Social Security

The Human Costs of the Modern Disability-Industry Complex



Over the weekend, I heard on NPR's Planet Money program a superb piece of reporting about the rise in the number of Americans receiving federal disability payments. The hour-long segment, "Unfit for Work," by Channa Jaffe-Walt thoroughly documents how changes in the U.S. economy combined with the disabilty system's perverse incentives are marginalizing many Americans. From the show:

In the past three decades, the number of Americans who are on disability has skyrocketed. The rise has come even as medical advances have allowed many more people to remain on the job, and new laws have banned workplace discrimination against the disabled. Every month, 14 million people now get a disability check from the government.

The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined. Yet people relying on disability payments are often overlooked in discussions of the social safety net. People on federal disability do not work. Yet because they are not technically part of the labor force, they are not counted among the unemployed….

The two big disability programs, including health care for disabled workers, cost some $260 billion a year.

What follows is a riveting and disheartening story of how the disabilty system "disappears" people from the workforce and making them permanently impoverished. Disability has become a defacto welfare system:

"That's a kind of ugly secret of the American labor market," David Autor, an economist at MIT, told me. "Part of the reason our unemployment rates have been low, until recently, is that a lot of people who would have trouble finding jobs are on a different program."

Planet Money

As part of the disabilty-industry complex, Jaffe-Walt details how states are hiring firms like the Public Consulting Group to contact welfare recipients to see if they can gin up enough evidence for some kind of disabilty. If they can, then the recipients can be shifted from state welfare rolls onto the federal disability system. She reports:

The company gets paid by the state every time it moves someone off of welfare and onto disability. In recent contract negotiations with Missouri, PCG asked for $2,300 per person. For Missouri, that's a deal—every time someone goes on disability, it means Missouri no longer has to send them cash payments every month. For the nation as a whole, it means one more person added to the disability rolls.

The result of these depressing trends is:

…going on disability means you will not work, you will not get a raise, you will not get whatever meaning people get from work. Going on disability means, assuming you rely only on those disability payments, you will be poor for the rest of your life. That's the deal. And it's a deal 14 million Americans have signed up for.

The whole program is well worth heeding.