Govt. Spends More on Disability than Food Stamps, Welfare Combined

In an eye-opening six-month investigation into America’s disability program, Planet Money reporter Chana Joffe-Walt uncovered a “disability industrial complex” fraught with fraud that churns out 14 million checks every month to citizens the government has deemed disabled.   

“Since the economy began its slow, slow recovery in late 2009, we’ve been averaging about 150,000 jobs created per month,” said Joffe-Walt in an Public Radio International (PRI) “This American Life” interview. “In that same period every month, almost 250,000 people have been applying for disability.”

Among Joffe-Walt’s findings are the following facts:

• The federal government spends more money each year on cash payments for disabled former workers than it does on food stamps and welfare combined; America’s two largest disability programs, including health care for disabled workers, costs taxpayers $260 billion a year
• In some parts of the country, such as Hale County, Alabama, one out of every four working-age adults collects a disability check
• As of 2011, 33.8% of newly diagnosed disabled workers cited “back pain and other musculoskeletal problems” as their reason for being unable to work.  In 1961, the top reason for being disabled was “heart disease, stroke”
• Disabled workers do not get counted in the unemployment figures. If they did, the numbers would be far higher
• Less than 1% of people who went on disability at the beginning of 2011 have returned to the workforce
• The Supplemental Security Income (SSI) program–which covers kids and adults–has exploded.  SSI is now seven times larger than it was 30 years ago.

The report suggests that the much-touted Welfare to Work policies of the 1990s that appeared to successfully move welfare recipients off the public dole may have been a mirage. States have figured out that shifting people from welfare to disability frees up substantial funds, as states have to pay the costs of welfare, but the federal government picks up the tab for disability.

“That’s a kind of ugly secret of the American labor market,” said MIT economist David Autor.  “Part of the reason our unemployment rates have been low, until recently, is that a lot of people who would have trouble finding jobs are on a different program.” 

Joffe-Walt says disability has “become a de facto welfare program for people without a lot of education or job skills.” The reporter notes that the disability program “wasn’t supposed to serve this purpose; it’s not a retraining program designed to get people back onto their feet.”

According to Social Security chief actuary Steve Goss, disability insurance program reserves will run out of money in 2016.