tables 3 and 7).

Average Annual Earnings

To solve the problem created by the age brackets, we considered using individual years of age, but some of the data cells in the CWHS would then be too small to produce reliable estimates. Instead, we divided lifetime earnings by the number of years worked to produce a measure of average annual earnings (Tables 4 and 8). That measure reduces the impact of the number of years worked within age brackets and allows a better comparison of those who died with those still alive.

Looking at average annual earnings, we see that workers in 1996 who had died by the end of 1997 generally had lower indexed lifetime average annual earnings per years worked than those who were still alive. That finding was more pronounced for black workers under age 50 (Table 4). Also, black workers in 1996 who became entitled to disability benefits in 1997 had somewhat lower indexed lifetime average annual earnings per years worked across age groups than those who did not become entitled (Table 8). Workers of other racial groups who became entitled to disability benefits had much lower average annual earnings.

Table 1. Number and percentage of all workers with Social Security taxable earnings in 1996
Age in 1996 Total Alive Deceased a
Number of workers, 1997 status
All workers
Total 141,640,900 141,181,300 459,600
Under 30 42,956,300 42,935,500 20,800
30–39 36,881,000 36,832,800 48,200
40–49 32,235,200 32,156,700 78,500
50–59 18,903,900 18,802,000 101,900
60 and older 10,664,500 10,454,300 210,200
Black
Total 15,972,200 15,912,800 59,400
Under 30 5,467,400 5,461,200 6,200
30–39 4,489,500 4,481,300 8,200
40–49 3,465,500 3,453,300 12,200
50–59 1,675,900 1,661,900 14,000
60 and older 873,900 855,100 18,800
All other
Total 125,668,700 125,268,500 400,200
Under 30 37,488,900 37,474,300 14,600
30–39 32,391,500 32,351,500 40,000
40–49 28,769,700 28,703,400 66,300
50–59 17,228,000 17,140,100 87,900
60 and older 9,790,600 9,599,200 191,400
As a percentage of all workers in category, 1997 status
All workers
Total 100.0 99.7 0.32
Under 30 100.0 100.0 0.05
30–39 100.0 99.9 0.13
40–49 100.0 99.8 0.24
50–59 100.0 99.5 0.54
60 and older 100.0 98.0 1.97
Black
Total 100.0 99.6 0.37
Under 30 100.0 99.9 0.11
30–39 100.0 99.8 0.18
40–49 100.0 99.6 0.35
50–59 100.0 99.2 0.84
60 and older 100.0 97.8 2.15
All other
Total 100.0 99.7 0.32
Under 30 100.0 100.0 0.04
30–39 100.0 99.9 0.12
40–49 100.0 99.8 0.23
50–59 100.0 99.5 0.51
60 and older 100.0 98.0 1.95
NOTE: Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted for delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
Table 2. Mean indexed lifetime Social Security taxable earnings, 1951–1996, for all workers with Social Security taxable earnings in 1996 (in 1996 dollars)
Age in 1996 Total Alive Deceased a
All workers, 1997 status
Total 353,125 352,061 679,889
Under 30 55,612 55,609 62,022
30–39 266,779 266,820 235,601
40–49 496,496 496,484 501,181
50–59 706,547 706,240 763,213
60 and older 790,272 788,684 869,252
Black, 1997 status
Total 254,217 253,474 453,226
Under 30 42,108 42,116 35,708
30–39 196,087 196,151 161,614
40–49 403,475 403,571 376,239
50–59 595,770 595,596 616,413
60 and older 632,972 632,673 646,550
All other, 1997 status
Total 365,696 364,585 713,531
Under 30 57,581 57,575 73,196
30–39 276,577 276,609 250,768
40–49 507,701 507,663 524,172
50–59 717,323 716,968 786,594
60 and older 804,313 802,582 891,127
NOTES: Earnings have been adjusted to 1996 dollars using the wage index that the Social Security Administration uses to calculate benefits (see SSA's Annual Statistical Supplement to the Social Security Bulletin, Table 2.A8). Earnings before 1951 have been excluded because they are only available in aggregated form and are more difficult to index.
Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted for delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
Table 3. Mean number of years with Social Security taxable earnings, 1951–1996, for all workers with Social Security taxable earnings in 1996
Age in 1996 Total Alive Deceased a
All workers, 1997 status
Total 18.2 18.2 31.0
Under 30 6.5 6.5 8.5
30–39 16.0 16.0 16.6
40–49 23.5 23.5 25.2
50–59 30.5 30.5 33.4
60 and older 35.1 35.0 37.4
Black, 1997 status
Total 16.5 16.4 27.2
Under 30 6.2 6.2 7.7
30–39 15.3 15.3 15.8
40–49 23.2 23.1 24.7
50–59 30.2 30.2 33.0
