Disability Rolls and the Makers/Takers/Fakers Nonsense

January 26th, 2013 at 6:18 pm

Had a rousing debate on the Kudlow show last night with Larry and Jimmy Pethokoukis (aka Jimmy P) haranguing me about makers/takers.  Jimmy went on a rant about all the fakers on the Social Security Disability rolls, prompting me to inject some facts from my CBPP colleague Kathy Ruffing about the factors actually responsible for most of the increase in the DI rolls.  I said I’d post the info, so here it is.

[Kathy’s paper, here, provides an excellent overview of all the key issues, with extensive evidence.]

As Kathy points out, the number on the DI rolls has doubled since 1995 while the working-aged population has only grown by about a fifth.  Sounds bad, right?

Not necessarily.  What if the population was aging, with a larger share in their high-disability years, while more women were working and thus eligible for the program?  In fact, about half of the increase since 1990 is due to those factors as shown in the figure below, comparing the rates of the insured population on DI, unadjusted and adjusted for age and gender.


Source: SSA

As the figure shows, the demographics-constant rolls grow about half as fast as the actual growth, so about half of the increase is what you’d expect given the fact that a more working-female, aging population would be expected to put upward pressure on the rolls.

Ruffing also points out that the increase in the eligibility age for Social Security from 65 to 66 over this period has also played a role over these years, as once DI recipients hit the retirement eligibility age, they transfer onto the retirement program.

I’ve always thought the key test of the Jimmy P et al claim—that lots of people were abusing the DI rolls when they could be working—is the extent to which the DI rolls are countercyclical, meaning they go up when the economy goes down.  If so, since there’s no obvious legit reason for DI rolls to go up in a downturn, that would support the critics.

What Kathy finds here, as shown in the figure below, is quite interesting: applications look at least mildly cyclical, lining up roughly with the unemployment rate.  But awards, which is what matters here, look less so, though if you squint you can see some upturn in the early 90s and the recent recessions.

So while these data show some growth in the DI rolls that may reflect folks getting DI who ought not to, much of the increase appears to be explainable by known, legitimate factors.  Neither is there much cyclicality to the rolls, suggest that “takers/fakers” are exploiting the program.

In fact, as I emphasized in the segment, more than 90% of entitlement dollars go to people who are either elderly, disabled, or working.  In other words, the makers/takers frame is factually wrong not to mention mean-spirited and divisive.

I admit that my ears aren’t exactly non-partisan, but that frame just sounds really nasty to me, as I suspect it does to most people.  So I guess if I were Machiavellian, I’d urge Larry and Jimmy to stick with it.  But as I’m not, I’d urge them and others to give it up.

Update: Ms. Ruffing also takes an informative look at the geography of DI, ruffly speaking.

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21 comments in reply to "Disability Rolls and the Makers/Takers/Fakers Nonsense"

  1. Tom Cantlon says:

    Jared, one factor you’re missing here is that a more generous economy carries some people who would qualify for DI but don’t need to apply while being carried. A friend who has worked in SS and is now a private DI lawyer said shortly after the crash applications shot up. Because many people who were marginally productive had jobs from employers being charitable and willing to continue a job for someone who wasn’t profitable or just barely so. With the downturn the employers didn’t have that luxury. Suddenly people who had a way to get by, or who didn’t wanted the pride of not being on DI, found they’d qualified all along and didn’t know it or hadn’t wanted to go that route, but now needed to.

    • Jared Bernstein says:

      That would also create some cyclical in the DI rolls.

    • JohnR says:

      That’s an excellent point, by the way. My wife has been on SSDI for over 25 years now, but has been willing and eager to get a job for a decade. She’s still physically impaired, but is more than able to do what she has the training and experience to do. Unfortunately, she finished bringing her skills up to date and certified in the spring of 2008, and nobody is interested in hiring anyone who’s been out of work for 20 years and partially disabled to boot, no matter what degrees and certifications she may have. Not as long as there are qualified youngsters willing to eat each other to get the job, anyway. Her friends in what I might call the “lightly disabled” community have been going through exactly what Tom describes; even good workers are getting “early retirement” against their will, because ‘better workers’ are available and often for less. That puts them right back on SSDI, at least until the benevolent VSPs and GOPs chop it to the ground because, after all, they’re not disabled and consequently see no use for it. Nowadays, all that EEOC stuff borders on a cruel sham; it’s just for show, more often than not, and in any event, who’s going to enforce it?

