Thursday, October 11, 2012

Behind those jobless numbers -- Oct. 11, 2012 column


Back in 2003, an up-and-coming economics professor cried foul when the government reported a surprisingly low annual unemployment rate. It was 6 percent.

“The unemployment rate has been low only because government programs, especially Social Security disability, have effectively been buying people off the unemployment rolls and reclassifying them as ‘not in the labor force,’” Austan Goolsbee of the University of Chicago Graduate School of Business wrote in The New York Times.

“The government has cooked the books,” he declared.

Nine years later, Jack Welch and other critics of President Barack Obama jumped on Goolsbee’s “cooked the books” comment to bolster their attack on what the former CEO of General Electric called “unbelievable” September jobless numbers. The Bureau of Labor Statistics reported that the unemployment rate declined three-tenths of a point to 7.8 percent and non-farm employment increased by 114,000.

Goolsbee, who chaired Obama’s White House Council of Economic Advisers in 2010 and 2011, denies he was being partisan in 2003. His words were taken out of context, he says. He’s right.

His op-ed said government policy loosening eligibility for disability payments had created “invisible unemployment” that benefits both parties. He did not accuse the Bush administration of phonying the numbers the way Obama’s foes have accused him.

“The point is not whether every person on disability deserves payments,” Goolsbee wrote then. “The point is that in previous recessions these people would have been called unemployed. They would have filed for unemployment insurance. They would have shown up in the statistics. They would have helped create a more accurate picture of national unemployment, a crucial barometer we use to measure the performance of the economy, the likelihood of inflation and the state of the job market.”

Goolsbee’s point is even more relevant today than it was nine years ago. The Social Security disability program has grown by leaps and bounds and now consumes nearly 20 percent of the Social Security budget. It’s on track to become the first safety net program to exhaust its trust fund – in 2016.

Getting stuck on one month’s unemployment numbers is pure political theater. BLS stresses that one month can be a fluke and revises numbers all the time.

Does anyone think a 7.8 percent unemployment rate is something to cheer about? Not when 12.1 million people are officially unemployed and unemployment would be so much worse without the disability safety net.

The disability rolls have doubled over the last decade. There were 10.6 million disability beneficiaries at the end of last year, 8.6 million of whom were disabled workers. The rest were dependents. The average monthly disability payment was $960, and disability recipients qualify for Medicare after two years. The average age of a disability recipient is 53.

As the economy soured and workers lost jobs and couldn’t find new ones, applications for disability soared. Over the years, eligibility for disability has been expanded to include mental conditions and back pain.

Congress started the disability program in 1956 to provide payments to disabled workers – that is, those unable to engage in “a substantial gainful activity in the U.S. economy.”

At that time, employment and disability were seen as mutually exclusive states, David H. Autor and Mark G. Duggan wrote in a 2010 paper on disability reform for The Center for American Progress and The Hamilton Project. The definition still stands, even though the nature of work has changed dramatically.

The disability program provides “strong incentives to applicants and beneficiaries to remain permanently out of the labor force, and it provides no incentive to employers to implement cost-effective accommodations that enable employees with work limitations to remain on the job,” Autor and Duggan wrote.

To fix disability’s financial crisis, Congress is considering a range of unpalatable options: raise the payroll tax, tighten eligibility and lower benefits.

Many who receive disability payments would rather be earning a paycheck and feeling like productive members of society. With some help from employers, many could work.

Instead of arguing about the unemployment rate, our leaders need to find ways to encourage work in the 21st century for all Americans, including those with disabilities.

© 2012 Marsha Mercer. All rights reserved.


1 comment:

  1. Yes,indeed. Ms. Mercer is absolutely right when she says "...our leaders should find ways to encourage work...for all Americans, including those with disabilities." She shines a needed light on a topic that is important, but not widely known by the American tax payers. Nice going Ms. Mercer, keep up the good work you are doing for your readers by bringing to our attention important issues that need to be dealt with now.