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Home Publications Blogs Beat the Press Planet Money Misses the Boat on Social Security Disability (Updated with Graph)

Planet Money Misses the Boat on Social Security Disability (Updated with Graph)

Monday, 25 March 2013 14:06

Last week This American Life had a piece on the increase in the number of people on Social Security disability. While the segment had many interesting stories, and presented useful background, it got some of the basics wrong.

While the story did note the impact of the economic downturn on disability claims, it failed to recognize the actual importance of the economic collapse. Instead the piece turned to a variety of other explanations, for example citing the 1996 welfare reform bill.

If we go back to the projections in the 1996 Social Security trustees report, the disability program was projected to cost 1.93 percent of payroll in 2005. As it turned out, the program cost just 1.85 percent of payroll in 2005, about 4 percent less than the trustees had projected in 1996. The program's cost did explode in the downturn, rising to 2.43 percent of payroll in 2011, with a projection of 2.48 percent of payroll for last year.


Social Security Trustees Reports, 1996 and 2012.

However the explanation for this increase seems pretty clear -- the economy is down almost 9 million jobs from its trend growth path. People who would have otherwise been employed find themselves desperate for any means of support due to the inept economic policy that sank the economy. This is a simple explanation that doesn't require examining the moral turpitude of beneficiaries or evidence of corrupt or negligent administrators. Fix the economy and you would remove much of the burden on the program. It is also striking that the projections in the 2012 Trustees Report show the costs again falling below the level projected in 1996 once the unemployment rate gets back down to a more normal level.

Of course that doesn't mean the program was working perfectly before the economic collapse. There were undoubtedly many people getting disability payments who should not have been and also many people who were wrongly denied benefits. The system is grossly understaffed. As a result, many claims take way too long to be processed and often the wrong decision is made.

However, it seems more than a bit of a reach to explain expanding disability roles on some of the items covered in the segment. For example, the welfare reform bill was passed after the projections in the 1996 Trustees report were made. Yet, in 1996 the trustees still projected that disability would cost more a decade later than turned out to be the case. If welfare reform had the effect discussed in the segment, the error should have been in the other direction.

As we say here in the nation's capitol, it's the economy, stupid.

Comments (19)Add Comment
written by Union Member, March 25, 2013 4:13
Planet Money would have us all believe the banks helped the Government make money on TARP while the Poor, the Unemployed, and those who've given up looking for work (cuz there aint any) are making off like bandits exploiting inefficiencies in government oversight of Social Security.
written by Joe, March 25, 2013 4:35
It would have been interesting if the author had interviewed those who had been denied disability so we could also hear his personal views on those people.
It is also interesting that he twice mentions that those on disability are not counted as unemployed. Is he assuming that everyone on disability is there solely because they cannot find a job?
With No Limit on Predatory Fees, Attorneys Can Get Anyone a Guaranteed Income
written by Last Mover, March 25, 2013 4:44
Whatever. What cannot be denied is the influence of attorneys who have wedged themselves into the process with handsome fees set up by SS disability itself for getting applicants awarded disability upon appeal after initial denial as explained in the report, one attorney cited as pulling down $16M in one year from representing 30k clients. Also essential is the high incentive of states desperate to dump the applicants onto federal welfare as costs avoided.

Remind you of anything? Think predatory fees paid by the poor to the likes of landlords, doctors, hospitals, emergency rooms, subprime credit cards, payday loan sharks and so on.

Now the poor - many poor for being unemployed rather than disabled - are getting blamed for abusing disability benefits to secure a pittance of an income of last resort instead of the other way around, the swarm of ambulance chasing attorneys who suddenly got religion and became good samaritans to assist the poor in getting what they "deserve", effectively unemployment insurance rather than the jobs they were robbed of by the rich in the first place.

