Monday, January 22, 2018

Disability Rolls Tumble As Economy Gains Steam

It's a miracle!
Then the eyes of the blind shall be opened, and the ears of the deaf shall be unstopped.
Then shall the lame man leap as an hart, and the tongue of the dumb sing: for in the wilderness shall waters break out, and streams in the desert.
From Investor's Business Daily, January 19:
Jobs: If you want a sign of a growing economy, look at the disability rolls. They've been shrinking rapidly of late, as fewer apply for benefits and more disabled return to work. This is very good news.

In the aftermath of the last recession, the number of workers who went on the Social Security Disability Insurance program skyrocketed by more than 1 million.

It's clear from the data that this was being driven largely by the lack of good job prospects. Monthly applications for SSDI leapt from an average 182,000 a month in 2007 to 245,000 a month in 2010. Even years after the recession had ended, applications remained well above 200,000 a month as the painfully slow recovery dragged on.

With jobs scarce and enrollment requirements for SSDI fairly lax, it's not surprising that many took this route.

While these trends started to slowly turn around in 2015, they accelerated in 2017.
In fact, the number of SSDI applications in 2017 was down 6% from the year before — the biggest one-year decline since 1997, government data show. At the same time, the number of people leaving the program was higher in 2017 than it's been in more than a decade.

As a result, the number of workers collecting federal disability benefits dropped 1.3% last year, which is the biggest annual decline since 1983....MORE
Take that Lourdes.

Okay, dispensing with the sarcasm there are two things to note:

1) many of the people receiving Social Security Disability Income were not disabled in the old fashioned sense. They were instead using SSDI as a safety net after unemployment compensation ran out.
Many (most) of that group definitely suffered emotional problems which were serious enough to qualify for the program.
And then there were the fraudsters. For some reason there is a fraud belt that extends from Arkansas on the Mississippi across Kentucky to Virginia on the Atlantic and down down through the Carolinas into the Deep South.
Here's one of the bigger prosecutions via the DOJ: "Social Security Disability Lawyer Pleads Guilty For Role in $550 Million Social Security Fraud Scheme".

2) What this means in a macro sense is the pool of potential workers is larger than it might first appear.
If there are jobs available, a majority of folks on SSDI will opt for work at around $8.00 per hour. The average SSDI payment in 2017 was $1171 ($6.92/hr) but there are disincentives that make the cost/benefit breakeven higher than the mathematical breakeven.

Remember, the people we're talking about may be troubled but they aren't crazy.

So, more people in the invisible labor pool means one more pressure keeping wages down.

"Unfit for Work: The startling rise of disability in America"

Geographic Areas to Short When the Debt Bomb Goes Off
Jobless Disability Claims soar to record $200B as of January"

The Nasty Truth About Wages in America

"TrimTabs on Debt and Disability Claims: How Much Debt Does it Take to Generate $1 in GDP? Disability Fraud vs. Expiring Unemployment Benefits Revisited"

The Real Problem With Social Security Disability: The DI Trust Fund Will Be Exhausted in Four Years

Phi Scamma Jamma: More People Went on Disability Last Month Than Got Jobs

Schrödinger's Disability or One More Reason the Social Security Disability Fund Will Run Out by 2016

See also Political Calculations' "Enabling Disability Fraud"

For what it's worth, the attorney at the center of the fraud in the DoJ release fled the country.
But didn't flee far enough.
From WKYT-TV, Dec. 4, 2017:
Eric C. Conn back in Kentucky after being captured in Honduras