Disability Benefits As An Economic Escape Hatch

Joanne Butler Contributor
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Friday’s positive jobs report for March 2016 has some liberals scratching their heads, wondering why voters are so angry. Part of the answer is: the jobs number looks better than it should, as so many people have exited the workforce completely – shrinking the pool of available workers.  For example, according to Social Security’s statistics, from January 2012 through last month, about 5.7 million people were awarded Social Security disability benefits. 

These 5.7 million people aren’t working or looking for work. That’s a significant number.

Now if you’re one of those think-tank types who sees this number as an indication of something wrong about the disability insurance system, you’re missing the point.

The point is that 5.7 million people realized the economy was never going to recover for them, and they went to the disability system for relief.

Social Security’s disability system awards ‘bonus’ points to those who are over age fifty (with more points added for even older workers) with low levels of education (e.g., high school dropout). As you might expect, many of these workers had jobs involving physical labor, some have mental issues too.

I imagine quite a few of the 5.7 (and their families) wonder if the economy will ever get around to recovering to the point where people at the higher end of the age scale but also at the lower end of the education scale can find jobs. And I expect they wonder about the prospects for their children, especially if they too are low-skilled, and lack education.

Now consider the situation of similar workers who are a bit younger than 50, and trying to hang on to their jobs. Disability benefits aren’t lavish; the average amount is about $930 monthly (plus Medicare, eligibility for food stamps, etc). Most of these workers, I think, would prefer to keep working rather than join the disability cohort. But they may not have a choice if the economic recovery doesn’t touch them.

And liberals wonder why voters are angry.

In fairness, the peak period for disability awards over the past three years was January 2012 through November 2013, with March 2012 being a record month, with about 143,000 claims awarded. December 2013 was the first month since January 2012 that awards dipped below 100,000 per month.

But the decline hasn’t been steady: April 2014 had over 123,00 claims awarded, April 2015 with nearly 116,000 awards.

A bright spot, however, is March 2016’s number of 92,128 awards – the lowest in the past three years. Another is that 2015 overall had the lowest number of awards (1,220,225) in the past 10 years, against 2010’s high of 1,683,115.  

These disability numbers seem to indicate that aging low skilled workers have left the employment pool for good. It doesn’t mean they’re happy about it.

And what about their younger brothers and sisters? What will our slow motion Obama recovery do for them?

It’s easy to be mystified at voters’ anger while sitting in a comfy chair with a laptop and a latte. But the answer’s clear as day if someone’s age 48, on their feet for 40 hours a week, and their knees are shot. Or they were on their feet 40 hours per week, but the company cut the work hours due to Obamacare’s costs. Happier knees, but a smaller paycheck in the end.

You don’t need to be Sherlock Holmes to solve this mystery. Seven years of Obama’s economic policies have done little for people who were the most vulnerable during the ‘Great Recession.’ And those people are angry. And they vote.