The real irony is the rich get similar legal representation to protect unearned income and stay out of prison as well, except they get it on a one to one basis. For the poor, it takes price gouging 30k of them to make one attorney rich.
Phase One Only
written by JP, March 25, 2013 8:00
While the week long "expose" is still on the trail I suspect that this is just the opening of the battle to come.
If we use the UK as an example, similar results happened under Thatcher. With unemployment population rising many were transferred to the rolls of the disabled. When you are running for office,it helps to have an unemployment trend going downward. (my editorial comment only)
This was very similar to what NPR described, perhaps with different motives, or not, when PCG (Public Consulting Group)was hired to troll the unemployed rolls and get as many recipients as possible transferred to disability to relieve the individual State's budgetary problems.
Now, in the UK, with a contracting economy and very little government spending to boost the economy (sound familiar!?) the government is pushing an effort to decrease this budgetary expense.
The assault began in the press by demonizing and portraying the disabled as spongers, cheats, and fakers. The UK government, and I predict it will happen in the US, turned to private enterprise to "solve" the perceived problem. ATOS was hired and is being handsomely paid, per head, to remove people from the disability roles. Those not squeemish about counting suicides and subsequent deaths are applauding the cuts.
(another editorial comment!)
NPR is opening the door, portraying one extreme county with 1 in 4 working aged adults as being on disability, to the reactionaries who will use this extreme example for their own ends. Expect the demonizing to begin and, of course, a private enterprise to be hired to "solve" the perceived problem.
written by watermelonpunch, March 25, 2013 9:13
It makes me sick that some people think the economic downturn has turned healthy non-disabled people desperate for money enough that they'd commit fraud. And I'm concerned that the wording this blog post does the same thing:
People who would have otherwise been employed find themselves desperate for any means of support due to the inept economic policy that sank the economy

The above quoted statement should really be qualified for clarity and reality.

The truth is that it's not that non-disabled healthy people are not getting jobs, so they claim they're disabled & get disability.
And that's what people make it sound like.

The reality is, and I think this is an important key issue... that in a good economy, there are plenty of people hiring who are willing to hire someone with disabilities just to fill the position.
While in a bad economy, where jobs openings are slim, and applicants plenty... it's very easy for employers or those doing the hiring to pass over "troublesome" employees with health problems, in wheelchairs, with hearing aids, or who walk with canes, etc...

A bad economy is bad for anyone unemployed. But anyone with half a brain should realize that someone with obvious extra "problems" (as seen from the employer's view) is going to have a much harder time finding employment...
And even more, with less jobs to choose from. After all someone with hearing problems probably cannot do intensive phone work. Most people with an artificial leg are not going to be able to work as a UPS delivery driver. And a 60 year old woman with arthritis, who could easily work any number of part-time desk jobs and may be qualified for them, is not going to find it easy when all that's available as a possibility is manual labour.
NPR caught the boat
written by Kronosaurus, March 25, 2013 11:35
I think this NPR report actually did capture Baker's concerns. They did a good job highlighting a correlation between an economic downturn and rising disability. They explained how it was a way for states to take folks off of welfare and put them on federally funded disability programs. The NPR report implied that disability recipients were rising in places where traditional blue collar work was ending and people were finding themselves unemployable for whatever reason. After reading it I got the impression that traditional welfare roles have been taken over by disability in a quiet manner. The economy and politics are both equally explanatory. I did not get the impression from the author that fraud was the big story, but I did get the impression that disability's rise has taken on such a big dimension that we need to start a serious discussion about how to conceptualize it. Is it welfare or disability? What does it mean if you can't find a job or make ends meet whereas in another location or another time you could work?
written by ljm, March 26, 2013 12:00
So many people hang onto a job by the skin of their teeth with a disability. When they lose that job, especially for older workers, it's nearly impossible to get anyone to hire that person. These people turn to SSDI as a last resort. They'd much rather still be in their jobs. Too many people simply become unemployable and the civil rights laws protecting the disabled at work are a joke. Ask any employment lawyer about the odds someone of winning an employment case under a civil rights law. It's horrible.
re:Phase One Only
written by Joe, March 26, 2013 11:05
As JP said, the demonizing has begun. Already Dick Santelli of CNBC was on a rant this morning about the article. Watch for others to use this to attack the disabled and others who may depend on government. Aside from the usual "everybody is a taker" stuff he did say something I questioned previously. He, like the author, is upset that those on disability are not counted as unemployed. Does anyone know if this is an accurate way to count the unemployed?
My grandmother is disabled and unable to work since she is dead. Yet, she too is not counted as being unemployed?
written by watermelonpunch, March 26, 2013 12:40
There does seem to be something dubious (if not totally ridiculous) about the wish to count all people on disability as "unemployed".

I think normal, fortunate, healthy, people often forget that MANY people on disability are in fact, terminally ill.

