The economic advancement of the mentally ill in the community: 2. Economic choices and disincentives.

In order to evaluate the extent to which economic factors influence the life choices of people with mental illness, we interviewed 50 mentally ill people living in Boulder, Colorado. Subjects experience significant financial disincentives to work. The average total cash and noncash income of part-time employed subjects ($1,028 a month) is only modestly higher than that of unemployed subjects ($929 a month). Most clients calculate that $5 is the minimum hourly wage which makes work economically practical. Work disincentives could be improved by a more appropriately graduated scheme for reducing disability benefits for beginning workers. A wage subsidy would provide a work incentive to underproductive clients. Psychiatric treatment costs for unemployed subjects in this sample are twice those for the part-time employed. We suggest that research is needed to determine if treatment costs can be reduced by paying clients a wage subsidy.