2013 September 29 Sunday
Disability Insurance: A Really Big And Growing Scam

The unemployed in America are using disability insurance as a longer term and more reliable form of unemployment payments. The result: a big drop in labor market participation and a more stagnant economy.

Although DI recipients may initially have climbed because the economy was weak, their numbers will almost certainly not decline when it strengthens again; only 4% of beneficiaries return to work within ten years. The proportion of working-age adults on DI has risen from 1.3% in 1970 to 4.6% in 2013. The impact on participation rates may be cyclical at first and then become structural.

Note that the rise in Disability Insurance recipients has occurred while work has gotten less physical. Granted, the population has aged. But injuries incurred at work have plummeted.

What would help separate out the real and fake pains: brain scans.

Share |      By Randall Parker at 2013 September 29 10:33 AM 

Sam said at September 29, 2013 9:12 PM:

I never thought I'd say this but good for them. Ten years ago this idea would have seemed absurd to me. After years of multi-millions of illegal immigration, legal immigration(both skilled and unskilled), all the S.S. money being stolen even with raised rates, multi-billion payouts to bankers who used the riskiest schemes possible to to earn bonuses and government workers extraordinary pay for poor performance why not try to get a little something before the whole ponzi scheme goes tits up. The amount of money going to these people is a pittance compared to banker disability. They got 800 billion from the bailout and we know from Rep. Paul that they printed another 16 trillion at essentially zero percent interest. That's not counting all the toxic waste the FED bought from the banks. With this new money I'll bet they're buying all the good assets in the country. Leaving us with the dreck.
I never thought I'd say this either. Tax the rich and the bankers until their anus bleeds. I know this is not the best or even rational policy. At some point you cease to care. You know all the cost when they throw away their present crop of aliens will be on the taxpayers. I don't believe voting will solve this. Voters get whatever vote the people that control the voting computers decide to give them. Anyone who doesn't follow the Judea-Hyper-capitalist line is creamed in the primaries by someone who will toe the line. By the way I'm not on disability nor am I funded by the government.

radical centrist blogger said at September 30, 2013 2:04 AM:

I used to work at a Social Security disability adjudication outfit. These people getting disability are older people. They know the score--the only jobs they can get are jobs where they would get less than what they get on disability. I say good for them. If I were not a cryonicist and therefore working hard in my 50s to get whatever money I can get to get the best possible cryopreservation I can, I would have already joined the SS disability crowd and would now be living in some little house in the country making my own hooch.

But for that chance at future life, I work...still....

radical centrist blogger said at September 30, 2013 2:08 AM:

reply to Sam above:
I am the same as you. I used to vote GOP. Now I hold my nose and vote Dem despite their anti-white fakeleftism that gives lip service to economic populism and instead focuses on identity politics etc.

If enough people like you and me see the truth, we may yet turn leftism back to its economic roots. And that may be enough to turn conservatism back to its majoritarian roots. We shall see....

Black Death said at September 30, 2013 5:40 AM:

There are actually two federal disability programs - Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). SSDI is available to workers who have accumulated a sufficient number of work credits in the Social Security program, while SSI is intended for those who do not qualify for SSDI. You have to be very poor to get SSI - no more than $3000 in total assets for a married couple. SSI usually comes with Medicaid and Food Stamps (SNAP). Both programs are administered by the Social Security Administration, but they are entirely separate, although they use the same medical criteria for eligibility. The base monthly federal SSI payment is $710, which some states supplement. SSDI payments vary, depending on the number of credits accumulated. The range is $300 - $2533. In 2013 the average payment is $1132. Plus, with both programs, you get Medicare after two years.

Iy's important to note that SSDI, SSI and Medicare are entirely funded by the federal government (unless a state chooses to supplement SSI, as some do). Medicaid and traditional welfare have big state funding components. There are private companies which staes hire to scour their welfare and Medicaid rolls looking for people who can be shifted to SSI, SSDI and Medicare, thereby saving the states big bucks. What a happy situation!

