Apr 8, 2013

Now We Know What's Wrong With Social Secuity Disability. It's A Case Of Hysteresis!

     From the Wall Street Journal:
The unexpectedly large number of American workers who piled into the Social Security Administration's disability program during the recession and its aftermath threatens to cost the economy tens of billions a year in lost wages and diminished tax revenues.
Signs of the problem surfaced Friday, in a dismal jobs report that showed U.S. labor force participation rates falling last month to the lowest levels since 1979, 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.
Michael Feroli, chief U.S. economist for J.P. Morgan, estimates that since the recession, the worker flight to the Social Security Disability Insurance program accounts for as much as a quarter of the puzzling drop in participation rates, a labor exodus with far-reaching economic consequences. ...
Former truck driver James Ottesen, who began receiving monthly payments in 2009, said, "I'm not real happy" about being on disability. "It kind of reminds me of welfare." He said he would "like to get re-educated to do something" because "my body is broke but my mind is not."
But even if the 53-year-old Ohio man learned of a job he could do with herniated discs, he said, the government disability program feels like "a blanket covering you, and to walk out from it…at my age, it's a little intimidating." ...
It is no longer a theoretical problem, said David Autor, a professor at the Massachusetts Institute of Technology, who has studied the disability program. The economy has a case of hysteresis, he said, created by the permanent transfer of workers to disability rolls.
Many newcomers to the disability roster are low-wage earners with limited skills, Mr. Autor said, and they are "pretty unlikely to want to forfeit economic security for a precarious job market."


Anonymous said...

That's actually a pretty good synopsis, minus the hysterisis. Who wants to trade economic security, no matter how small, for the unknown? I think that's the part people often overlook is that people certainly don't get rich or in most cases even live comfortably on disability, but they ultimately adjust their lifestyle to fit their income as best they can. Giving up that security when they have worked very little in the past is daunting.

Anonymous said...

I'll repost my previous comment.

Currently i'm a beneficiary. The ADA does not provide full protection against hostle employers and co workers although it may provide some relief but it can be considered barely relief. I wish the government would sponsor certain employers similar to an enhanced ADA act that would give employers more incentive to not only help a person with disabilities but treat that impaired person with respect and or dignity.

Such a sponsorship would perhaps be effective in lowering the disability rolls.

Anonymous said...

Lets see, we still have unemployment at about 7.6%. There is 7.6% of the healthy workforce who can't find jobs. Yet somehow, the real problem is there are not enough disabled people seeking work?

This is all BS. It has always been possible to deny claims for ability to do PRW. So the mere loss of a job is not sufficient to trigger eligibility for disability benefits. To the extent that somebody meets a listing, or meets the grid and cannot do PRW, there is nothing scandalous about that person receiving DIB even if they might be able to find work in a robust economy.

Anonymous said...

I wonder what the percentage is of disability recipients with more than a high school diploma? I'm guessing pretty darn low. Not that having a college degree guarantees employment, but I would think it does demonstrate the ability to do "other work".

Why doesn't the government require the disability recipients under a specific age, say 45 or something, to go to vocational rehabilitation to keep the benefits? Remove the two year wait for Medicare, get the people some medical help, and get them trained to do a job they can tolerate. Isn't something better than nothing? Don't the people who get benefits want to be self sufficient?