Thursday, July 26, 2012

Social Security Disability Insurance Reality Two: A Convenient Way To Cover Up a Failed Policy

Get Them Out of the Labor Force and the Unemployment Picture Looks Better.

From a politician’s perspective, TDI (discussed yesterday) has a drawback.  The recipients are still attached to the labor market even though they are temporarily not counted.  Social Security Disability Insurance fixes that for politicians who are experiencing a policy failure. 

Data for the month of June presented a very good example of how effectively Social Security Disability Insurance can be used to paint over failed policies.  However, it’s just one illustration of what has been going on for a while.  Interestingly, John MerlineJOHN MERLINE12655 Beatrice Street
Los Angeles
 of INVESTOR'S BUSINESS DAILY noticed it.  In “Disability Ranks Outpace New Jobs in Obama Recovery,” he points out how effectively the Obama administration has used it. Investor's Business delivers unique stock investment research, education and stock tips for new or seasoned investors, combined with daily business and financial news.askibd@investors.com310-448-6600WilliamO'Neil12655 Beatrice StreetLos AngelesCA90066USA12655 Beatrice StreetLos AngelesCA90066USA

“More workers joined the federal government's disability program in June than got new jobs, according to two new government reports, a clear indicator of how bleak the nation's jobs picture is after three full years of economic recovery….The economy created just 80,000 jobs in June, the Bureau of Labor Statistics reported Friday. But that same month, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program, according to the Social Security Administration.”

It goes on to note that: “The disability ranks have outpaced job growth throughout President Obama's economic recovery. While the economy has created 2.6 million jobs since June 2009, fully 3.1 million workers signed up for disability benefits….In other words, the number of new disability enrollees has climbed 19% faster than the number of new jobs created during the sluggish recovery. (Even after accounting for people who left the disability program because they died or aged into retirement, the disability ranks have climbed more than 1.1 million in the past three years.)”

It notes that: “…the ‘labor force participation rate’ — the number of people who have jobs or [are] actively looking for one compared with the entire working-age population — is now 63.8%, down from 65.7% in June 2009. This participation rate is lower than it's been in 30 years. In previous recoveries, the labor participation rate has almost always risen, not fallen.”  Once these people are out of the labor force, they stop being counted as unemployed.  Thus, the unemployment rate looks lower. 

Given Obama’s complete lack of understanding of how the economy works, this isn’t surprising. It’s a success from his perspective.  They’re not unemployed.  They’re disabled.  Can’t blame Obama for that, can you?  However, one sure can see a trail leading right to his failed policies; but will voters follow the trail?  Alas, each new recipient is a new defender of his or her disability and his or her entitlement to benefits.  So, the response to the policy failure builds its own constituency.  Neat trick. Yet, as will be discussed tomorrow, it would be wrong to blame the recipient.

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