WSJ Finds the Real Cause of Weak Recovery: Disabled Workers

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Monday, 08 April 2013 09:07

Folks who follow the economy might have thought that cutbacks in government spending, the continued weakness of construction, or the large trade deficits were the causes of the slow recovery, but the WSJ has the real scoop: it's workers going on disability. The WSJ ran a piece headlined,"Workers Stuck in Disability Stunt Economic Recovery," that told readers:

"The unexpectedly large number of American workers who piled into the Social Security Administration's disability program during the recession and its aftermath threatens to cost the economy tens of billions a year in lost wages and diminished tax revenues.

Signs of the problem surfaced Friday, in a dismal jobs report that showed U.S. labor force participation rates falling last month to the lowest levels since 1979, the wrong direction for an economy that instead needs new legions of working men and women to drive growth and sustain a baby boomer generation headed to retirement"

Let's see how this one is supposed to work. According to the Bureau of Labor Statistics were 11.7 million people who were counted as unemployed last month. This means that they were actively looking for work. On the other hand, a separate survey of firms showed that there were 3.3 million job openings. This means that there were 3.2 workers looking for jobs for every opening that was listed. We also know that there are millions of other workers who would like a job, and are not on disability, but have given up looking for work because they don't see any jobs available.

Okay, so now we put the Wall Street Journal's news division in charge of the disability program and they throw 9 million workers off disability. How exactly does this create more jobs? Are the companies that were already seeing many applicants for each job openings going to start offering more jobs when this ratio increases further?

Keep in mind that most of the additional applicants do have serious disabilities, only 40 percent of applicants for disability are approved, as the WSJ article notes. Also, one-third of these had to go through an appeals process. So almost all of these people will have some condition that at least seriously impairs their work ability, even if it does not make it altogether impossible to work.

So the WSJ apparently wants us to believe that when these 9 million people are thrown off disability -- people with bad backs, severe fatigue, terminal cancer -- companies will suddenly start offering millions of additional jobs. That's an interesting economic theory.