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 Social Security disability rolls have climbed since the 1980s as
the U.S. population has grown older and soared during and after the
global financial crisis. That stoked fears that shrinking workforce
will stunt the economy's future growth.
The surge also raised the prospect that the program could run out of
money and triggered calls for tougher eligibility rules as part of a
broader political stand-off over the scope and costs of Social
Security.
The trend reversal may help dispel funding fears and take the edge
off the political confrontation.
Alongside other data such as the decline in the number of part-time
workers, it is also another sign that the scars of the 2007-2009
crisis and recession are healing.
The number of new disability awards peaked in 2010 and held near or
above a million a year between 2009 and 2012. It returned to
pre-crisis levels last year, hitting 811,000, according to Social
Security figures.
Data for the first three months of the year suggest a further drop
to around 750,000 in the whole of 2015. Last year was the first in a
decade when the share of disabled workers in the 16-64 year-year-old
population stabilized. Other measures of the prevalence of
disability have also leveled off.
The numbers serve as a gauge of labor market strength because people
with less severe disabilities and sought-after skills are able to
hold on to jobs when the economy improves, said Social Security
Administration's chief actuary Stephen C. Goss. Disability
applications have dropped by about 400,000 a year, to 2.5 million,
since the crisis.
CYCLICAL UPSWING
In addition, some in the middle of the extensive application process
or already on the disability rolls might find jobs that pull them
back to work, said Goss, who oversees the statistics used to manage
the vast pension and disability programs.
"There is no question that there is a cyclical component."
With benefits linked to a person's earnings and years of work, the
federal program is available to people with physical or mental
conditions that prevent them from "gainful" activity - defined to
mean they cannot earn more than $1,095 a month.
But the availability of jobs, and employers' willingness to hire
those with health problems, changes with the economic cycle: More
people with less-severe problems seek benefits during hard times and
more will choose full-time work over benefits during upswings.
Since September, more people were leaving than joining the program,
driving down the total number of benefit recipients to 8,935,000.
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Kevin Holtsberry, spokesman for Opportunities for Ohioans with
Disabilities, a job placement agency, said the group has seen a jump
in the past year both in the number of people requesting vocational
rehabilitation plans so they can keep working or return to work, and
a more than 16 percent increase in the number of people placed into
jobs.
“We have seen an uptick in applications and we are seeing an
increase in successful outcomes,” Holtsberry said.
Andrew Houtenville, an associate professor of economics at the
University of New Hampshire and research director at the school’s
Institute on Disability pointed out that labor force participation
for people with disabilities has increased over the past six months
compared to the rest of the population, a rare stretch of
improvement.
For Federal Reserve policymakers who meet on Tuesday and Wednesday
and continue to weigh when to start lifting interest rates a key
question is how much slack is left in the job market and how many
people might still wait to rejoin the workforce.
The share of those working or looking for work peaked in 2000 at
67.3 percent and has been falling since, with the slide accelerating
during the last recession. The rate has held relatively stable for a
year now, but at just below 63 percent it is still far below the
pre-recession levels.
Yet Richmond Federal Reserve bank president Jeffrey Lacker has
indicated that this might be as good as it gets since the crisis
discouraged many workers from looking for jobs altogether.
Speaking on April 10 in Sarasota, Florida, Lacker said that the
potential for cyclical movement into and out of the labor force was
"gone now."
"I think we're back to trend," he said. Lacker, who is a voting
member of the Fed's policy committee this year, has advocated
considering a rate rise in June.
(Reporting by Howard Schneider and Michael Flaherty; Editing by
David Chance and Tomasz Janowski)
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