Is America’s Workforce Disabled or Just Discouraged?

By Logan Albright, Policy Research Intern for FreedomWorks

Over the past forty years, the number of Americans receiving disability benefits from the federal government has increased more than six-fold. This is an alarming statistic any way one looks at it, but the implications of it are far from clear. Is the number of Americans with disabilities really increasing so rapidly, a veritable epidemic of enfeeblement? Or perhaps the disabled have always been with us in such numbers, but policy changes have only now enabled them to collect disability insurance. Still another possibility is that, during times of economic downturn when gainful employment can be hard to come by, more people are turning to disability insurance as a way to supplement their income in the absence of a job, exaggerating or outright fabricating the severity of their disability. The truth is most likely a combination of the three, but when one in every sixteen American workers is officially classified  as disabled, there is good cause to worry.

One of the problems with disability insurance is a general fuzziness of definitions and no good way to definitively falsify a claim. If someone claims to have back pain, there is no way to prove that they don’t. Even if the pain is psychological rather than physical in origin, the effect on one’s ability to work is no different. The nature of the disabilities being reported has changed over time, with more difficult to verify conditions, such as back pain and mental illness overtaking more obvious medical problems such as heart disease and strokes. Is this a reflection of a different set of health problems faced by modern Americans, or the exaggeration of less serious conditions in an effort  to collect benefits?

The difficulty in ferreting out disingenuous claims is compounded by a lack of incentives to do so. A doctor’s incorrect diagnosis of a disability keeps his patient happy and may result in a great number of future billable hours. Furthermore, state benefit programs have an incentive to foist applicants off onto federal programs to protect their perpetually depleted coffers. Lawyers too, not exactly renowned for their selfless concern for the misfortunes of others, can see a hefty payout by collecting pools of clients to claim retroactive disability benefits. In short, the overwhelming incentive for almost all parties involved is to take advantage of the federal disability program, and while we would like to be able to rely on people’s honesty and sense of duty over financial gain, history and economic theory alike demonstrate that to do so is generally unwise. Indeed, an audit of a similar program in Britain recently revealed that over half of those collecting benefits were not, in fact, legally entitled to them.

Then there is the question of what is really meant by “unfit to work.” A medical condition that would make construction work impossible may pose no significant obstacle to a desk job. The Social Security Administration’s criteria for disability specifies that the disabled worker must “be unable to adapt to other work,” but this is based on a determination made by the SSA and it is in no way clear how rigorous their standards are. It is also the case that some people with minor health problems are perfectly willing to work as long as jobs are plentiful and profitable, but in times of economic malaise may find it more beneficial to represent themselves as unable to work.

Applications for disability insurance are strongly correlated with the unemployment rate, but again, this statistic by itself is not very meaningful. It could be that, during periods of high unemployment, disabled workers have a tougher time finding the types of jobs that can accommodate their needs. On the other hand, it is equally possible that a greater number of unemployed workers may seek out disability checks as a necessary fraud to stave off poverty.

Some have pointed to demographic trends as the reason for the marked and continuous rise in disability claims. The aging crop of baby boomers combined with more female workers and a consequent rise in the labor force as a share of the population would naturally be expected to result in more claims, but the fact that the increase has been so steep and sustained over time would seem to suggest that there are other factors at work as well.

While the welfare reform efforts of the mid-nineties succeeded in reducing the number of people collecting unemployment benefits, there was an accompanying increase in those who claimed disability benefits, seeming to indicate that some people at least were merely shuffled from one program to another, irrespective of whether they had any legitimate medical complaint.

The underlying point of all this is that the more free the government is with its (or rather, with other people’s) money, the greater the potential for fraud and abuse. We are only human, after all, and you cannot expect to leave bait dangling on the end of a line without getting a bite or two. Nor is the expense involved insignificant. The Social Security Administration reports that in March of 2013, more than 8.8 million workers received an average payment of $1,129.61, for a total in excess of $10 billion a month, and this does not even include benefits to the workers’ spouses and children. At this rate, the SSA reports that it will exhaust the money allocated to pay for these claims as early as 2016, necessitating either higher taxes or lower Social Security benefits.

When more than six percent of the nation’s workforce is declared unfit for work, and is instead supported at the expense of the taxpayer to the tune of $120 billion a year, is it any wonder that the economy continues to falter and jobs remain scarce? The federal disability program should adopt clearer and more easily falsifiable criteria for benefits, and perhaps a housecleaning effort similar to that implemented by Britain would be useful to weed out fraudulent or exaggerated claims. Regardless of the underlying causes of the swelling disability rolls, one thing is clear: the status quo is unsustainable and unacceptable.

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