'A record 5.4 million workers and their dependents have signed up to collect federal disability checks since President Obama took office, according to the latest official government data, as discouraged workers increasingly give up looking for jobs and take advantage of the federal program.
This is straining already-stretched government finances while posing a long-term economic threat by creating an ever-growing pool of permanently dependent working-age Americans.
Since the recession ended in June 2009, the number of new enrollees to Social Security’s disability insurance program is twice the job growth figure. (See nearby chart.) In just the first four months of this year, 539,000 joined the disability rolls and more than 725,000 put in applications.
As a result, by April there were a total of 10.8 million people on disability, according to Social Security Administration data released this week. Even after accounting for all those who’ve left the program - about 700,000 drop out each year, mainly because they hit retirement age or died - that’s up 53% from a decade ago.
The explosive growth in disability enrollment also “helps explain some of the drop in the labor force participation rate,” noted economist Ed Yardeni on his blog.
In fact, the participation rate - the share of working-age people who have or are looking for a job - has fallen to 63.8% compared with 65.7% at the start of Obama’s term.
Ironically, this drives down the unemployment rate, which simply measures how many people are looking for work but haven’t been able to find it. When people quit looking or sign up for disability benefits, they no longer count as unemployed.
The problem is that few people who get on disability will ever participate in the labor force again. In fact, the vast bulk of those who exit Social Security Disability Insurance do so either because they hit retirement age or died.
As a result, the swelling ranks of the disabled can become a drag on the economy.
the explosive growth in enrollment is not only increasing the financial strain on the Social Security Disability Insurance trust fund - which is scheduled to go bankrupt in 2018 - it’s boosting costs for Medicare as well, since SSDI enrollees can qualify for Medicare after two years. SSDI now accounts for more than 16% of Social Security’s budget and more than 15% of Medicare’s.’ - John Merline, Investor’s Business Daily