  2. wkj says:

    You don’t mention the wide disparities among states with regard to receipt of SSDI benefits. The Kaiser site (link below) says that nationally SSDI beneficiaries are 4.6% of the population age 18-64, but three states (Alaska, Hawaii & Utah) are at 2.9%, while WV is at 9.0%, almost twice the national average and three times the lowest states–with KY, ARK & Miss not far behind. Note: Your first chart shows that nationally DI beneficiaries are almost 6% of insured workers–that suggests that in WV DI beneficiaries may be as much as 11 to 12% of insured workers.

    One factor is almost certainly education levels (DI = Dropout Insurance?). Another could be the prevalence of physical vs. office work. A third could be local wage levels. Because WV and other high DI states are well down in the national wage scale. It seems reasonable to assume that DI is likely to be more attractive (as compared to working) in WV, etc., than it would be in a higher wage state. If true, that would be one data point for the Taker/Faker narrative, would it not?


    • JTS says:

      It could also reflect the differences in disease burden across states. Chronic disease burden happens to be higher in the southeast generally, particularly for cardiovascular and pulmonary problems. WV and KY have some of the highest smoking rates in the nation, and correspondingly some of the highest rates of related chronic diseases.

  3. Mark Jamison says:

    It would seem that basic human nature would indicate that there are always going to be some free riders on programs. That’s not limited to social welfare programs but we’ve all heard stories or know directly of people who got food stamps or housing benefits or veteran’s benefits or disability when they probably didn’t merit that help. There are always going to be people who try to take advantage of such programs.
    That would seem to be a field ripe for study, that there ought to be some way to look at programs and see if there isn’t some sort of universal failure factor (I’m guessing that it’s actually pretty low). Some of the work Dan Ariely has done in behavioral economics would seem to offer some hints.
    Waste, fraud and abuse are going to be issues for any sort of government program but a well designed program should limit that. Nevertheless there ought to be a way to see if there’s some universal expectation.
    Ever since the days of Ronald Reagan and his welfare queens in Cadillacs we’ve heard about the horrors of social program abuse but what’s the real impact? Being able to quantify that would offer a substantive response to those like Jimmy P who use this as a sort of emotional sledgehammer to undermine support for very useful and necessary elements of the safety net.

    • Mcmike says:

      Being able to quantify the baseline illegitimacy level will not change the conversation one iota. ( which i agree will always be part of any such program)

      Alas, If facts and context had any bearing on the debate, we wouldn’t be talking about social security or welfare at all, we’d be talking about defense and corporate welfare.

      The real framing failure starts with the prioritization of “welfare” abuse as an urgent issue, while defense spending and abuse march merrily along.

      • jo6pac says:

        Thank You

      • Roger D Raybuck says:

        Agreeded in spades ! Corporate welfare recepients are self labeled makers with pockets wide open. Plutocrats taking, wall street booming, corporate profits and cash bloated more than Christy! Meanwhile, those who continue to have lost the class-fare shuffle continue to suffer without jobs, homes and prospects. Adding insult to injury the GOP lifts the limp bodies to find the real target those disabled American “takers”. A deversion or just plain sick, let’s get the hugh benefits being shovled out to SSDI participation. Exxon needs new cigar trimmers for the corporate xmas party.

    • JohnR says:

      “..basic human nature would indicate that there are always going to be some free riders on programs.”

      I agree completely. So, why is the sadly sincere and deeply concerned concern limited to the small-timers on the ‘social welfare’ rolls, rather than the high rollers on the ‘government gravy train’ rolls (farm and corporate subsidies and the like)? That is, of course, purely a rhetorical question – as always the Golden Rule applies (“Whoever has the gold, makes the rules”).

  4. Alex says:

    Basically, what Tom said above. I don’t see why people who apply for DI are necessarily cheating the system just because they’re more likely to do so in a downturn. It’s not just people who have a mild/moderate disability who could find a “generous” employer when unemployment is low (I don’t believe employers are capable of altruistic generosity, so why don’t we just say “more desperate”), but also people who acquired a disability while working for one employer, are kept around when unemployment is low because of the ADA or familiarity with the one workplace, and then are the first fired in a downturn and can’t find a new job because, well, they’re disabled.

    But I really imagine that the AEI mindset is “anyone who is old or disabled who isn’t working is a moocher.” It’s what Rand said and anyone who listens to the far right hears it all the time (how did Romney come up with that 47% figure?).

