Social Security Disability Economist article
The Economist ran an editorial in the September 28, 2013 publication entitled ‘The Missing Millions or the Rising disability claims may explain America’s shrinking labor force’. The article notes the drop in the US unemployment rate from10% in late 2009 to 7.3% in late 2013 but emphasizes that the real unemployment rate would be much higher if the labor participation hadn’t fallen to a 35 year low at 63.2% (from 66% in 2007).
The availability of Social Security Disability may be the main cause of this decline in the work force participation rate according to an unpublished study by Mary Daly of the San Francisco Federal Reserve Bank and others. According to the study, the awarded benefits from the large increase in disability applications would explain between 31% and 59% of the observed decrease in the labor participation rates of the 16 to 64 year olds. Since few folks leave social security disability benefits once on them, this low labor participation rate may continue. That will be a problem for our economy as it strengthens. In addition, it makes the looming 2016 bankruptcy of the Social Security Disability Fund even more important.
It is imperative that the Social Security Disability Fund be reformed as soon as possible. We hope that the Congress and the President will act soon.
Harry Pukay-Martin October 15, 2013
