The labor force participation rate fell to 63.3% last month, the lowest level since the Jimmy Carter administration. One of the reasons so many Americans aren’t working or looking for work is that a record number of them are on disability.
The number of Americans enrolled in the Social Security Disability program hit an all-time high of 8.9 million in March, up from 455,000 in 1960 and about 7.4 million when Obama took office in January 2009. Some of the rise in disability payments can be explained by America’s growing population and the dismal employment environment generally. But there’s another factor at play: America’s changing attitude toward work. There used to be a powerful stigma against idleness. That stigma has largely vanished.
In order to receive Social Security Disability, a person must have a severe disability (or combination of disabilities) that is expected to either result in death or last at least 12 months, and which prevents them from working at a “substantial gainful activity” level.
Many people try to game the system. Some are able to work but simply don’t so that they can collect benefits instead, while others claim they are unable to work but collect disability while working on the side.
It’s a generous program. The average monthly disability payment is $1,130, and after two years on disability, recipients become eligible for Medicare.
America’s flight from work began long before the current economic downturn. The ratio of full-time workers to people collecting disability was 51 to 1 in December 1968. By January 1997, it had reached 24 to 1.
But the problem has grown worse in the Obama era. Today there are only 13 full-time workers for every person collecting disability. Since January 2009, the number of people on disability has increased more than the number of people working.
Critics point out that only about one-third of those who apply for disability receive it. That may be true, but it merely underscores how hard some people are willing to work in order not to have to work. Many people are persistent in applying, and most who apply eventually succeed.
Once people are on disability, they rarely leave. Of the 653,877 people who left the program in 2011, 36% died and 52% moved to other benefit programs. Just 6% returned to work and only 3.6% left the program due to an improvement in their medical condition. The estimated average lifetime cost of a disability award is about $300,000.
One problem is that standards for proving disability vary widely from state to state; another is that administrative courts often rubber stamp approvals. But the biggest problem is that the majority of new beneficiaries receive payments for disabilities that are difficult or impossible to verify — like musculoskeletal problems or mental illness, a category that includes mood disorders.