Paying for Disability

The number of disabled people in the United States is increasing at a shocking rate – from 1984 to 2000 the number of disabled people more than doubled from 3.8 to 7.7 million. Today, over 5% of adults aged 25 to 64 are disabled. Even more worrying is that disability is increasing especially rapidly among the young. What is responsible for this awful increase? Workplace accidents? Chemicals in the environment? Gun violence? Naahh, it’s incentives of course.

By disabled I mean receiving Social Security Disability Insurance or Social Security Income. In 1984, it become significantly easier to qualify for these programs. Combine this with an increase in the effective generosity of these programs for people of low-income, brought about by increases in mean relative to median income, and you have the makings of an epidemic. Today, “annual disability expenditures exceed that of welfare (TANF), Unemployment Insurance, and the Earned Income Taxed Credit combined” write economists David Autor and Mark Duggan in an important paper that I have drawn from.

Increases in disability have come mostly in the form of “back pain” and other difficult to verify maladies. One of the elegant ways Autor and Duggan demonstrate that you get what you pay for is the following chart which shows that as the number of disabled increased dramatically their mortality rate declined equally dramatically! (Click on the graph to expand it.)

Workers on disability are not counted as unemployed. Thus, another consequence of the increase in the disabled is that our unemployment statistics are artificially low. (See Austan Goolsbee’s NYTimes op-ed on this also drawing on Autor and Duggan.)



Comments for this post are closed