DdR said at September 30, 2013 7:51 AM:

I read that article from the Economist, and it corraborates with examples that I've seen in real life.

My uncle, who worked at a Miller Brewing Company plant for a while (20+years#, eventually got laid off. A naturally lazy man, he collected his unemployment until it ran out, then looked for work. Besides doing odd jobs and paving driveways, he was effectively unemployable. Suddenly he developed issues with his back, rendering him disabled. He filed a claim with the Social Security Disability Insurance and has been getting checks more or less the last 10 years. He now spends his days smoking, doing odd jobs under the table, drinking, and watching NASCAR. He seems content.

Clearly this is a program that's being abused #Economist did a good job citing the Dutch experience with SSDI fraud and how they eventually needed to revamp the system#, but Republicans won't touch it as it would directly affect their base of voters, i.e., white, blue-collar men. Instead, the Republicans are attacking food stamps, as mostly blacks and Hispanics use SNAP, even though SNAP takes up a miniscule amount of the budget.

It looks like the Amnesty bill has fallen out of favor, likely because smart Republicans realized how it would screw over their base of voters. They're attacking Obamacare now, not because it's a bad thing #it'll likely benefit many Republican voters#, but because Obama is a craven president who doesn't know how to get things done, and the Republicans smell blood and are pouncing.

Republicans are generally smart politicans, but they're letting abortion corrupt their platform. What's going to happen if they decide to have "no-policy" on abortion? Will the Mormons and Hasids vote in droves for Democrats? Highly unlikely. But then they'll get a much larger chunk of the white vote, especially white-women vote.

I still don't think anything useful will get done if the Republicans gain power in view of Bush's presidency. He had low deficits and a booming economy, and he spends it enlarging Medicare, creating the largest bureacracy since FDR #Homeland Security/TSA# and undertaking foreign boondoggles.

Black Death said at September 30, 2013 10:17 AM:

@DdR -

Pretty much agree. SNAP (food stamps) spending in the current federal budget is $78 billion, about 2% of overall federal spending. A miniscule amount? I leave that decision to the reader. However, SNAP spending has been increasing at a much faster rate than overall spending, more than doubling since 2007. Currently about one in seven Americans is on SNAP, a number that has increased substantially since the recession ended in 2009. Defenders of this program like to point out that the daily benefit is around $4.30 per person per day, which is not a whole lot. But there are more than a dozen federal food programs, including WIC, free school breakfasts and lunches, Department of Agriculture giveaways, etc., and anyway, the program was always intended to be a supplement - that's what the "S" in SNAP means. Nobody wants the poor to starve, of course, even the wicked Republicans, and we seem to be doing a pretty good job in this regard, since the principal nurtitional problem among the poor is obesity.

The Republicans are clearly sensing a target of opportunity here and taking full advantage of it. They know that the folks on the receiving end of these programs are never going to vote for them, so why not take a crack at them. Of course, they have a legitimate point as to why the participation rates and costs have increased so much since the end of the last recession. The Democrats do this stuff too, except they're much more effective, as when the used the IRS to hammer the Tea Party and other groups they despised.

The disibility programs, by contrast, cost $56.65 billion in 2011, and the cost has been stable to slightly decreasing.

bbartlog said at October 1, 2013 6:54 AM:

I stopped getting worked up about welfare for poor schmucks back in 2008, when Paulson et al managed to secure unlimited welfare for bankers. That's a bigger problem and has to be dealt with first. Arguably welfare for the poor is also economically distorting - it raises the price of various things like low-skill labor and food somewhat. But it's nothing compared to the effects that something like QE has.

Randall Parker said at October 1, 2013 7:34 PM:


I do not follow your logic. Since some people are parasites other people are morally justified on being parasites too? The vast majority of the people who are funding this parasitism thru their own labor are not parasites.

