America’s disabling disease

Two Canadian economists, UBC's Kevin Milligan and Wilfrid Laurier's Tammy Schirle, have published a new working paper on a subject dear to my heart: the high use of disability insurance, particularly Social Security disability insurance, in the United States. At the end of March 2017, the monthly report from the U.S. Social Security Administration declared that the country has almost exactly 14 million people under the age of 65 receiving some sort of federal disability payment.

This figure includes spouses and dependents of disabled workers, and a few children receiving supplemental income on the grounds of their own disability. The number of actual workers judged to be no longer capable of work, and collecting on Social Security disability insurance earned during their careers, is listed as 8,778,000.

The overall working-age population of the U.S., ranging from ages 15 to 64, stands at about 205 million. So even if we generously leave teenagers in the denominator, that's about four per cent of the American working-age public on disability — from one particular federal program (admittedly the dominant one).

However, that quotient does not include any veterans with a service-related disability (there were close to four million of those in 2015), anybody on a state disability program, anybody in a workers' compensation scheme, or anyone receiving private disability insurance.

This is not normal, as Milligan and Schirle point out in their paper. Since 1990, the rate at which Americans go on disability insurance under Social Security has increased by two-thirds for men. Over the same period, it tripled for women, as increasing female workforce participation made most of them eligible independent earners. They now become formally disabled at almost the same rate as men.

As dangerous industrial jobs disappear, life in almost every regard becomes vastly safer, and work itself becomes more disabled-friendly, the U.S. has nonetheless experienced a substantial increase in the “disabled” population, even while Social Security rolls have held steady for the past couple of years.

These results contrast with other advanced welfare states, which are usually thought to be much more generous. The Canada Pension Plan disability benefit, for example, attracts workers at onethird the rate.