Sunday, May 11, 2014

8.9 Million on Disability vs. 92.5 Million not in Labor Force

In a post from the Federal Reserve of Atlanta: How Has Disability Affected Labor Force Participation? they note, "How much can the change in demographics during the past decade explain the rise in disability or illness as a reason for not participating in the labor market? The answer seems to be: Not a lot."

They claimed in their post that "from the fourth quarter of 2007 through the end of 2013, the number of people claiming to be out of the labor force for reasons of illness or disability increased almost 3 million (or 23 percent)." But that number is actually much less.

Number of disabled workers only --> Awards (not applications) minus terminations for total in payment status:

As of Dec 2013: 8,942,584
From Dec 2007: 7,101,355
= 1,841,229 net increase on disability (not 3 million as stated in the Atlanta Fed post). Source: Social Security

The Atlanta Fed's article also goes on to say, "Only about one fifth of the decline in labor force participation as a result of reported illness or disability can be attributed to the population aging per se." So their fraction of (one fifth) would be even less --> It's actually 9.6% of those not in the labor force who receive disability.

NOTE: The 8.9 million total on disability (to date) is a very small fraction of the 92.5 million total that are currently not in the labor force. That is because offshoring to environmentally unregulated countries has been the primary cause that contributed to the lack of jobs that created the largest decline in the labor force participation rate.

Also, we have over twice as many high school graduates every year than we have people retiring on Social Security. The increase of those in payment status for disability is minuscule compared to these demographics.

After being laid off during the Great Recession and collecting their maximum weeks of unemployment benefits, many 62 year-olds took early retirements. U.S. News reports that according to a 2011 Employee Benefit Research Institute survey, 68 percent of retirees ended up retiring before reaching age 65 (before qualifying for their full benefit amount). I suspect that after being laid off in 2008//2009 they were already "long-term unemployed" and unable to obtain another job when employers began hiring again. So when workers turned 62, they were forced to take a lower Social Security benefit. (The first Baby Boomer retired at 62 in 2008 and the First Baby Boomer turned 65 in 2011).

My other posts on this subject at the Economic Populist:

Record Number of Boomers Left the Labor Force: February 10, 2014

Long-Term Unemployed Baby Boomers in 2013: August 26, 2013

The Last Word on Social Security Disability: July 22, 2013

Report: Disability Claims and Awards Declined: July 19, 2013


  1. From the Economic Policy Institute: There is currently an all-time-high of 6.2 million missing workers...the Class of 2014 report [shows] there is little evidence that today’s missing young workers are “sheltering in school”.

  2. Regarding this other post from the Atlanta Fed: "The Economic Outlook and Forward Guidance"

    In it they state, "About half of the fall in participation can be explained by demographic trends — that is, baby boomers choosing to retire."

    My rebuttal: Fed Up with the Fed Blaming Boomers

  3. It's apparent that Europeans have a bigger set of cojones than Americans, who simply roll over when their jobs are threatened, their lifestyles are threatened, their retirement is threatened, and their Health Care is threatened. How do the Europeans prevent this? Because they are almost 100% unionized. But a union is perceived to be bad for people in the USA! Why, because the corporate propaganda machine has made ignorant Americans believe what is good for them is really bad!

    American’s easily forget that when we had unionization of our work force, we also had the largest increase in wages, health care benefits and a viable pension plan. The Republicans successfully passed in 1947 the Taft Hartley Act which was the beginning of the end of unionization in America. The result is “Right to Work States” a classic example of an oxymoron, in which you as a worker have no rights, only the corporation hiring you has any rights. The Republicans have continued with this assault upon the American Worker and the 'Middle Class' for the past 65 years. The results are evident. Wages are stagnant over the past 20 years while corporate executive pay has gone up 300%.

    Without any voice to speak for the American Worker, corporations are free to do whatever they please! The American Worker has no one to blame but themselves because they haven’t voted for people who want to protect their jobs. They buy into the ‘Trickle Down’ economics theory which for over 30 years hasn’t worked and the only thing tricking down is brown and smelly as the wealthy cheerleaders keep telling the unintelligent that they live in the best country in the world.

    Well here’s the real statistics! In the latest worldwide study of overall Quality of Life, the USA ranked 32nd. In education, the USA ranked 22nd. In health care the USA ranked 39th. So much for the myth that we live in the best country in the world. And I don’t want to hear from the unintelligent, “IF YOU DON’T LIKE IT MOVE!” Well I don’t like it, and I’m not moving either… I’m calling for a change dummies!

    Consider this: Industrial production in Germany, Europe’s largest economy, increased more than economists forecast the past 3 years, led by rising output of investment goods such as machines. In Germany the unionized workers enjoy 5 weeks of vacation, more holidays, free health care, free dental, free college or university education, and a pension plan that is 60% of the average wages of the last 3 years of employment.

    And what do you, the American worker get? A large jar of Vaseline if you ever get a chance to retire!

    "You can fool some of the people all of the time and those are the ones you want to concentrate on." -- George W. Bush

  4. The medical procedure for a minor problem now costs USD 25,000 which is close to the annual median income for Americans.