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It’s Great Disability Rolls Are Finally Shrinking, But the System Still Needs Pro-Work Reform
Have Americans gotten way healthier over the past several years? Seems dubious. But the US economy sure has strengthened. And America’s hot job market seems to be finally draining a reservoir of hidden slack: disability rolls. The New York Times notes the number of Americans receiving Social Security disability benefits has declined to 8.63 million from a September 2014 peak of 8.96 million.
Now there might be other things going on as well, such as the big expansion of Medicaid and the Social Security Administration tightening the approval process for benefits. But as interesting as all these numbers are, more compelling is the story of Christian Borrero, told at the end of the Times piece. Born with cerebral palsy, Borrero until 2015 received disability benefits as he worked at a part-time job answering phones. The salary was low enough that he still qualified for benefits.
Then Borrero was offered a full-time receptionist job at a landscape supply and waste-to-energy company. And what happened next illustrates some big flaws with America’s disability system. Twice Borrero turned down the job, “terrified” he would lose his benefits. Plus he had never had a job with “real benefits and real hours.” Finally, however, Borrero accepted the job and then, subsequently, lost his disability benefits. So he took a second job to replace those lost benefits, although eventually his full-time employer gave him more responsibility and bumped up his pay to cover the shortfall.
So good news that a hot labor market pulled Borrero off government assistance. A nice quote here from Borrero: “I haven’t had an easy life. But I love the feeling of earning enough money to pay my bills and do what I want to do. I feel very blessed.”
This lovely vignette also highlights a truly messed up disability system that discourages work. If a disability recipient has earnings that exceed the monthly amount allowed, they lose the whole benefit. This is a holdover from an earlier era where a worker could either, say, operate a jackhammer or not. It was a binary thing. In America’s more service-oriented economy of today — you may have heard that Walgreens is replacing GE in the Dow Jones Industrial Average — disability should be seen as more of a continuum. As my AEI colleague Michael Strain has written. “SSDI should be modified to reflect this, covering individuals who truly cannot work, as a just society should, while encouraging others to do what work they can.”
Making that happen might require gradually phasing out benefits as income increases rather than a hard stop, or could involve providing a temporary limited benefit along with health care coverage and other help. The decline in dependence is a good story, but it can be made even better.
Published in Economics
Well it is not like they have a choice. When you kick people off disability they have to make their way any way they can. Maybe a job, if they can find somebody that will take them. Maybe a off the books or illegal job. Maybe to live on the street. Maybe just to die by their own hand or another. It does not matter as long as the numbers look better.
This is actually one of the big reasons I oppose immigration. What about workers who aren’t physically disabled but nonetheless cannot compete with immigrants? Like, say, inner-city blacks. Just look at how tight the labor market has to be for their unemployment rate to fall. Why are we favoring foreigners over the poor descendants of slaves?
Yes! I worked from 1998 to 2012 as a therapist in a setting where many of my mental health clients were on Medicaid and disability. I never once saw anyone take a job that would get him or her off disability. I saw a fair number of people collecting disability and working “under the table.” Being a therapist, I could not violate confidentiality to report them.
I’d keep telling those who seemed ready to get back into the work force that real work would eventually lead to their being financially better off, but they were afraid to give up that security of disability income, Section 8 housing, and food stamps. I’d try to tell them that the government didn’t have unlimited funds, but no one grasped the concept.
I agree. I have always wished we had more flexibility in the SSI and Medicaid systems.
Great post.
One way to look at disability benefits is as if you have an annuity paying you $1000 per month in income and $500 per month in healthcare. To purchase an annuity paying you $1500 a month for 15 years, you would need to cut a check to Charles Schwab for $223,000. That is a lot to give up…..
Having been in and out of this system at various times, I always chafed at the notion that receiving benefits at all requires ‘spend-downs’ and/or near-destitution in the first place. Rational support would offer help with disability-related employment expenses like personal-care assistance/modified transportation at the start; and allow recipients to work as much as they can: a hand up, not a hand out.
A bit harsh, isn’t this, FJ/JG? Yes, one can always find horror stories of the truly unable being treated in a draconian fashion. There are those of us who’ve been so browbeaten by the so-called social safety net’s “soft bigotry of low expectations” that we’d rather die than have to apply – and celebrate the chance to move out of its confines – for however long we can…Trust me, we’re out here….