People who are getting disability payments aren't just getting that money. They are also not producing anything and they aren't paying taxes. So their total cost to the rest of us is larger than it looks.

radical centrist blogger,

Demographics alone argues against the Democrats shifting back to being the party they were in the 1960s and 1970s. Their veer toward being the party of identity politics and ethnic spoils will only get stronger as the demographic pull in that direction increases. The important thing to accept about American politics and society: It is only going to get worse. Widening differences in values and interests and loyalties. The middle class on the decline.

Black Death,

In his latest very interesting book Average Is Over Tyler Cowen gives a number for total disability cost over twice your number. Robert Samuelson gives the same numbers as Tyler:

. In 2010, Social Security’s disability program cost $124 billion plus another $59 billion for Medicare (after two years, disability recipients automatically qualify for Medicare). This exceeded $1,500 for every U.S. household.

The real cost per productive household is much higher. Take away the households that pay little or no taxes and the higher earning households are supporting many more people. I'd like to know how many people I support with the taxes I pay.

BTW, Tyler has reached many of the same conclusions I have about what is going on with the labor market and what that portends. Most of the people not doing cognitively demanding work that involves making computers more productive is going to find declining demand for their labor. I still think I'm ahead of Tyler in my thinking. Though I've got to finish reading the whole book to find out whether he's realized how extreme automation will cause capital to move away from big concentrations of human population.

SOBL1 said at October 3, 2013 9:30 AM:

Randall - I have read and heard that the fast growing claims are anxiety and obesity claims. They take on average 2 years and 9 months to get approval, but once they do, it's pretty easy to stay on. A positive change would be to alter the payment for mental nervous claims to be payable for 24 months unless confined to an institution. My guess is most anxiety, depression, etc. mental-nervous claims would wash away leaving only the truly mentally ill receiving SSDI and SSI.

My problem with these scamemrs and the underclass in general is the negative externalities factor. Can we wall them off if we have to pay for them? This is actually a problem with govt assistance compared to the old church charity and welfare of old. If you belonged to the church and received help, you were expected to conform to the group's behviors, norms andmores. If not, you were out of luck. Now we pay and don't expect any behavior beyond "vote left".

Randall Parker said at October 3, 2013 9:10 PM:


Walling off: I think we will have to wall them off by leaving America and putting a wall around where we go to. Unless the American elites totally flip and come to view the lower class as something that needs to shrink in size I see America as pretty much a lost cause. Maybe offspring genetic engineering could turn it around. Don't know what else would.

SOBL1 said at October 4, 2013 6:59 AM:

Randall, As a dad and an uncle, I'm afraid you're right. My destination of choice is Uruguay. I'll be supporting secession movements in the US if they ever arise.

Sam said at October 4, 2013 7:40 AM:

..."Since some people are parasites other people are morally justified on being parasites too?"...
Yes this is logical. Lets state it differently than calling them parasites. Big business gets a tax break, should the middle class? If we can't stop big finance from getting windfalls we shouldn't inordinately focus on everyone else. I don't believe cutting a few people off from disability is going to save the country and if we're going to all be working off the same credit card I want less jammed on it by the financial types. Same operating procedure as Cloward–Piven strategy. Remember I did say it was not the most rational decision but if everyone around you is beating themselves with whips and screaming it might be a good idea to do a a little screaming yourself. Irrational is sometimes rational in certain circumstances.

Randall Parker said at October 5, 2013 8:31 AM:


Lets not state it less inaccurately. Parasites live off the labor of others. If more people become parasites then others get even more blood sucked out of them. I'm opposed to having more blood sucked out of me.

I do not think that the result of more parasites will be a political reform that leads to a fairer system. In other countries (e.g. France) it has led to either sustained much higher taxes or reform to cut back on the number of welfare program parasites or both. Plus, if the system supports more parasites it will pull in parasitic immigrants and parasites will make more babies.

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