Job disability a headache for recoveryI am skeptical of this claim because of the large increase in the number of older, working age people in America and because the rate of increase of those on disability has remained constant since the early 90s.
By Antonella Ciancio
WASHINGTON | Sun May 6, 2012 2:51pm EDT
Applicants soared to a record high of 2.94 million in 2010, and have held above 18 per 1,000 workers in the past three years - a far higher rate than in previous recessions.
Since the recession began, the share of Americans actively looking for work, known as the labor participation rate, has fallen to 63.6 percent from 66 percent in 2007.
Some people give up looking for work temporarily, but the size of the decline has perplexed economists and disability is clearly a factor.
Chris Low, chief economist at FTN Financial, said over time, disability will rob roughly $250 billion - or 1.6 percent - from total output each year once the economy returns to full employment, probably within the next five to seven years. This will also widen the budget deficit.
Economists say part of the rise in disability claims may be due to people nearing retirement who ignored a health problem when the job market was strong, but then seek benefits when they lose their job as a bridge until they qualify for Social Security pension plans.
Yet it is not the only reason. An aging population accounted for two-thirds of the rise in claims from 2000-07 as so-called baby boomers entered their 50s and 60s, when disabilities are more common, but they have only accounted for 10 percent of growth from 2007-10.
"If you look at the people on disability, around 40 percent are in their 60s. But younger people in their 30s and in their 40s have grown a lot. That is part of what has been driving the program," said Mark Duggan, an economist at the Wharton School of the University of Pennsylvania.