On disability as a de facto welfare system

I’ve been catching up on This American Life podcasts this week. My mind is still fixated on the programme from a couple of weeks ago, “Trends With Benefits”.

Apparently, the number of Americans receiving federal disability payments has nearly doubled over the last 15 years. There are towns and counties around the nation where almost 1/4 of adults are on disability.

Planet Money‘s Chana Joffe-Walt spent 6 months exploring why this is the case and returns with a complicated picture of what this means about the US economy as well as the larger industry that supports this structure:

Chana Joffe:  Joseph and Ethel Thomas live in a depressed town in a poor state in a national economy that is basically in the process of fully abandoning every kind of job they know how to do. Being poorly educated in a rotten place, that in and of itself has become a disability.

This is a new reality. This gap between workers who are fit for the US economy and millions of workers who are increasingly not. And it’s a change that’s spreading to towns and cities that have thrived in the American economy. Places that made cars and steel and batteries and textiles.

The disability programs are acting like a sponge, sopping up otherwise desperate people. This is happening so often in so many parts of the country, this shift from work to disability programs, that I have actually been reporting on it for years, and I didn’t even know it.

David Autor:  Well, that’s kind of an ugly secret of the American labor market, that part of the reason our unemployment rates have been low until recently is that a lot of people who would have trouble finding jobs are on a different program. They’re on the disability insurance program. And they don’t show up in the labor force statistics. And so it artificially reduces the unemployment rate that we observe.

Chana Joffe:  So you’re saying we all already knew it was bad. It’s actually worse than we think.

David Autor:  It is. It’s been worse than we thought for a long time. This has been going on pretty rapidly for now more than 20 years.

Chana Joffe:  David Autor says disability has become a sort of de facto welfare for people without a lot of education or job skills. Except it is the worst kind of welfare program, because it includes one feature you never, ever want from your social safety net.

David Autor:  Once people go in that direction, they’re unlikely to come back.

Chana Joffe:  The problem with using our disability programs as a sort of quiet de facto welfare system is they’re not designed to help people to deal with their disabilities, to get jobs, to make increasingly more money over a lifetime. They’re not there to catch you when you fall down and help you back on your feet.

Once a worker gets on disability, there are really only two ways out. You get old enough that at 65, 66-years-old, you move on to a different government program, Social Security for seniors, or you die. Those are the two ways people exit disability. Almost no one gets better. The benefits don’t get you rehabilitative services or supportive technology. They just give you a monthly income.

And it’s not a great income, about $13,000 a year. But if your alternative is a minimum wage job that will pay you $15,000 a year– a job you may or may not be able to get, may or may not be able to keep, that probably won’t be full time, and very likely will not include health insurance– disability may be a better option.

Well let’s just think about what that option means. You will not work. You will not interact with coworkers, get promoted, make more money, get whatever meaning people get from work. And assuming you rely only on those disability benefits, you will be poor for the rest of your life. That is signing up for disability. That’s the deal. And it’s a deal 14 million Americans have chosen for themselves.

–This American Life, “Trends With Benefits” (bolding added)

The entire programme is worth a listen and really illuminates an integral aspect of how US federal benefits work that has been missing from most of the policy debates I’ve heard.  A lot to mull over, but so insightful in understanding why these problems seem intractable.


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