Laid-Off Workers Swelling the Cost of Disability Pay

Millions of low-skilled workers have turned to federal disability pay as a refuge from layoffs in recent years, doubling the benefit's cost and, with little notice, making it by far the government's biggest income-support program.

Most of those qualifying for the benefits, part of the Social Security system, never got past high school and held jobs like factory worker, waitress, store clerk, laborer or health care aide. Their numbers have grown to 5.42 million today from 3 million in 1990, swelling the program's costs to $60 billion last year. That far surpasses unemployment insurance or food stamps or any other similar program.

"Show me a high school dropout, particularly a male, who is over the age of 40 and is not working and there is a 40 to 45 percent chance that he is on Social Security disability insurance," said David H. Autor, an economist at the Massachusetts Institute of Technology.

It is not that disabling injuries are occurring more frequently or that more people are cheating a system that requires considerable evidence to prove disability. Research by a number of economists indicates that the growing numbers signal instead a reliance on disability benefits by low-end workers who had ignored their ailments as long as their limited skills brought them steady employment. Some who would have gone on welfare now apply for disability pay instead.

"When you are a person who has lost a job, and you can't find another and you are home sitting on the couch," said Morley White, an administrative law judge in Cleveland who rules on disability claims, "you become preoccupied with ailments that do qualify in many cases as legal disability but while you were working did not come into your mind."

Neither Congress nor the White House has challenged the skyrocketing cost of disability insurance, which will go up an additional $9 billion this year, reaching $69 billion, the Social Security Administration estimates. By comparison, the agency expects to pay out $382 billion in traditional old-age pensions in 2002, financing both pensions and disability payments through the same payroll tax. The debate on the financial health of Social Security has focused on the much larger pension system.

"There was always a bigger issue in the news to distract us and disability just crept up on us," said Kevin M. Murphy, a University of Chicago economist. "It is the tortoise in the tortoise and hare story."

The surge in the disability rolls started with the early 1990's recession, and the numbers climbed steadily as layoffs became common, even in the boom years of the late 90's. Hard times over the last 18 months produced another surge in the disability rolls, which grew by nearly 400,000 people in that period, unevenly across the country. State officials process the disability claims, acting as agents for Social Security, and some states have been more generous than others.

"In tough times, there is a tendency at the state level to cut people a little slack," said Charles A. Jeszeck, a labor economist at the General Accounting Office.

The rising numbers of people on disability take some of the gloss off the prosperity of the late 1990's. Unemployment fell and in the tight labor markets jobs went begging, even at the low-paying end. But the Labor Department counts as unemployed only those people actively seeking new jobs. When people stop looking and drop out, including people who go on the disability rolls, they no longer count as unemployed.

Those dropouts surged in number in the late 1990's. There were so many that if they had been counted as unemployed, the unemployment rate would have been higher, perhaps by as much as half a percentage point, according to new research by Dr. Autor and Mark Duggan, a University of Chicago economist.

Not all of the dropouts applied for disability pay, of course, but many of them did, Dr. Murphy found in a study he did with Robert H. Topel, also a Chicago economist, and Chinhui Juhn of the University of Houston. "More than 40 percent of the growth in nonparticipation is associated with an increase in men claiming to be ill or disabled," the three wrote in a recently published paper.

The 5.42 million people on disability pay, receiving $819 a month on average, is equal to 4 percent of those who hold jobs today. That increased from 2.5 percent in 1990, after barely rising at all in the 1980's, although Congress broadened the definition of disability and made proving it easier in 1984. It became particularly easier in the cases of back trouble and mental health problems, which can now include depression, manic behavior and other "mood disorders." Back trouble and mental stress are the two most cited ailments in disability awards.

"You have to be basically unable to function in a working environment," Dr. Autor said about the broader guidelines. "Before 1984, you had to have a specific qualifying ailment, like schizophrenia or a broken back."

Seventy-five percent of those on disability have a high school diploma or less education, the Social Security Administration reports. Their limited skills mean they are often still without a job five months after being laid off — the minimum time required to file for disability pay. Magnifying the problem, the low skilled find themselves mostly holding jobs that require physical exertion, Judge White said, and any ailment becomes an obstacle to landing the next job. So they turn to disability.

"I think that people who are better educated with transferable skills and other opportunities do not have to come before me to claim disability," the judge added.

