Friday, July 6, 2012

Gaming the System... Disability Edition

In my post outlining the decline in employment (excluding teens), reader Mike pointed out another interesting phenomenon:
One of the stories I read about this month's BLS report dealt with the rise in people on disability. I thought charting this over a few dozen years and several recessions might tell an interesting story.
Unfortunately, the BLS only reports this data going back to 2008, but the most recent data shows an interesting trend. From the looks of it, we have what appears to be a not-so-coincidental mirror image between the decline in those unemployed with the rise in the number of people not working via claims of disability. I know next to nothing about disability, but my guess is individuals whose employment benefits have run out, have been increasingly taken advantage of disability (or tried to) as a replacement.

Source: BLS


  1. This idea of people "inappropriately" going on disability has come up before. My co-workers wife went on disability around 2007. She reported it was very difficult to be accepted by the review board; a story I had heard from others that I thought were clearly eligible. All of the anecdotes I hear now are that the review process has become much easier and people are encouraged to apply. In any event, eligibility has apparently always been fairly subjective.

  2. Nice chart. A picture is worth a thousand words. This is a great news item.

  3. Great job Jake. It is a pity the BLS doesn't have more historic data. I bet it would tell an even stronger story about the times in which we are living.

  4. The Social Security Administration does publish data going back to 1993. Here's the link It seems to understate the number of beneficiaries as reported by this snapshot I suspect that the graph does not include spouses and children.

    There is a separate disability trust fund which is projected to be in the red by 2016. This article will give you a glimpse into the swamp that the program has become

    No doubt that the current recession contributed to a rise in the disability rolls but it's a minor part of the story about this particular train wreck.

  5. I don't doubt there are some people who do it at the best of times, but are they the majority? Correlating the rise isn't enough. I can see two other explanations off the top of my head:
    1) less employment choices leads to less employee bargaining power leads to less safety in the low-skill workplaces leads to more injuries
    2) less employment leads to less normative socializing leads to less adherence to social norms + lower self-esteem leads to more selfdestructive behaviours eg overeating leads to disability caused by behaviours that are either preventable or manageable. Need more details on the category of disability.

    Here's another angle. I know of a previously employed paraplegic who is now on disability. One could argue whether or not this is an "appropriate" use. So I'd also be interested in whether or not their conditions were preexisting.

  6. On a recent Econ Talk podcast, David Autor "explains how the program works, why the growth has been so dramatic, and the consequences for the stability of the program in the future." In the interview, David talks about the incidence of unemployed persons applying for social security disability insurance.

  7. Here is another thought: During times of high unemployment, emplbsoyers can choose NOT to higher people with disabilities who might have been able to get jobs in better times. My son is intelligent, but he has a disability that prevents him from a) getting a license, and b) working a normal 8-hour schedule. Nobody will hire him, even for minimum wage, because they can easily higher a laid-off Microsoft Marketing Manager, with a license, who can work a normal schedule without accomodations.

  8. Follow up to previous comment:
    By the way...he is unable to work, but has repeatedly been DENIED disability.