By Daniel Sutter

The United States is experiencing an epidemic of disability. New awards under the Social Security Disability program (SSDI) have risen from an average of 630,000 a year between 1992 and 2000 to over 1 million in 2010, an increase of over 50%. One sixth of all Social Security payments now go to the disabled, and an estimated 6% of working age Americans are disabled. Alabama ranks in the top five states nationally, and in Hale County nearly one in four adults is on disability.

The rise in disability is both mysterious and surprising. The mystery arises because other measures suggest that Americans overall are healthier now than in the past. People are living longer, with fewer workers killed or seriously injured on the job. Medical innovations like hip replacements and back and heart bypass surgeries mean that many previously debilitating conditions are no longer so.

The surge is surprising for two reasons. First, the Americans with Disabilities Act, passed in 1990, sought to integrate people with disabilities fully into life and work. Employers can no longer discriminate against people with disabilities and must offer reasonable accommodations. Enhancing work opportunities should reduce the number of people with disabilities needing government assistance.

An ever increasing division of labor also makes the rise in disability surprising. Specialization drives the prosperity of the modern economy, a point I often make in this column. But the division of labor also particularly enhances the economic prospects of people with disabilities. A subsistence agrarian economy where everyone hunts or works in the fields offers few opportunities for the blind, deaf or invalid. Dividing labor into small enough tasks creates jobs where the abilities of people with disabilities can contribute. In our modern economy, Stephen Hawking became a world famous physicist despite his disabilities.

Taken together, the division of labor, spurred by technology like artificial intelligence, the Disabilities Act, and modern medicine mean that the economic opportunities of people with disabilities have never been greater. Fewer should need government assistance, and yet this has not happened.

Why are the ranks of the disabled swelling? The surge might be more legal than real. News reports document that many of the newly disabled are reasonably healthy and do not fit a traditional image of disability. The fastest growing causes of disability, back pain and mental illness, are the most difficult diagnoses to document or disprove. This suggests possible subterfuge, and perhaps able-bodied individuals seeking disability status.

Why then has there been so much effort by individuals to qualify for disability? Several factors appear involved. Disability claims increase with unemployment, so the 2008 recession explains some of the recent disability surge. SSDI, however, is not a temporary welfare program; very few working age Americans ever reenter the work force after being designated as disabled. History suggests that many of the newly disabled during the recent recession will never work again.

Welfare reform has also contributed. In 1996 Congress and President Clinton passed a landmark reform ending the entitlement to cash welfare payments. Welfare now has a lifetime limit and strict work requirements. Yet these conditions do not apply to the disabled. The nation’s welfare rolls have been reduced by over 60% since 1996, but some former welfare recipients have simply been shifted to SSDI.

States have contributed to the surge in disability. States operate our nation’s welfare programs, albeit with significant Federal funding, while SSDI is a purely Federal program. Consequently states have a financial incentive to move potential welfare recipients to disability. Some states have paid private companies to help welfare recipients get declared disabled, with bonuses for each “success.”

Americans are very caring and want a safety net to take care of the disabled, and yet also do not like for their generosity to be abused. And it is valuable for the talents of people with disabilities to contribute to our economy. Operating a safety net without disrupting the incentive to work is challenging. The recent disability epidemic demonstrates that our government-run welfare state continues to struggle with this task.

 

 

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University. Respond to him at dsutter@troy.edu and like the Johnson Center on Facebook.