Work and Benefit Applications through the Second Year of the COVID-19 Pandemic


During the first year of the COVID-19 pandemic, workers ages 50 to 70 were about 10 percent less likely to be working relative to pre-pandemic levels. Unlike in previous recessions, when older workers turned to Social Security disability insurance or retirement benefits, the drop in employment in the pandemic’s first year was accompanied by a decline in applications for disability insurance and no significant change in retirement applications.

As the pandemic continued into a second year, older individuals may have readjusted their work or benefit claiming behavior in response to changing circumstances. The public programs enacted in the pandemic’s early days wound down, with the final round of economic impact payments being made in March 2021 and expanded federal unemployment insurance (UI) benefits ending between June and September 2021, depending on the state. Vaccines became widely available, new coronavirus variants emerged, and some pandemic-induced restrictions on activities were lifted. Many workers learned whether remote work options would become permanent. Low unemployment rates, supply shortages, rising inflation, and the continued closure of Social Security Administration offices also characterized this period.

In Older Workers’ Employment and Social Security Spillovers through the Second Year of the COVID-19 Pandemic (NBER RDRC Working Paper NB22-01), researchers Gopi Shah Goda, Emilie Jackson, Lauren Hersch Nicholas, and Sarah Stith examine employment outcomes for older adults and their participation in disability insurance and retirement programs through the second year of the pandemic.

In the second year of the pandemic, employment moved closer to the level that would have been expected based on pre-pandemic trends. Employment was 3.1 percentage points lower than predicted levels for 50-to-61-year-olds and 2.5 percentage points lower for 62-to-70-year-olds, representing declines of 4.5 and 7 percent relative to expected levels. In year two, most of the decrease in employment was due to people being out of the labor force, unlike in year one, when unemployment was the most important reason for people to be out of work. This is consistent with some individuals who were previously unemployed and looking for work choosing to leave the labor force altogether in the second year of the pandemic.

Turning to Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) applications, the authors observe a sharp reduction in total SSI and SSDI applications that leveled off at the end of year one around five fewer applications per 100,000 individuals ages 20 to 64 than would have been predicted. Overall applications, concurrent SSI and SSDI applications, and SSI only remained at approximately the same depressed level through the second year of the pandemic, though SSDI only applications have rebounded to typical levels.

Applications for Social Security retired worker benefits were essentially unchanged during the first year of the pandemic, though there was a roughly 7 percent increase in applications filed online and a similar decrease in applications filed offline (via phone and in person). In year two, total applications increased by 3.3 percent relative to the pre-pandemic mean. This increase in year two is consistent with more older individuals reporting that they are not participating in the labor force due to retirement. Finally, the authors explore the relationship between the expiration of extended UI benefits and disability applications, making use of the fact that states discontinued these benefits at different times. They find that in the months following expiration, concurrent SSI and SSDI applications rose by about 0.6 applications per 100,000 individuals ages 20 to 64, or about half of the decline seen over the course of the pandemic. Changes in SSDI only and SSI only applications were not statistically significant.

The pandemic recession has differed in many ways from prior recessions. The authors conclude, “it will be important to continue to monitor how labor market outcomes among older workers and spillovers to Social Security change as the COVID-19 pandemic transitions to an endemic state.”

The research reported herein was performed pursuant to grant RDR18000003 from the US Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA, any agency of the federal government, or NBER. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof. This project was also supported by grant number T32HS026128 from the Agency for Healthcare Research and Quality. The content is solely the responsibility of the authors and does not necessarily represent the official views of the Agency for Healthcare Research and Quality. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.