The Disabled American Worker
Bloomberg Businessweek|December 19 - December 25 2016

Where jobs vanish, disability insurance is the safety net

Brendan Greeley
The Disabled American Worker

If you’ve paid into Social Security, become injured or sick, and can no longer earn more than $1,130 a month, you can get a monthly subsidy from Social Security’s Disability Insurance Trust Fund. In 1990 fewer than 2.5 percent of working-age Americans were “on the check.” By 2015 the number stood at 5.2 percent. That growth has left the fund in periodic need of rescues by Congress—most recently in 2015, when the Bipartisan Budget Act shifted money from Social Security’s old-age survivors’ fund to extend the solvency of the disability fund to 2023.

“None of us should be surprised that the cost of the program was rising,” says Stephen Goss, Social Security’s chief actuary. He says the program’s growth is mostly a consequence of demographic change. Older workers are more likely to get sick, and as women have entered the workforce, they too have become eligible for benefits.

The geographic distribution of people on disability tells a different, but complementary, story: Workers who might have endured pain for a physical job apply for disability when jobs disappear. This has created what some economists call “disability belts”—rural areas in Appalachia, the Deep South, and along the Arkansas-Missouri border.

In a 2013 paper, David Autor, an economist at MIT, and his co-authors wrote that Social Security disability insurance was the single biggest source of federal transfers into areas that had been directly affected by trade with China and Mexico. Dan Black, now at the University of Chicago, found in a 2004 paper that growth in disability claims in Appalachia dramatically outpaced those in the rest of the country. Although it’s not designed to, Autor says, Social Security disability benefits function as unemployment insurance.

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