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Home Publications Blogs Beat the Press The Rise in Disability Is Not Just a Bad Economy

The Rise in Disability Is Not Just a Bad Economy

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Saturday, 21 September 2013 09:43

The Washington Post had an interesting article on the sharp rise in disability rates in the downturn. It would have been helpful to include some additional information.

One important reason for the rise in disability not connected to the recession, is the increase in the normal retirement age. This was increased from 65 for people who turned 62 before 2002, to 66 for people who turned 62 after 2008. The rise in the normal retirement age means that people on disability can collect benefits for an extra year before they have to turn to their Social Security retirement benefits, which will typically be less. The increase in the retirement age would have led to a substantial rise in disability rates even if there had been no underlying change in the incidence of disability.

A second point that would have been worth noting is that it is not easy to get disability. More than 60 percent of applicants are originally ruled ineligible. While many successfully appeal their rejection, the final approval rate is still below 50 percent. It is reasonable to believe that the vast majority of frivolous claims are rejected.

At one point the article discusses the notion put forward by economists David Autor and Mark Duggan that workers with little education may have substantial incentives to turn to disability:

"Benefits are hardly generous. They average $1,130 a month, and recipients are eligible for Medicare after two years. But with workers without a high school diploma earning a median wage of $471 per week, disability benefits are increasingly attractive for the large share of American workers who have seen both their pay and job options constricted.

"In 2004, nearly one in five male high school dropouts between ages 55 and 64 were in the disability program, according to a paper by economists David Autor and Mark Duggan. That rate was more than double that of high school graduates of the same age in the program and more than five times higher than the 3.7 percent of college graduates of that age who collect disability."

While the difference between median earnings and the average disability payment is considerably lower for less-educated workers there are two other important factors that affect disability rates. First, less educated workers are far more likely to have worked at physically demanding jobs that could result in a disability. For example, someone who works as a mover is more likely to develop back problems than an office worker with a desk job.

The other difference is that the jobs that are available to less educated workers are likely to be more physically demanding. A back problem that may be an inconvenience for a desk worker may make it impossible for someone to find work as a custodian or some other low-paying job. These differences undoubtedly explain much of the difference in disability rates by education.

 

Comments (10)Add Comment
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written by PeonInChief, September 21, 2013 12:39
Another factor is simply the increase in unemployment. It's much easier for an employee with a job to request reasonable accommodation than it is to get hired with a disability. When there are three workers for every job, it doesn't require much creativity to explain why you didn't hire the disabled worker.
Reagan helped
written by Scott Supak, September 21, 2013 1:01
An older study:

http://www.nber.org/bah/fall06/w12436.html

> The most important factor [in the growth in the DI rolls] is the liberalization of the DI screening process that occurred due to a 1984 law. This law directed the Social Security Administration to place more weight on ap-plicants' reported pain and discomfort, relax its screening of mental illness, consider applicants with multiple non-severe ailments, and give more credence to medical evidence provided by the applicant's doctor.

> These changes had the effect of both increasing the number of new DI awards and shifting their composition towards claimants with low-mortality disorders. For example, the share of awards for a primary impairment of mental illness rose from 16 percent in 1983 to 25 percent in 2003, while the share for a primary impairment of musculoskeletal disorders (primarily back pain) rose from 13 per-cent in 1983 to 26 percent in 2003.
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written by Leslie, September 21, 2013 2:55
The note from Scott above, concerning musculoskeletal disorders, brings out a further difficulty with adjudicating disability. My experience is that when the rewards are high enough, people are willing to put up with pain and discomfort at their work, whereas they become less so as the payoff declines. Physicians are asked to objectively rate subjective experience.
I think this is a shame all the way around. As the example of Mr. LaPorte shows, people often want to work even after they qualify as "disabled." If more attractive employment were available, I am sure they would be doing so.
Custodian
written by Gentro, September 21, 2013 3:13
Kudos for this - it is extremely rare to see in this context any mention at all of physical demands presented by lower paid work. But the difference between SS disability and workers' comp disability is vast. Individuals injured because of their work - especially chronic pain/repetitive stress type injuries - will generally find an entirely adversarial system set up against them, and one set up to exclude nearly all but the most archetypal and violent injuries we might associate with a long-gone era's industrial character. If SSD has become looser and more generous (which is pretty doubtful whatever its changes) it certainly hasn't become easier to succeed in a workers comp claim.

