Friday, December 28, 2012

Disability and work

Via Brad Delong we have this quote from Eschaton:

It's an economist way to think about things, that someone being in the labor force means they're choosing the "work option." But in recession the options for some are no work and no money (otherwise known as "homelessness") or managing to qualify for disability (average monthly payment about $1100, max benefit about $2500). If you have some form of disability, you might be able to work if you have a job and employer that can accommodate you, but lose that job and you're probably going to be out of luck.

This isn't really mysterious stuff. Someone is 61, has a moderate disability, and loses his/her job. There is no work option.
This was in response to an article by Edward Glaeser puzzling over why the social security disability roles are suddenly rising, including such gems as

Ultimately, the best recipe for fighting poverty is investment in human capital. This starts with improving our education system, an undertaking that should include experiments with digital learning, incentives for attracting good teachers and retooling community colleges so they provide marketable skills to less-advantaged Americans.

The steady rise in disability claims presents something of a puzzle. Medicine has improved substantially. Far fewer of us labor in dangerous industrial jobs like the ones that originally motivated disability insurance. The rate of deaths due to injuries has plummeted. Behavior that can cause disability, such as alcohol use and smoking, has declined substantially. American age-adjusted mortality rates are far lower than in the past.
Has Professor Glaeser noted tuition costs lately?  Or looked at the consequences of defaulting on student loans?  The opportunity cost for a semi-disabled worker to go back to school, go wildly into debt and then risk having social security garnished to pay wages is very high. 

The real issue is unemployment.  That is the root source of declining skills and it is reasonable that firms may be less likely to hire disabled workers in a recession.  Add in the lack of mobility that we have added with the housing crash and this is not at all mysterious why people might have trouble breaking back into the work force once they are delayed. 

As for reduced mortality, sometimes that goes the other direction.  Saving a person from a heart attack (who would previously have died) may result in a person with lower cardiac function and with less endurance than before.  In a full employment scenario they can fight to stay in the workforce because there is a shortage of good people.  But in a massive recession they can no longer compete and disability is actually a correct description of why they cannot compete. 

No comments:

Post a Comment