By DAVID LEONHARDT
New York Times April 8, 2011
In the worst economic times of the 1950s and ’60s, about 9 percent of men in the prime of their working lives (25 to 54 years old) were not working. At the depth of the severe recession in the early 1980s, about 15 percent of prime-age men were not working. Today, more than 18 percent of such men aren’t working.
That’s a depressing statistic: nearly one out of every five men between 25 and 54 is not employed. Yes, some of them are happily retired. Some are going to school. And some are taking care of their children. But most don’t fall into any of these categories. They simply aren’t working. They’re managing to get by some other way.
For growing numbers of these men, the federal disability program is a significant source of support. Disabled workers — men and women — received $115 billion in benefits last year and another $75 billion in medical costs. (Disability recipients become eligible for Medicare two years after starting to receive benefits.) That $190 billion sum is the equivalent of about $1,500 in taxes for each American household.
Yet disability usually goes unlargely uncovered by the media. Lately, it hasn’t. Motoko Rich of The Times and Damian Paletta of The Wall Street Journal have both written richly detailed articles recently.
Mr. Paletta explains:
The [disability program] is set to soon become the first big federal benefit program to run out of cash — and one of the main reasons is U.S. states and territories have a large say in who qualifies for the federally funded program. Without changes, the Social Security retirement fund can survive intact through about 2040 and Medicare through 2029. The disability fund, however, will run dry in four to seven years without federal intervention, government auditors say.
Perhaps the worst thing about the disability program is that, once in it, many people never leave. They were eligible for disability because of a legitimate injury. But once they stop working, many become less appealing job candidates and less motivated to find work. Their chances of finding well-paying work shrivel. Relative to a low-paying job, especially if the job exacerbates a chronic injury or chronic pain, the modest monthly disability payment of about $1,100 on average can look appealing.
As the economists David Autor and Mark Duggan have written, “the program provides strong incentives to applicants and beneficiaries to remain permanently out of the labor force, and it provides no incentive to employers to implement cost-effective accommodations that enable employees with work limitations to remain on the job.”
In that same paper (a joint effort of the Center for American Progress and the Hamilton Project), Mr. Autor and Mr. Duggan suggest some changes to the system. The two economists, as Ms. Rich writes, propose:
that disabled workers be offered partial income support and services to remain in the workplace. Moreover, they advocate for employers to purchase mandatory disability insurance as they do unemployment insurance and workers’ compensation, giving them incentive to accommodate workers rather than send them to the federal benefit rolls.
The more workers who went on disability, the higher a company’s insurance costs would be.
Given how much variation already exists in states’ approaches to the program — as Mr. Paletta’s article details — you could imagine how an innovative governor might try to make his or her state a model for others to follow. And reforming disability should be part of any solution to our huge looming budget deficits.