Optimistic Jobs Numbers Obscure Swelling Social Security Disability Insurance Rolls

Joanne Butler Contributor
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Lost in the cheering over from President Obama’s hype section over last Friday’s jobs report was a major factor:  the millions of unemployed on the federal disability rolls. If we added them, plus those who have given up looking for work, then April’s unemployment numbers don’t look so bright – a shameful prognosis in the sixth year of the Obama administration.

First, let’s look at how many people who’ve given up looking for work. The Department of Labor’s Bureau of Labor Statistics has a nice euphemism for them; they’re called “discouraged workers.” In Friday’s BLS monthly report for April 2014, the agency estimated the number of discouraged workers at 783,000, and stated this figure was unchanged from a year ago. BLS defines a discouraged person as wanting and ready for work, but has given up searching for a job because they believe no jobs are available.

Social Security’s statistics add another piece to the unemployed population puzzle.

First, from 2009 through 2013, 11.2 million people have applied for Social Security Disability Insurance (SSDI) benefits (available to people with sufficient work history and their families). Some of these applications involve spouses and disabled children, but most involve workers.

According to the Social Security Administration (SSA), as of March 2014, about nine million workers were receiving SSDI benefits. The basic factor in disability benefits decisions is whether or not the worker has a disabling condition which prevents the person from working. However, other significant factors are involved.

Many workers applying for SSDI are age 50 or over, as the agency’s regulations state that workers below age 50 are more likely to return to work, while the over-50s are less likely. Further, if the worker is 55 or older, the agency’s rules indicate he/she is of “advanced age” and even less likely to return to work. The same rules increase the odds of not returning to work if the applicant is age 60 or older (as age 62 is the first year a worker can apply for early Social Security retirement benefits). Bottom line: if you’re age 50 or older, your chances of being approved for benefits is higher and will increase.

The other determining factor involves education and skill level.

Let’s say Marty dropped out of high school in 11th grade, and immediately went to work in a local furniture factory. Marty is 52 years old and has spent over 30 years making furniture. Decades of bending, stooping, plus pressure on his joints from using high-powered stapling guns have given him arthritis in his legs and arms. He’s developed back problems that make it difficult for him to stand or sit for long periods.

Marty’s work has been physical, not analytical. The idea that Marty could become a computer programmer or take a less-skilled job that involved computers would be stretch (besides, he’s got arthritis in his elbows). Maybe, just maybe, his former employer could have found less-demanding work for Marty to do, but the plant is locked and shuttered. The few remaining plants in his region aren’t hiring.

Marty needs an income and medical benefits, so he applies for SSDI. While he’s waiting for his application to be processed, he learns that’s he eligible for a low-income subsidy for Obamacare and he applies and receives that too.

The number of SSDI applicants is worth noting, as it consists of another segment of the population that’s unemployed. During the month of December 2013 (most recent data available), over 168,000 workers applied for SSDI benefits. While this was the lowest month for SSDI worker applications in 2013, the total number of applications for that year was 2.6 million. That’s 2.6 million workers who aren’t working and haven’t worked for some time.

Looking ahead, after doing a bit of extrapolation (say 160,000 applications per month) I reckoned the first four months of 2014 would yield 640,000 SSDI applications. That adds over a half-million workers who also have been unemployed for awhile.

SSA also administers a second disability program: Supplemental Security Income (SSI). Its population includes disabled non-working adults without enough work history to qualify for SSDI, who also have very low incomes. According to the Social Security Administration, as of March 2014, about five million people of working age (18-64) were receiving SSI benefits.

A final note: once Marty and his counterparts go on SSDI or SSI, the chances of their returning to the workforce are remote, as the risks outweigh the benefits.

SSDI beneficiaries eventually receive Medicare in addition to their cash payments. If Marty’s cash payments are low enough, he may be eligible for food stamps and a housing subsidy.

Meanwhile, SSI recipients receive Medicaid plus a cash payment (plus food stamps, housing subsidies, etc.).

My message for Obama’s cheerleaders: you can put away your pom-poms. The current unemployment rate is, in fact, nothing to brag about. Millions of Americans, many over 50, have given up looking for work, and vanished from the labor market like ghosts. This is a shameful fact in the sixth year of the Obama administration, and American families (who pay no attention to esoteric BLS statistical reports) know it.