Acting Social Security Commissioner Carolyn Colvin and Sen. Debbie Stabenow, D-Mich., claimed Wednesday that the recession did not greatly increase the rolls of the Social Security Disability Insurance program. However, data clearly show that increases in disability rolls occurred during the recession, suggesting they were caused by the poor labor market.
“I think there’s a general sense that recession and more people apply for disability, and therefore more people are receiving disability,” Stabenow said at a Senate Budget Committee hearing on disability insurance. “The numbers that I’ve seen don’t show that out. Would you agree that more people may apply, but that doesn’t mean they receive it?”
“That’s correct, Senator,” Colvin said. “We have many workers who are marginal. They have disabilities and they continue to try to work, and when jobs are there they work … So some of those individuals may go on the rolls, but it’s a small number. And if you look at our most recent numbers you’ll see that initial applications are actually going down.”
But the recession really does appear to have resulted in more people receiving disability. Disability insurance awards averaged about 800,000 a year from 2000-2009, but peaked over 1 million awards a year in 2010 and 2011. Rolls saw larger than usual gains from 2008 through 2010. Awards in 2008 spiked 8.7 percent higher than the 2007 number. Awards spiked higher still by 10.2 percent in 2009, which was the worst year for employment growth in decades.
The labor market then started to recover, the number of new awards declined. As Colvin herself said, applications are now on the decline, but this has more to do with the job market, not demographics.
Colvin and Stabenow went on to claim that demographics were responsible for increasing rolls, not people applying for disability because of the bad economy.
“The increase in the disability rolls was predicted by our actuaries, … but it was not due to people who shouldn’t get on the rolls, it was due to the demographics that Sen. Sanders talked about earlier,” Colvin said, referring to the rise of women in the labor force. “We have more women coming in to the workforce,” Stabenow said.
While the rise of women in the labor force is certainly a factor in higher participation, there’s no denying that the poor labor market during the recession caused some people who are physically able to work to go instead for disability insurance when they lost employment.
Graphs of annual percent change in employment and disability awards from 2000 to 2013 are almost opposites of each other. From 2008 to 2013, every year when employment declined, disability awards rose, and vice versa. Disability rolls also increased during the recession that occurred in 2001.
Studies have shown a clear relationship between the labor market and disability rolls. A 2003 study found “rapid program growth despite improving aggregate health,” with reduced stringency and declining demand for low-skill workers responsible for the increase in participants. A January 2015 study found that low education increases one’s likelihood of becoming a disability recipient, consistent with other work showing unemployment influencing disability rolls.
The disability insurance program exists to help those who are unable to work for physical reasons. It is not there to help people who can physically work but are unable to find a job. Other government programs already serve that purpose — namely unemployment insurance. Stricter reforms are necessary to ensure that only those physically unable to work receive disability benefits. Reform would extend the lifespan of the disability insurance trust fund, currently on its last legs and projected to reach depletion in late 2016.
