Is Unemployment Dropping Because of Increased Disability Claims?

Hans Bader says:

The official unemployment rate is going down, but that’s partly because many long-term unemployed people went onto Social Security Disability, citing ailments such as depression.  Now that they have a monthly government check, they are never, ever going back to work, and they are no longer treated by the government as unemployed, since they are not seeking work. The Washington Post’s Bob Samuelson explained recently how vast numbers of Americans are going onto Social Security Disability. Carter and Reagan tried without success to reform this program, and were blocked by Congress. The current administration has no interest in reforming it, since it helps mask persistently-high unemployment.

As Zero Hedge notes, exploding disability claims are credited “with distorting the unemployment rate and making it lower than most expect or believe.” It cites a study noting that “nearly 25% of those not actively seeking a job had applied for, and been accepted, by disability — mostly Social Security.”

This is really not too terribly surprising, and not entirely the dishonest scam that you might at first think.  I can tell you that when I lost my job in 2001 (or rather, my employer stopped paying us, and was surprised that we did not continue to come to work, anyway), I found myself struggling with depression.  Fortunately, I had consulting work offered to me that helped with both the finances and the loss of self-esteem.  When my contract job evaporated in 2009, I was again fortunate to have something useful to do, writing a law review article that was cited in McDonald v. Chicago (2010).

But guess what?  Most people are not that fortunate.  People that have been out of work for a year or two, get depressed.  Losing your house to foreclosure because you can't make the payments, is depressing.  Watching what little savings you had evaporate away, is depressing.  Realizing that you are over 50, and therefore unlikely to ever get a job again, is really depressing--and we are talking about severe depression, the kind that prevents you from getting out of bed in the morning, and when you do get up, you are mentally drained, and unable to concentrate--that is a real disability.

I am not saying that there are not scammers out there, pretending that they are disabled to get a government check.  But when you reach the point where you have run out of unemployment, out of savings, are having to hit up relatives and friends for money, and the local food bank for food--it is surprisingly easy to rationalize, "I'm never going to be able to get another job.  Another five or ten years and I would have been collecting Social Security anyway...what's the difference?"

I do not have a great deal of hope for this country anymore.  It seems headed down the toilet.  But stuff like this really accelerates the collapse.  The super-rich who benefited from all the sleazy manipulation that created this housing bubble, and who benefit from the sleazy tax breaks and green crony capitalism are laughing all the way to the bank.  A lot of other people are not.