I think what in general needs to be better understood is what over the last few decades has happened to the working class, when it is increasingly paid poverty level wages while being obliged to do the work of the two or three people whose positions no longer exist.

Equally illuminating to the statistics cited above will be a trip to the "foot care" aisle of the local supermarket. This section has grown immensely in the last ten or so years: bandages, splints, braces of all types are sold so that the working class may manage, on their own, to get through the day with slightly less suffering. And it certainly isn't the headachy desk-sitters that are buying Tylenol or Advil 500 pills at a time. It's people who work on their feet, and are being ground into hamburger.
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written by AlanInAZ, September 21, 2013 3:40
certainly isn't the headachy desk-sitters that are buying Tylenol or Advil 500 pills


Gentro,

The aging of the baby boomers is probably the main reason for the expanding use of pain meds. I am now 67 and require significant pain relief for my joint arthritis despite working at a job you would probably call sendentary. My parents as they aged also had similar issues. I doubt that more people as a percentage of the total workforce are working on their feet than in the past given the manufacturing sector shrinkage in recent decades.
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written by watermelonpunch, September 21, 2013 7:59
written by AlanInAZ, September 21, 2013 2:40
I doubt that more people as a percentage of the total workforce are working on their feet than in the past given the manufacturing sector shrinkage in recent decades.


What I'd like to see is a percentage of workers in "on the feet" jobs, over the years, who have had health insurance.
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written by Gentro, September 22, 2013 12:21
@AlaninAZ - Thanks very much; my hypothesis on the large bottles of otc pain pills regarded normal headache use versus chronic body pain use. (And if buying Tylenol 500 at a time is what's happening, that person should have access to something other than self-treatment maybe!)
Secondly, I wouldn't assume the manufacturing sector shrinkage has resulted in growth of sit-down jobs. I believe job growth is highest in things like retail and low-wage service jobs. The disappearing scenario is obviously the industrial plant job, in which an injury was certainly possible, and in which also the individual worker tended to have more vigorous protections (eg a union). To simplify, it seems that formerly the deal was: you get messed up by your job you get taken care of, and in the new-normal, service-economy world, companies have learned to shift risks of this type onto the workers in many ways.
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written by denise, September 22, 2013 1:31
Is the suggestion is being made that someone making $500/month working can get $1100/month on SSDI? No. The lower your pay, the lower your benefit. No one is getting nearly as much money not working as he was working.
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written by Noni Mausa, September 22, 2013 9:34
Another difficulty with disability payments is that, for the disabled person, there is no going back to even a part-time job. Please correct me if I mess up the details -- I live in Canada so I don't have front line information.

My brother has been on SS disability for 25 years due to treatment resistant depression. His SS income is in the vicinity of $750 a month, plus Medicare coverage. The meds alone would cost him double his monthly stipend, if he had to cover them himself. But if he works at anything, he could easily lose his SS status and be pushed back onto his own resources.

To replace his poverty level income plus the medical costs would require a job paying over $30,000 a year. Even before the recession, there's no chance he could land such a job, or keep it if he did. So he is stuck in idleness. Till last year when our mother passed away, he lived with her, did the shopping, read her the paper and monitored her medications and her health -- valuable unpaid work that benefitted them both. Now he is on his own in a tiny apartment, his small store of usefulness going to waste.

How many others are in this trap? How many millions of man-hours are being thrown away out of American institutional mean-spiritedness?
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written by Redwood Rhiadra, September 22, 2013 3:08
@denise - the article indicated $471/WEEK working compared to $1130/MONTH on disability. Working does earn more in this scenario.

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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.

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