On disability, many jobless are disguised as employed

February 02, 2003|By JAY HANCOCK

THE dividends of the 1990s expansion look less fabulous than they used to, but at least we still have this: Unemployment is 6 percent, which is not much higher, after an extended economic slumber, than the lowest unemployment rate in the 1980s boom.

Or is it? Now economists are questioning this part of the story, too. A huge increase in people collecting disability payments from the Woodlawn-based Social Security Administration suggests that millions who would otherwise be listed as jobless have merely shifted from the unemployment rosters to the public disability dole.

These folks are not working, and they would probably have difficulty finding employment if they decided to seek it. But because they are classified as disabled, they don't show up in the unemployment statistics.

If not for the enormous growth of the disability rosters in the past decade, today's unemployment rate would be much higher than 6 percent, some analysts argue.

"There's an incredible boom" in disability applications, says David H. Autor, an economist at the Massachusetts Institute of Technology. "There's no question that the disability program has continued to reduce the measured unemployment rate. What it does - it takes a lot of the high-friction, high-unemployment workers out of the work force," and thus out of the pool of the officially unemployed.

The number of people getting disability benefits under the need-based Supplemental Security Income program rose by 63 percent, to 5.3 million, between 1990 and 2001, according to the agency. The number of beneficiaries in the Social Security Disability Insurance program, which requires previous employment and is not need-based, increased 67 percent, to 6.2 million, in the same period. Many folks get money from both programs. This growth is much faster than that of the overall population.

Economist Autor and colleague Mark G. Duggan at the University of Chicago calculate that 5.3 percent of adults between 24 and 65 - one person in 20 - participate in SSI or SSDI today. That's up from 3.1 percent in 1984. Most qualify on the basis of disability, although SSI also benefits the blind as well as the needy aged. Their paper on the subject is in this month's Quarterly Journal of Economics.

At more than $80 billion a year, disability pay costs more than welfare, unemployment insurance and the earned income tax credit combined. Why rolls have swollen is a matter of intense disagreement. It's not an increase in workplace injuries. One cause, Social Security says, is the rise of working women, which increases the number of people eligible for SSDI.

But Autor and Duggan point to other factors: Easier qualification standards as well as rising benefits that, combined with stagnant blue-collar pay, have increased incentives for less-educated unemployed people to apply for disability benefits instead of looking for work.

"It's kind of an alternative to a job search, in a way," Autor says. "Our suspicion is that people lose jobs and become discouraged - and that's when they apply for disability."

To be sure, nobody is moving to Palm Beach on disability pay, which averages about $800 a month on SSDI and about $400 a month on SSI. But with the U.S. minimum wage of $5.15 an hour producing less than $900 a month in pay, not working and collecting disability checks might look like a good choice.

Of course, you're not supposed to have a choice. If you're disabled, you're not supposed to be able to work. If you can work, you're generally not supposed to collect disability benefits.

Autor does not comment on whether everybody on the disability rosters truly belongs there.

Robert Burgess, a retired Social Security hearing officer in Texas and former president of the National Association of Disability Examiners, does.

"We are wasting at least $10 billion per year now, and that is a very conservative estimate," he says. A lack of medical training among disability appeals judges, Burgess adds, generates "over a hundred thousand insupportable awards annually."

A Social Security spokesman declined to comment, saying, "We follow the disability laws and regulations set by Congress."

If Burgess is right, it's bad news. If I were Sen. John Breaux, chairman of the Subcommittee on Social Security and Family Policy, I'd fly in Burgess for testimony tomorrow.

But the larger point is that the unemployment rate might not be as good as it looks. Autor figures joblessness might be half a percentage point higher if disability screening had not eased and benefits not improved, but this accounts only for people with less than a high-school education on SSDI. The figure would be even greater if all disabled workers are considered, he says.

The official unemployment rate is 6 percent. Don't tell us these books were cooked, too!

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