No, Social Security disability awards didn't plummet --- but they haven't skyrocketed either.
Robert Oak, who owns the website Economic Populist, has determined that the number of people receiving disability compensation (SSDI) has been steadily increasing as a percentage of the population since 1960 (since the program was first initiated). And in the aftermath of the Great Recession, he saw no sudden jump in the disability numbers, despite the many conflicting claims. "We see that growth rates did not suddenly explode in 2008 and 2009, but are much more a reflection of the general trend in more of the population receiving disability benefits overall.1"
This was exactly what I had always suspected, but I didn't have any way of proving the others wrong. I had always assumed that "claims" for disability might have went up after the recession, but saw that the actual "awards" were relatively on par from previous years. That's why I spent so much time and effort reading all the reports and trying to find inconsistencies in their claims (and trying to comprehend the economic jargon, the numbers, and graphs).
In my gut, I just couldn't believe that millions of people were suddenly leaving their jobs just to go on the government dole (like Bill O'Reilly and John Stossel have indicated several times on Fox News)
When I last worked in 2008, I was earning about $33, 280 a year in wages ($16 an hour) plus an average of $100 a day in tips (with healthcare and dental benefits, as well as vacation pay) as a union casino bartender in Las Vegas. I wouldn't have left that job in the hope that I MIGHT eventually qualify for SSDI benefits one day. And why would I leave a job I liked for SSDI benefits that only pays $13,560 a year? (The average SSDI benefit is $1,130 a month). And why would I then forgo NO INCOME AT ALL for 2 or 3 years while pursuing a disability claim, only to go through several appeals processes? It just didn't any make sense at all to me.
But I could understand why people would apply for SSDI (or Medicaid or SSI or TANF or SNAP) after their unemployment benefits ran out and they couldn't find any other work (and why SSDI applications might have risen in the aftermath of the last recession) --- because after all, people just want to "live".
In a CBO report they say that many people who receive SSDI only do so because they couldn't find work, but that they would prefer a job (and that SSDI "claims" for disability usually rise during recessions). I myself would prefer to work, even if the wages were less than what I was making before I was laid off (but more than SSDI). I would always prefer a job. Based on a 40-hour work week, the average monthly SSDI monthly payment equates to a job paying 6.52 an hour ($1,130 a month) give or take, depending on how FICA and federal taxes are calculated (In places like NYC, I think they also pay state and city taxes too.)
Most people prefer going to a job because it gives them some sense of identity and a purpose. It also breaks up a rather dull routine of watching TV all day long. And even if you don't particularly like your job or don't get along well with your boss, it's much better than sitting at home all day with no money at all. I know from personal experience, so I can tell you, that it's almost like being under house arrest --- because without cash, you're not financially free to do anything (or financially trapped to do nothing). You're stuck. Especially if you can't keep up with car payments or auto insurance, and can't afford gas --- then you're really stuck without a car.
People receiving SSDI or unemployment benefits don't usually have the extra discretionary income to make their jobless time a "vacation". They can't occupy all their spare time with other activities (like traveling or drinking at a bar) because they don't have the money to do so. It's "math". After rent and everything else, how far can $1,130 a month realistically go towards living expenses?
And especially if you are a single person living alone (like I was) who had no family members or a spouse to rely on, or to help out with expenses. Like I said before --- people just want to "live" (as with food and shelter). And if you're older (and also have a disability), and if you can't find work, and if you're denied SSDI, then you are very much SOL (like I almost was).
That may be why suicide rates have skyrocketed 30% for Baby Boomers. Last January 2011, I once thought I might be of those statistics, because I knew I couldn't survive very long as a homeless man, going through a slow and miserable death on the streets.
Millions of Americans are working part-time when preferring full-time work. Nearly 12 million Americans remain unemployed. At least 4.4 million Americans have been unemployed for more than six months. These Americans have not only lost unemployment benefits, they've drained their retirement and savings accounts in order to pay for food, clothing and shelter for themselves and/or their families. Laziness has nothing to do with their predicament. It was the man-made crash of the economy that did this to them (they are economic victims, not government-subsidy predators). Empirical research has shown that employers simply do not want to hire people who been out of work for a long period of time.
And millions more are underemployed or have given up looking for work altogether because there aren't near enough job openings. At the current rate of job creation, some say it will take at least eight more years to get back to pre-recession levels. These statistics --- which have been regarded by many economists as a national crisis --- have become the new normal.
So if a small percentage of the population can be saved with SSDI, why not? Just start taxing capital gains income (the income that CEOs earn from their stock options every year) for Social Security and eliminate the $113,700 cap for Social Security payroll taxes to help make the Social Security Trust Fund more solvent --- especially when people's lives depend on it.
And no, Social Security Disability Insurance (SSDI) is not a hammock, it's life support.
"We don't want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency." - Paul Ryan
More relevant is how those receiving disability payments has grown relative to the growth in overall population. Below is a graph of all persons receiving either SSDI, SSI or both as a ratio of United States total population including the armed forced from 1960 until 2011, the last year of annual data. What we see is an increase in this ratio, which means there are more people receiving disability benefits as a ratio to population. If the below line was flat, we would see the same percentage of people receiving disability as a segment of the population.
Another element to examine in the above graph is the rate of change of this ratio. Is it really soaring as some claim? It is not. The below graph is the percentage change of the above ratio each year. As we can see the amount of people as a ratio to the population has been steadily increasing, but less so in recent years than say 1961 and even 1992. Now this graph does include all peoples, that is children as well as those over the age of 65.
There is also in increase by ratios in those receiving disability benefits who are of prime working ages, 18 to 64. Below is a graph of all, that's workers, widowers and adult children, receiving either SSDI, SSI or both as a percentage of the population that at that time was between the ages of 18 to 64. We go back only to 2000 due to the lack of backwards Census adjusted population data by age.
Now the graph clearly shows a growth in working age people on disability as a percentage of the age 18 to 64 population. The above is all disability, SSDI, SSI or beneficiaries receiving both. The next graph shows just those receiving SSDI, this includes workers, widows and adult children of beneficiaries. Here too we see an increase, even as a ratio of population ages 18 to 64.
Yet when we look at the rate of change of either all disability recipients as a ratio to ages 18 to 64 population growth or SSDI alone, ages 18 to 64 as a ratio of that age group population, we see that growth rates did not suddenly explode in 2008 and 2009, but are much more a reflection of the general trend in more of the population receiving disability benefits overall.