Social Security: Proposed Changes to the Earnings Test Page: 1 of 6
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Order Code 98-789 EPW
Updated June 23, 2003
CRS Report for Congress
Received through the CRS Web
Social Security: Proposed Changes
to the Earnings Test
Domestic Social Policy Division
On April 7, 2000, President Clinton signed H.R. 5, the Senior Citizens' Freedom
to Work Act. The new law (P.L. 106-182) eliminated the Social Security earnings test
- which reduces the benefits of recipients who work and earn more than a specified
amount - for recipients between the "full retirement age" (currently age 65 and two
months) and age 70, effective January 1, 2000. In the 108th Congress, Representatives
Shaw and Sessions have introduced bills (H.R. 75 and H.R. 2311, respectively) that
would eliminate the earnings test for recipients age 62 and older. This report will be
With variations, the earnings test has been part of the Social Security program since
its beginning. It reduces the benefits of recipients under a certain age who earn income
from work in excess of a certain sum (the "exempt amount"). It does not apply to
disabled recipients.1 The original rationale for the test was that, as a "social insurance"
system, Social Security protects workers from certain risks, among them the loss of
income due to their retirement, and therefore benefits should be withheld from workers
who show by their substantial earnings that they have not in fact "retired."
Old Law. Before passage of P.L. 106-182, the law provided different tests for
recipients under and over the full retirement age. Recipients who would not attain the full
However, in the disability program earnings above a certain amount indicate ability to engage
in "substantial gainful activity" (SGA) and therefore disqualify a person from receiving benefits.
For non-blind recipients, that amount is set by regulation at $800 a month. Before enactment of
P.L. 104-121, SGA for the blind was tied to the monthly earnings test (the annual exempt amount
divided by 12) for those who have attained the full retirement age. P.L. 104-121 removed this
linkage. Instead, the SGA level for the blind continues as before (i.e., adjusted annually to reflect
growth in average wages - it is $1,330 a month in 2003). For more information, see CRS
Report RS20479, Social Security: Substantial Gainful Activityfor the Blind, updated periodically.
Congressional Research Service V The Library of Congress
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Social Security: Proposed Changes to the Earnings Test, report, June 23, 2003; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc809231/m1/1/: accessed August 14, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.