Someone in their 30s with terminal metastatic cancer, estimated to have 6 months to 3 years to live at the outside, and undergoing constant radiation or chemotherapy and/or prescribed a cocktail of drugs to treat cancer, anxiety, depression, and intense pain, is unlikely ever to be considered part of the work force again.
As tragic and horrible as that is, and despite being uncomfortable to think about... I think it should be recognized, and respected.

Or how about someone 55, who's lost 2 legs in a car accident caused by a drunk driver, and also suffers from sciatic pain, arthritis, and must spend hours per week in physical therapy, and must take heavy pain medication for several years, only to emerge mostly recovered, but in a wheel chair, with outdated skills in their previous profession, at age 62.

The idea to even HINT at these people somehow being "sponges" on disability is TRULY THE DEPTH OF IMMORALITY.

However, Germany counts "underemployed" people as "unemployed". And I think that could be considered a worthwhile distinction to introduce into statistical data.
For example:
Someone who is able bodied, and wishes to work full time, but can only secure part-time employment.
Someone who is somewhat disabled, but could work part time in a narrow capacity... but is unable to find anyone willing to hire them in the capacity they are capable.

In these situations, perhaps there is a reason to consider the nuances for data purposes.

However, these nuances should not be ignored in any data set. Nor used to demonize people who are disabled at any level... and make unemployment seem like "their own fault so they deserve it therefore they should be ridiculed".
I plowed this ground
written by edward ericson jr, March 26, 2013 1:20
a couple years back. Long story here: http://citypaper.com/news/hardly-working-1.1155113

It's a huge problem. Many causes contribute. But the economic downturn is really the bottom line, not the mid-90s welfare reform that Ira teased the segment with. Quite a bonanza for lawyers, too, but try negotiating the system without one. Now imagine an ex-factory worker trying. Or a person with an IQ of 68.
Chana's story is very empathetic, and offers some concrete suggestions
written by Dennis, March 26, 2013 1:42
Some of the comments here seem to assume that Chana Joffe-Walt is blaming the indigent. I wonder if they actually listened to the podcast and heard the tone of her questions. She never once said that an individual is doing anything other than what makes rational, personal, economic sense. She also would agree with the comments that the economy is the problem, at least the major part. As a liberal, I was still incensed that States hire advocates to shift people from (state-paid) welfare to (Fed-paid) disability, and that lawyers collect 30% of back benefits for presenting the case unopposed to the review board. This can and should be fixed even if we expect the problem to get better when the economy improves.
That graph at the top....
written by Dennis, March 26, 2013 1:53
Lets see. Using current data (up through 2012, which is likely a projection) the program cost has risen at a rate twice the original projections.

BUT IT'S OK, since in the future the cost will come down to match the projection better. Since both the original projection and the 2012 projections come from the same board, is it any surprise that they expect that the future years will show they were right, even if current data doesn't?
written by Dylan Barr, March 26, 2013 2:20
From personal experience with friends who are on SSI I can tell you that they used to survive through a combination of part time work, dumpster diving the excesses of capitalism, and familial and friend support. But now there is less waste because people are being thriftier, family budgets are more strapped so they can provide less help (free housing, food, etc), AND the job market is much tighter. So these factors combined to push those who didn't want to/couldn't handle dealing with the beauracratic nightmare of trying to get SSI to do it because their other support systems dried up, and they are people who could have qualified all along but many people with mental health issues and/or physical disabilities didn't want to go through the battle it takes to get SSI until they had to, which was when the supports they relied on dried up due to the financial crisis.
This is only personal, anecdotal evidence, but it seems to make sense to me.
Re: Dennis
written by timb, March 26, 2013 10:03
Dennis, you could not be more wrong. First, since Ms. Joffe-Walt decided NOT to mention it, the attorney fees are capped at $6,000. And, winning one of those "full fee" cases is about 30% of the time. SS work pays lawyers almost nothing, which is why the bar is dominated by small firms and solo practitioners.

The guy she mentioned, Charles Binder, employs several hundred people, if not thousands, in several states across the country. His millions of dollars represents more than the earnings of the next 15-20 firms combined.

Secondly, a representative of the government sits in every hearing and makes a judgment. That government representative is called a judge. Judges approve right around 50% of claims and they are about as sympathetic to disabled people as you are. Many of them are retired military officers, whose typical response to the sick is tell them to suck it up and stop whining.