Gregory Jordan, a 51-year-old former dock worker in Long Beach, Calif., is certainly familiar with the disability appeals system. He has just started to receive a $560 monthly disability check, five years after suffering the injury that disabled him. On a windy day on the docks in April 1997, a rear door of a tractor-trailer swung into Mr. Jordan's back.

"I completely blew a disk out," Mr. Jordan said, explaining that he had gone back to work after the accident and had continued on the job until Christmas, when the pain finally forced him into a hospital and he learned the extent of his injury. Workmen's compensation payments soon started, and they will continue alongside the disability checks. Like old-age pensions, disability pay is based on former earnings and not on need, as welfare is.

In telling his story to a reporter, Mr. Jordan recounted the case he made to disability officials to justify his claim: six back operations, constant use of pain killers, nerve damage affecting his arms, hands and legs. With only a high school education, his opportunities away from the docks in work that did not require physical exertion were limited. Still, disability evaluators, following Social Security guidelines, at first determined that jobs were available commensurate with his skills.

"They told me I could work at telemarketing or sitting at a desk all day answering telephones," Mr. Jordan said.

Like so many others, Mr. Jordan took his case to an administrative law judge. Although Social Security disability is a federal program, most of the states provide the judges who rule on appeals, often reversing an earlier denial. About 40 percent of all disability awards come on appeal, actuarial studies have found.

"No employer is going to hire me and take on the liability that I represent," Mr. Jordan said. "I can't stand very long, I can't sit very long. If I go anywhere I have to use a wheelchair."

Sitting or standing: those are crucial in judging whether a claimant, particularly one with little education, can "engage in a substantial gainful activity." If the person can demonstrate that because of an ailment or the pain it produces, he or she can no longer sit for six hours in an eight-hour day or stand for at least two, then that person is deemed disabled.

"Pain is the most argued thing in disability cases," Judge White said, adding that "98 percent of the people who come before me truly believe they are disabled."

No one disputes that the disability rolls are swelling. But the reasons offered vary. Social Security officials attribute the rise to the large number of aging baby boomers. In addition, many women have gone to work, thus becoming eligible for benefits. The rules require a disability applicant to have held a paid job for a total of 5 of the previous 10 years and to have earned wages for 25 percent of the time since age 22. The earnings in these years then become the basis for calculating disability.

Those explanations are challenged by some economists and policy makers. Despite the baby boomers, the average age of people on disability has fallen, they note. They argue that younger people increasingly qualify on the ground of mental illness. With the average age falling, the disabled are remaining on the rolls longer, and that has swelled the numbers. Congress helped in this process by making it harder for Social Security officials to declare people cured and no longer eligible for disability.

"They now have to present compelling evidence of an improvement in health," Dr. Autor at M.I.T. said.

There are other explanations. Lawyers, for example, increasingly help applicants with their claims, earning fees if the claims are awarded. The disability payments themselves have been rising at a faster rate than the pay of most low-end workers, gradually making paid employment less attractive for the unskilled, said Lawrence Katz, a Harvard University labor economist.

There's another lure, particularly for the unskilled who often work without company-paid health insurance. Two years after the disability checks begin to arrive, Medicare coverage kicks in free.

Cost-cutting proposals are beginning to appear. Douglas Besharov, a scholar at the conservative American Enterprise Institute, for example, would make modern drugs available at little or no cost to the mentality ill on disability so they could work again, thus cutting the rolls. But he sees little chance of change now.

"This is the wrong election cycle to talk about cutting back anything," he said. "I think the lesson of the last year is that the Democrats want to paint the Republicans as mean and the Republicans are willing to spend tens of billions of dollars to avoid being called mean."

One approach to trimming the rolls that might not be dismissed as mean spirited is a proposal by Kenneth S. Apfel, a commissioner of Social Security in the Clinton years, to combine disability pay with retraining and part-time work.

"It would help the large number of people in their late 50's who have become obsolete workers and have some medical condition," said Mr. Apfel. "It would give them a bridge to retirement at age 65 when they are shifted anyway from disability pay to regular pensions."

Its pretty weird. My sister-in-law has a heart ailment, she has an immune disorder, she has two bad knees, she has carpal tunnel in both wrists.

But she cannot get disability because they say that she "could" get a job in her chosen profession. Her profession is as a Registered Nurse. She was told that she could work as a telephone nurse. This is true I suppose except the position of telephone nurse is extraordinarily rare here and the employers tend to hire healthy people even for that position. Nevertheless, she COULD do that if positions were available.