60 and older 34.4 34.4 36.0
All other, 1997 status
Total 18.4 18.4 31.5
Under 30 6.6 6.6 8.9
30–39 16.1 16.1 16.7
40–49 23.6 23.6 25.3
50–59 30.5 30.5 33.5
60 and older 35.1 35.1 37.6
NOTES: Earnings have been adjusted to 1996 dollars using the wage index that the Social Security Administration uses to calculate benefits (see SSA's Annual Statistical Supplement to the Social Security Bulletin, Table 2.A8). Earnings before 1951 have been excluded because they are only available in aggregated form and are more difficult to index.
Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted for delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
Table 4. Mean indexed lifetime Social Security taxable earnings, 1951–1996, divided by number of years worked, for all workers with Social Security taxable earnings in 1996 (in 1996 dollars)
Age in 1996 Total Alive Deceased a
All workers, 1997 status
Total 19,402 19,344 21,932
Under 30 8,556 8,555 7,297
30–39 16,674 16,676 14,193
40–49 21,127 21,127 19,888
50–59 23,165 23,155 22,851
60 and older 22,515 22,534 23,242
Black, 1997 status
Total 15,407 15,456 16,663
Under 30 6,792 6,793 4,637
30–39 12,816 12,820 10,229
40–49 17,391 17,471 15,232
50–59 19,727 19,722 18,679
60 and older 18,400 18,392 17,960
All other, 1997 status
Total 19,875 19,814 22,652
Under 30 8,724 8,723 8,224
30–39 17,179 17,181 15,016
40–49 21,513 21,511 20,718
50–59 23,519 23,507 23,480
60 and older 22,915 22,866 23,700
NOTES: Earnings have been adjusted to 1996 dollars using the wage index that the Social Security Administration uses to calculate benefits (see SSA's Annual Statistical Supplement to the Social Security Bulletin, Table 2.A8). Earnings before 1951 have been excluded because they are only available in aggregated form and are more difficult to index.
Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted for delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
Table 5. Number and percentage of workers with Social Security taxable earnings in 1996, excluding workers who retired, died, or became disabled before January 1, 1997
Age in 1996 Total Alive, nondisabled Deceased a Disabled b
Number of workers, 1997 status
All workers
Total 134,886,000 134,473,200 130,400 282,400
Under 30 42,832,600 42,799,500 10,300 22,800
30–39 36,621,000 36,560,700 20,200 40,100
40–49 31,921,800 31,815,000 35,800 71,000
50–59 18,568,000 18,407,900 42,400 117,700
60 or older 4,942,600 4,890,100 21,700 30,800
Black
Total 15,319,800 15,249,200 18,800 51,800
Under 30 5,442,100 5,434,900 2,700 4,500
30–39 4,433,200 4,421,100 3,000 9,100
40–49 3,397,900 3,376,100 5,700 16,100
50–59 1,618,200 1,595,400 5,100 17,700
60 or older 428,400 421,700 2,300 4,400
All other
Total 119,566,200 119,224,000 111,600 230,600
Under 30 37,390,500 37,364,600 7,600 18,300
30–39 32,187,800 32,139,600 17,200 31,000
40–49 28,523,900 28,438,900 30,100 54,900
50–59 16,949,800 16,812,500 37,300 100,000
60 or older 4,514,200 4,468,400 19,400 26,400
As a percentage of all workers in category, 1997 status
All workers
Total 100.0 99.7 0.10 0.21
Under 30 100.0 99.9 0.02 0.05
30–39 100.0 99.8 0.06 0.11
40–49 100.0 99.7 0.11 0.22
50–59 100.0 99.1 0.23 0.63
60 or older 100.0 98.9 0.44 0.62
Black
Total 100.0 99.5 0.12 0.34
Under 30 100.0 99.9 0.05 0.08
30–39 100.0 99.7 0.07 0.21
40–49 100.0 99.4 0.17 0.47
50–59 100.0 98.6 0.32 1.09
60 or older 100.0 98.4 0.54 1.03
All other
Total 100.0 99.7 0.09 0.19
Under 30 100.0 99.9 0.02 0.05
30–39 100.0 99.9 0.05 0.10
40–49 100.0 99.7 0.11 0.19
50–59 100.0 99.2 0.22 0.59
60 or older 100.0 99.0 0.43 0.58
NOTE: Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted for delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
b. Includes workers with 1997 entitlements to disability benefits awarded as of June 1998. Not all eventual 1997 entitlements were awarded by June 1998.
Table 6. Mean indexed lifetime Social Security taxable earnings, 1951–1996, for workers with Social Security taxable earnings in 1996, excluding workers who retired, died, or became disabled before January 1, 1997 (in 1996 dollars)
Age in 1996 Total Alive, nondisabled Deceased a Disabled b
All workers, 1997 status
Total 332,784 332,178 581,040 506,892
Under 30 55,651 55,650 60,476 53,939
30–39 267,616 267,690 232,969 217,906
40–49 498,099 498,250 524,172 417,081
50–59 708,174 708,345 760,766 662,568
