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Avatar of GI KoreaBy on August 6th, 2013 at 8:50 pm

The Abuse of the Disability System In America

My prior posting about poverty in the USA led to some interesting discussion to include a reader leaving a link to an NPR report on the abuse of disability in America:

In the past three decades, the number of Americans who are on disability has skyrocketed. The rise has come even as medical advances have allowed many more people to remain on the job, and new laws have banned workplace discrimination against the disabled. Every month, 14 million people now get a disability check from the government.

The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined. Yet people relying on disability payments are often overlooked in discussions of the social safety net. The vast majority of people on federal disability do not work.[1] Yet because they are not technically part of the labor force, they are not counted among the unemployed.

In other words, people on disability don’t show up in any of the places we usually look to see how the economy is doing. But the story of these programs — who goes on them, and why, and what happens after that — is, to a large extent, the story of the U.S. economy. It’s the story not only of an aging workforce, but also of a hidden, increasingly expensive safety net.

For the past six months, I’ve been reporting on the growth of federal disability programs. I’ve been trying to understand what disability means for American workers, and, more broadly, what it means for poor people in America nearly 20 years after we ended welfare as we knew it. Here’s what I found. [NPR Planet Money]

I highly recommend reading the whole article because it validates the point I made in my prior posting that many Americans are refusing to work due to low wages and thus choose to live off of government assistance.  The NPR reporter Chana Joffe-Walt shows example after example of this happening to include one town where 1 in 4 people are on disability.  He also shows how disability goes up where unemployment rises.  For example if a mill shuts down often those workers cannot find similar paying work locally and thus go on disability and drop out of the workforce.  The other thing about going on disability is that recipients are provided health care.  So if you are someone that is looking at just a minimum wage job it actually makes sense for you to go on disability and make a similar wage and have health care which that minimum wage job would not provide.   Also disability is a federal program and states are paying private companies to get people off of state programs and on to disability in order to free up state money.  The reporter calls this the “disability industrial complex”.

Basically the claim of ending welfare as we know it is not really true because these people were just shifted to disability which is arguably even worse since these people drop completely out of the workforce and will likely never hold a job again:

Here is how the article concludes:

Somewhere around 30 years ago, the economy started changing in some fundamental ways. There are now millions of Americans who do not have the skills or education to make it in this country.

Politicians pay lip service to this problem during election cycles, but American leaders have not sat down and come up with a comprehensive plan.

In the meantime, federal disability programs became our extremely expensive default plan. The two big disability programs, including health care for disabled workers, cost some $260 billion a year.

People at the Social Security Administration, which runs the federal disability programs, say we cannot afford this. The reserves in the disability insurance program are on track to run out in 2016, Steve Goss, the chief actuary at Social Security, told me.

Goss is confident that Congress will act to keep disability payments flowing, probably by taking money from the Social Security retirement fund. Of course, the retirement fund itself is on track to run out of money by 2035.

Goss and his colleagues have worked out a temporary fix under which the retirement and disability funds will both run out of money by 2033. He says he hopes the country will have come up with a better plan by then.

Basically this is a ticking fiscal time bomb that is not getting any better.  So what can be done?  In my opinion real health care reform, not what we got now would go a long way to helping this problem because then people would not feel like they need to go on disability to get health care coverage.  Then there has to be an increase in good paying jobs for people who do not have technical skills.  Real health care reform would actually help wages because employers could pay their employees more since they do not have to provide health insurance any more.  Also we need to come to terms that not everyone is meant to go to college and work for a tech start up.  Some people are good at using their hands and we need to have good paying jobs for these people.  The one industry where I can see these jobs being created quickly would be in the energy sector.  I am interested to here if anyone else has any better ideas, but the course we are currently on is not working.

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  • Mooseknuckle
    11:41 pm on August 6th, 2013 1

    @GI Korea, I don’t know if you took the time to read the comments but most if not all were saying how skewed and innaccurate the story was. I’m none the wiser when it comes to this whole system but the bottom line is, accuracy or not the financial numbers and rising trends in people going on disability is proving to be yet another financial drain on the country.

  • Burma Bob
    1:14 am on August 7th, 2013 2

    It is indeed a drain. But the fact is that as the piece points out, states are happy to move these people of their books and onto the Federal government’s. Take a look at some towns in WV, where mines have shut down. Whole families have managed to get on SSDI, every single member.

  • guitard
    1:32 am on August 7th, 2013 3

    Burma Bob wrote:

    Take a look at some towns in WV, where mines have shut down. Whole families have managed to get on SSDI, every single member.

    All you have to do is go to the doctor and say, “Doc, I feel depressed.” And BINGO! You are eligible for a disability check.

    There is a segment of American society – I’m guessing it’s around 15% of the adult population – who feel that scamming the gov’t in this manner for free money is not only the smart thing to do – they think you are a fool if you don’t take advantage of the system in this way. In other words, it’s their God given right to get that free money.

    And unlike welfare – where you at least have to pretend that you want to work – there are only two things that can stop people from receiving disability: death and reaching age 65.

  • guitard
    1:41 am on August 7th, 2013 4

    there has to be an increase in good paying jobs for people who do not have technical skills. Some people are good at using their hands and we need to have good paying jobs for these people.

    How can you pay an unskilled worker a decent salary when that same unskilled work can be performed in Mexico or India for a small fraction of what it costs in the United States?

  • Liz
    2:50 am on August 7th, 2013 5

    #4: That’s why service economy is the new black. Most services can’t be as easily outsourced.

  • Avatar of GI KoreaGI Korea
    4:00 am on August 7th, 2013 6

    @4- That is why I said the energy sector is where decent paying jobs can be generated. You cannot outsource fracking to Mexico unless you staff your company with illegal immigrants which is a separate issue that is driving down wages that also needs real reform.

  • Thomas
    7:38 am on August 7th, 2013 7

    It’s the “victim” mentality. Instead of just being poor, now they can claim they’re disabled and won’t be looked down upon as much.

  • The Abuse of the Disability System In America | ROK Drop « GIVE BACK TO OUR DISABLED WAR HEROES
    11:18 am on September 30th, 2013 8

    […] via The Abuse of the Disability System In America | ROK Drop. […]

 

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