More on disability, fewer seeking work
THE Great Recession, which began in December 2007, ended in June 2009, we are told. The recovery of the U.S. economy is picking up steam now. Employment, not so much.
The U.S. Labor force participation rate fell last month to the lowest level since 1979. Job growth was pegged at 88,000 in March - way below estimates.
As a story in the Wall Street Journal pointed out this week, temporary economic factors may be leading to permanent economic losses.
An economist for J.P. Morgan said about a quarter of the drop in participation rate comes from a rise in the resort to Social Security Disability benefits. Most of those who go to that program won't return to work.
It's easy to understand why.
David Autor, a professor at Massachusetts Institute of Technology, said many low-wage workers with limited skills "are pretty unlikely to want to forfeit economic security for a precarious job market."
Last year, the program paid out $137 billion in benefits to 8.8 million disabled workers. And because people on that program qualify for Medicare after two years of eligibility, the American taxpayer also paid out about $80 billion in Medicare benefits.
In 2011, fewer than half a percent of Social Security Disability beneficiaries returned to work.
States have an incentive to boost the number of people on SSD. Federal checks replace state-paid benefits. In addition, recipients eventually move from Medicaid programs, the cost of which weighs heavily on states, to the Medicare program, which does not.
The number of Americans receiving disability benefits was 7.1 million in 2007. Now it's 8.9 million people.
President Obama suggests closing a loophole that lets people collect disability and unemployment at the same time. Some lawmakers would go further.
Truly permanently disabled people must have help. But Social Security Disability needs to be rethought.
As the authors of the Journal story put it, having fewer people in the workforce instead of the job market is "the wrong direction for an economy that instead needs new legions of working men and women to drive growth and sustain a baby boomer generation headed to retirement."