60 or older 739,347 738,083 894,787 830,569
Black, 1997 status
Total 242,402 241,631 399,825 412,139
Under 30 42,132 42,124 29,179 59,010
30–39 197,024 197,040 156,027 202,563
40–49 406,126 406,311 375,363 378,339
50–59 598,803 598,813 642,211 585,408
60 or older 611,246 610,661 676,087 633,396
All other, 1997 status
Total 344,365 343,759 611,567 528,177
Under 30 57,618 57,618 71,595 52,692
30–39 277,338 277,408 246,389 222,409
40–49 509,055 509,165 552,351 428,442
50–59 718,616 718,739 776,976 676,226
60 or older 751,504 750,108 920,715 863,431
NOTES: Earnings have been adjusted to 1996 dollars using the wage index that the Social Security Administration uses to calculate benefits (see SSA's Annual Statistical Supplement to the Social Security Bulletin, Table 2.A8). Earnings before 1951 have been excluded because they are only available in aggregated form and are more difficult to index.
Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted for delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
b. Includes workers with 1997 entitlements to disability benefits awarded as of June 1998. Not all eventual entitlements were awarded by June 1998.
Table 7. Mean number of years with Social Security taxable earnings, 1951–1996, for workers with Social Security taxable earnings in 1996, excluding workers who retired, died, or became disabled before January 1, 1997
Age in 1996 Total Alive, nondisabled Deceased a Disabled b
All workers, 1997 status
Total 17.4 17.3 26.8 27.2
Under 30 6.5 6.5 8.0 7.9
30–39 16.0 16.0 16.2 17.2
40–49 23.5 23.5 25.3 25.0
50–59 30.5 30.5 33.2 32.9
60 or older 32.5 32.5 35.2 37.6
Black, 1997 status
Total 15.8 15.8 24.0 25.7
Under 30 6.2 6.2 6.7 8.8
30–39 15.3 15.3 15.3 16.9
40–49 23.2 23.1 24.1 25.2
50–59 30.2 30.2 32.9 32.5
60 or older 32.3 32.2 36.1 36.0
All other, 1997 status
Total 17.6 17.5 27.2 27.5
Under 30 6.6 6.6 8.5 7.7
30–39 16.1 16.1 16.4 17.3
40–49 23.6 23.6 25.5 25.0
50–59 30.5 30.5 33.2 33.0
60 or older 32.5 32.5 35.1 37.9
NOTES: Earnings have been adjusted to 1996 dollars using the wage index that the Social Security Administration uses to calculate benefits (see SSA's Annual Statistical Supplement to the Social Security Bulletin, Table 2.A8). Earnings before 1951 have been excluded because they are only available in aggregated form and are more difficult to index.
Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted or delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
b. Includes workers with 1997 entitlements to disability benefits awarded as of June 1998. Not all eventual 1997 entitlements were awarded by June 1998.
Table 8. Mean indexed lifetime Social Security taxable earnings, 1951–1996, divided by number of years worked, for workers with Social Security taxable earnings in 1996, excluding workers who retired, died, or became disabled before January 1, 1997 (in 1996 dollars)
Age in 1996 Total Alive, nondisabled Deceased a Disabled b
All workers, 1997 status
Total 19,126 19,201 21,681 18,636
Under 30 8,562 8,562 7,560 6,828
30–39 16,726 16,731 14,381 12,669
40–49 21,196 21,202 20,718 16,683
50–59 23,219 23,224 22,915 20,139
60 or older 22,749 22,710 25,420 22,090
Black, 1997 status
Total 15,342 15,293 16,659 16,037
Under 30 6,795 6,794 4,355 6,706
30–39 12,877 12,878 10,198 11,986
40–49 17,505 17,589 15,575 15,013
50–59 19,828 19,828 19,520 18,013
60 or older 18,924 18,965 18,728 17,594
All other, 1997 status
Total 19,566 19,643 22,484 19,206
Under 30 8,730 8,730 8,423 6,843
30–39 17,226 17,230 15,024 12,856
40–49 21,570 21,575 21,661 17,138
50–59 23,561 23,565 23,403 20,492
60 or older 23,123 23,080 26,231 22,782
NOTES: Earnings have been adjusted to 1996 dollars using the wage index that the Social Security Administration uses to calculate benefits (see SSA's Annual Statistical Supplement to the Social Security Bulletin, Table 2.A8). Earnings before 1951 have been excluded because they are only available in aggregated form and are more difficult to index.
Data are from SSA's 1997 1 percent Continuous Work History Sample and have not been adjusted for delinquent postings.
a. Data may be incomplete for deceased workers who never collected a benefit or had no survivors.
b. Includes workers with 1997 entitlements to disability benefits awarded as of June 1998. Not all eventual 1997 entitlements were awarded by June 1998.