A friend of mine DID get disability insurance. His problem is that he has two completely shot knees. He can't walk so good. The reason he DID get disability is because he was strictly a manual laborer. His only skills are in setting up heavy manufacturing equipment. He is indeed disabled for his profession even though he is about ten times healthier than the sister-in-law. And even though he has just about as much chance of getting a job as the sister-in-law.

This is a perfect example of why manual laborers and such get disability at a much higher rate. It has nothing to do with "lazybone blue collar" versus "productive white collar" as this article sort of hints. I am a Software Engineer and I would never be able to get disability even were I to go blind and deaf with a serious heart defect. Simply because in my career I COULD get a job with a Braille terminal and IV bag pole next to me. My blue collar friend could not.

So...I'm trying to figure out..does your reply mean that you tend to look down your nose at blue collar workers-or am I just mis-interpreting your feelings?

I'm a former blue collar worker-now disabled-I was always hard-working..maybe too hard working..in fact..I'm sure that's why I became disabled..is it wrong to work too hard?

I have a GED and over 2 years of college-and I'm a veteran..when I went to college..I was also working 2 jobs..a real grind..yet I wasn't able to "break" into the white collar world..am I a failure in your opinion?

I have 2 fused discs and degenerative arthritis setting into my spine..is that my fault..or the fault of profit hungry companies that often ignore OSHA regs regarding max weight limits on blue collar workers backs and skeletal frames?

You see... I have a tendency to not trust those who've never worked hard physically a day in their lives..because few of them ever appreciate the blessings and breaks they've had..that many of us blue collar workers never get..anyhow..I'm just curious..don't mean to offend..have a good one....

No. I'm challenging the gist of the article which seems to be that blue collar workers are quick on the trigger to go for disability benefits and perhaps are not really as deserving.

My points were that a white collar person like myself gets turned down for disability benefits based on the exact same standard as blue collar workers because my particular skills are not as affected by physical disability.

The author seems to think that blue collar workers are getting disability for injuries that white collar workers are not. This is obviously true but the author makes the fundamental mistake of judging the disabilities equally rather than judging the disabilites effect on the work requirements of the individual in question. Two bad knees destroyed the career of my friend whereas two bad knees would not affect my career materially. He should get disability for the same injury that I should not. The author doesn't seem to understand the distinction.

The author seems to have a suspicion that this is somehow unfair or unseemly of those blue collar workers and that maybe something fishy is going on. Thats because the author has preconceived notions, probably based on his own situation, of what is and what is not a disability. I seriously doubt that the author lifts heavy objects for a living.

Thats not to say its all fair. My sister-in-law should indeed get disability insurance because her disabilities are such that her (realistic) career opportunities are reduced to nil. She doesn't get it because her (theoretical) career opportunities are reduced to "almost" nil. This is certainly not the fault of blue collar workers however.

I see that a lot here are all fired up about this as a government give-away. Its not supposed to be. It is supposed to be an insurance policy and God knows we pay a lot of premiums into this particular insurance policy. You should not blame the beneficiaries of the insurance policy because the insurance company can't run its business correctly or has executives that steal all the money to pay for other things. That is what we have with Social Security and its not the fault of the disabled who paid premiums. Blame your Representatives and Senators and blame yourself for electing them. But collecting on what is purported to be an insurance policy is not grounds for being called a "welfare recipient".

I don't know what state your sister is in, however, here in Texas, apparently everyone is routinely turned down for disability the first time - even those terminaly ill and dying.

The second time, when you appeal (it is important to appeal within the 60 days of the determination) or your case must start over) about 80-90% are turned down.

The third time, you appeal, it goes to an administrative law judge for a personal hearing, and you can get a reasonable hearing.

However, they tell me it really helps to get a lawyer (who routinely charges 25% (up to a maximum of $4000).

It took me over 3 years and a lawyer and inability to work for 5 years to get disability.

One of my turn downs effectively said (in appropriate burro-ocrateese) you aren't dead yet and you aren't totally blind yet, therefore you are not disabled.

SSDI benefits are not awarded on the basis of one's ability to work in their chosen profession. Rather they are based upon one's ability to work in any job for which one is qualified. For example, in order for a doctor to qualify for SSDI, he has to prove that he not only is unable to work as a doctor......he has to prove that he is unable to work in any job for which he meets the minimum qualifications. Obviously, the higher one's level of skill and education, the more jobs one technically has to choose from.......and the more difficult it is to qualify for benefits.

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