Unmentioned also by Ms. Joffe-Walt, is that 50% of ALJ (the Judge in the room) denials LOSE in Federal Court when they are seen by a real Federal Court judge and defended by SSA lawyers. The implication here is that the judges are not following SSA's own rules on a significant portion of their denials. I am sorry she took you in with her crap reporting, which featured unattributed quotes, a failure to get SSA on the record, a failure to mention House and Senate testimony on this subject, and a failure to investigate ANY of the thousands of rules and regulations which govern this program. As a for instance, I listened to that nice Dr. Timberlake with increasing horror, as she made him out to be some sort of decision maker with SSA. His opinion is no more controlling to an ALJ than your would be. The regulations mandate doctor opinions about who cannot work are expressly forbidden
written by ben kaplan, March 27, 2013 10:25
The downturn of the economy and its correlation with the growth of Disability was the main point I took from the TAL/PM story. Much of the criticism seems to be focused on the narrative about whether people are abusing the system; However, while that suggestion was evident in the story, that hardly seemed like the story's most compelling idea. For me, the above criticism really just reinforces the TAL narrative.
let's talk
written by din, March 27, 2013 10:51
let's talk about what it is like withOUT these SSI payments.

i struggled with severe depression for 8 years. I couldn't hold a job for more than a few months. My life would fall apart about every 6 months. I wouldn't leave the house for a month or more except to buy food.

i didn't get SSI, which meant I didn't have health care, which meant I couldn't get the medicine to treat this problem, which meant I kept losing jobs, and not being able to create a longer-term career for myself. This meant I would just not show up anymore one day, and the businesses would have to manage short-staffed which placed a burden on them. It also meant I could not save to start a business, buy a home, and do the other things that are more productive for the economy than being poor and mentally ill and working entry-level jobs.

Thankfully I managed to stop having such episodes and now am building a real life for myself. But I can never get those 8 years back. I feel 8 years behind what other people my age are accomplishing.

So yeah, sometimes SSI can be a good thing, at least until and unless we get universal health care like most of Europe, Costa Rica, and other civilized nations have.

But here in the US, we have a pack of wolves funded by right-wing think tanks going after SSI by manipulating not-so-bright former intern NPR-blog level journalists into writing such ideological, fact-biased, fact-blind, and skewed stories about critical social support sectors of our government because they are ideologically opposed to government programs for anything other than shoring up Wall Street from collapsing and funding the military to maintain neo-colonial control over the rest of the world, and not silly things like providing a social safety net.

and PS -- Welfare reform by clinton was a huge success? HA! at what? getting people off welfare rolls? sure. but not at helping people OUT of poverty at ALL.
written by watermelonpunch, March 27, 2013 10:59
Am I being naive? But to me, if a government safety net system requires ordinary people to hire lawyers and other professionals, in order to navigate the system in order to get what they legally qualify for... isn't that a big red flag that something is horribly wrong with the system?
Social Security Disabilty Claims vs. Awards
written by Bud Meyers, March 27, 2013 2:12
It's also worth noting that, before the recession began in 2007, there were 7.1 million Americans receiving Social Security disability benefits*.

Since then, and until the end of 2012 (over the past 5 years), 1.7 million more claims were awarded for a total of 8.8 million --- that's an average of only 345,288 new SSDI claims per year that were actually "awarded", out of the many more that were only "filed".

* The number of applications is for disabled-worker benefits only and as such, excludes disabled child's and disabled widow(er)'s benefits. Only if you include these people, does the number go over 10 million.

SOURCE: http://www.ssa.gov/oact/STATS/dibStat.html
where to begin
written by Ann, March 27, 2013 5:05
Here's an abridged list of the things I hated about this story:

1) There's no explanation of the difference between SSI and SSDI, and that SSDI is an insurance program one pays for through FICA taxes.

2) The definition of what constitutes a childhood disability is wrong.

3) The report reinforces the false notion that one can tell if someone has a disability just by looking at him or her.

4) There is no mention of the many SSA work incentive programs.

5) Listeners are led to believe that a doctor can decide whether or not someone is disabled. Only SSA makes that determination -- and it must be supported with medical evidence.

6) How does someone do six months of research and fail to interview anyone from SSA?

7) For every Charles Binder there are a thousand public interest disability lawyers who collect no fees, are not rich, and don't advertise on tv. We help people access disability benefits because they are poor and unable to work, and the disability application and appeals process is confusing and cumbersome. When we do get them benefits, guess what? They're still poor. In my world, THAT is the problem.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.