Appendix - Sampling Variability

The tables in this note present data that are from a 1 percent sample file drawn from the administrative records of the Social Security Administration.

Because of sampling variability, estimates based on sample data may differ from the figures that would have been obtained had we used all of the records rather than specified samples. The standard error is a measure of sampling variability. About 68 percent of all possible probability samples selected with the same specifications will give estimates within one standard error of the figure obtained from the compilation of all records. Similarly, about 95 percent will give estimates within two standard errors, and about 99 percent will give estimates within two and one-half standard errors. The standard error of an estimate depends on the design element, such as the method of sampling, sample size, and the estimation process.

Because of the large number of data cells tabulated from the sample files, it is not practical to calculate the standard error for every possible cell. However, we do estimate standard errors for a large number of cells. We used those estimates to fit regression curves to provide estimates of approximate standard errors associated with tabulated counts and proportions.

Tables A-1 and A-2 show the sampling variability and provide a general order of magnitude for similar estimates from the various sample files. Table A-1 presents approximate standard errors for the estimated number of persons from the 1 percent sample file. The reliability of an estimated percentage depends on the size of both the percentage and the total on which the percentage is based. Data in Table A-2 provide approximations of the standard errors of the estimated percentage of persons in the 1 percent sample file. The standard errors are expressed in percentage points, and the bases shown are expressed in terms of the estimated total population.

Table A-1. Approximation of standard errors for estimated number of persons from 1% sample file
Size of estimate (inflated) Standard error
500 250
1,000 300
2,500 500
5,000 800
7,500 900
10,000 1,100
25,000 1,700
50,000 2,400
75,000 3,000
100,000 3,400
250,000 5,400
500,000 7,800
750,000 9,600
1,000,000 11,100
5,000,000 25,800
10,000,000 36,900
25,000,000 57,700
50,000,000 76,100
75,000,000 82,900
 
Table A-2. Approximation of standard errors of estimated percentage of persons from 1% sample file
Size of base (inflated) Estimated percentage
2 or 98 5 or 95 10 or 90 25 or 75 50
1,000 4.7 7.3 10.1 14.5 16.8
10,000 1.5 2.3 3.2 4.6 5.3
50,000 0.7 1.0 1.4 2.1 2.4
100,000 0.5 0.7 1.0 1.5 1.7
1,000,000 0.1 0.2 0.3 0.5 0.5
5,000,000 0.1 0.1 0.1 0.2 0.2
10,000,000 a 0.1 0.1 0.2 0.2
50,000,000 a a a 0.1 0.1
100,000,000 a a a a a
a. Less than 0.05 percent.

Notes

1. See also Alexa A. Hendley and Natasha F. Bilimoria, "Minorities and Social Security: An Analysis of Racial and Ethnic Differences in the Current Program," Social Secuirty Bulletin, vol. 62, no. 2 (1999), pp. 59–64.

2. See also Charles G. Scott, "Identifying the Race or Ethnicity of SSI Recipients," Social Security Bulletin, vol. 62, no. 4 (1999), pp. 9–20.

3. See Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 1999, Table 2.A8.