Saturday, March 30, 2013

How much would you have to earn in a job in order to not take Federal Disability Compensation (assuming you qualify)? I do the math for you and ask: "What would YOU do in this situation?"?

This post comes as a result of thinking about the much discussed NPR story on the Federal Disability program and the real (or perceived) abuses.

I want to put the benefit amount recieved by qualified recipients in perspective.

The average monthly check a person receives from the Federal Disability program is $1,202.96 (Source HERE).

If this person were working and earning a wage, to earn this amount after taxes, they would have to make about $1,382.00 (I took $1,202.96 and multiplied by 1.15 to add on 15% in various taxes and deductions--this may be high OR low)

If this person were to work 4.3 weeks a month (on average) and work 40 hours per week, then that would work out to an hourly wage of $8.03 (40 X 4.3 = 172.  $1382/172 = $8.03)

Opportunity Cost.  Presumably, the incentive to "get off" Federal Disability compensation would require a nominal wage of AT LEAST $8.03 per hour, but it is probably much higher. This is assuming there are no addtional benefits being collected.  There are also additonal costs of going to work---transportation costs, clothing costs, daycare, etc that people have to factor in.

The minimum wage is $7.25 per hour (some States it is higher).

This is the choice people face. It is the incentive before them.

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