    They want (lower/middle class) people to work until they drop dead. That’s it.

  5. kass says:

    Could you please stop using the word entitlement. These programs are paid into but those against them have won a real propaganda coup by getting this misleading word adopted by everyone, even those who should know better. It’s important not to let the opposition frame the debate.

  6. Mark says:

    I’d like to know how much of the increase in DI is from veterans. The uptick in DI awards also appears to be correlated with the first Iraq war (1990-91) and the recent Iraq and Afghanistan wars.

  7. Royce Wicks says:

    Would these higher DI rates be associated with a shift in the labor force age? My father grew up at the outset of the Great Depression. Many boys entered the work force at age 16. Growing up in the late 50’s, most boys stayed in high school, and managed to find 30- or 40-year jobs in one industry. And they retired– really LEFT labor force.

    Presently, both men and women workers, having retired, remain in the labor force, as greeters or funeral assistants and similar jobs, the kind that require people skills and earn them play money. Then, with few entry level jobs available to 18-year olds, they find anything else to do, often delaying their entry into the work force.

    If this holds true (probably requiring assembling data of questionable consistency and verifiability), our contemporary workforce might be so different from the workforce these programs were designed for that we might instead be quite happy that DI levels are ONLY what they currently are.

  8. rajatuta says:

    Hi Jared,
    I think there should also be some upward adjustment in the data to account for a decrease in manufacturing employment over the last 30 years. Ms Ruffing notes in her blog that the manufacturing sector reports a higher percentage of disabled workers. There should also be some upward adjustment due to improvement in medical care but that would be tough to quantify.

  9. Garry says:

    I think one poster who commented on a potential link between States with low wages and DI being a more attractive option might have some validity. However, as someone who was on SS DI following a liver transplant for 4 years when I used State Vocational Rehab benefits to finish school and then go back to work the people I know personally are like me and want to work and be productive citizens. However, I also know how hard it is to get approved for DI as you do NOT just decide you do not want to work and go get on DI. However, I guarantee that health insurance (Medicare) which goes along with DI is the driving reason why most people apply and once on DI do not use the Ticket to Work which allows a trial period to transition back to the work force. Most people are afraid they will lose their health insurance.

  10. ottovbvs says:

    While Jimmy P is not to be taken seriously for a moment it’s hard to escape the conclusion that there has been quite a substantial increase in the rolls even when weighted for age/gender. It does merit some closer examination surely?

  11. Richard Grelber says:

    Look more carefully at the graph of applications for disability coverage, and acceptances.

    Yes, the acceptances rise less than applications in absolute terms during the recession, as you would expect, because the acceptance rate of claims is less than 100%.

    But in proportionate terms, looking at the graph of applications and acceptances, both rose roughly the same amount as a % of their prior levels.

    So no, it is not just more people applying unsuccessfully. It is also more people applying successfully during the recession.

  12. Colin says:

    So both of your charts show that the percentage of workers and the percentage of awards indicate that the use of disability is increasing. Both of these seem consistent with the idea that disability abuse is growing, and that the only uncertainty is the scale. Am I missing something?

    • Ken Schulz says:

      Yes, Colin, you missed the confounding demographic factors mentioned by Dr. Bernstein and those suggested by several commentors. When there are (even just potential) confounds, no conclusions can be drawn from simple correlation.

      Further, no mechanism has even been suggested. SSDI has extensive rules and procedures to qualify applicants; absent extensive changes in these, or in the population’s skills at deception, one would expect the rate of successful deceivers to be approximately constant.

      I have one more potential confound to suggest: aging population + increasing life expectancy = more persons in long-term care + increasing obesity = more opportunities for back injuries among caregivers; see http://blogs.cdc.gov/niosh-science-blog/2008/09/lifting/ Back injuries are a large category of disabling injury.

      • Colin says:

        When there are (even just potential) confounds, no conclusions can be drawn from simple correlation.

        Agreed! But isn’t it fair to say that these graphs also don’t disprove the hypothesis that abuse of the program is growing?

        Further, no mechanism has even been suggested.

        What about just a simple numbers game? If, say, 5% of all fraudulent claims make it through the safeguards, and the number of fraudulent claims rises as a result of people looking for an income stream given the tough economy, won’t the number of fraudulent claims making it through necessarily rise?