Chuñdy

For the second part of this series, I compared the increase in the number of people on Social Security Disability Insurance (SSDI) according to age groups. The first bar breaks down the number of Americans on SSDI in 1984 by age and the third bars does the same for the year 2009. The Mendoza Bar represents the 24-year average of all SSDI recipients in each age group between 1986 and 2009.

If we look to see which age group is contributing to the increase of people on SSDI, the CBO is correct that the increase in the number of workers over 50 has contributed greatly to the increase of people on SSDI. The largest percentage change from 1986 to 2009 is found in people who are over the age of 65—a 281% increase to be exact. The age group who saw the next greatest increase was among those between the age of 50 and 54.

On This American Life, Chana Joffe-Walt recently published a rather myopic piece on the increasing number of Americans on federal disability insurance. The piece portrayed this trend as unprecedented and unsustainable. By focusing on a few atypical cases, Joffe-Walt’s segment gave the impression that Social Security Disability Insurance (SSDI) was immune to economic progress, increasing even during periods of economic growth. Thereby she led the audience to conclude that the rise of Americans on SSDI is due not to legitimate disability, but other factors.

Yet if we look at this increase of people on SSDI as a percentage of the working-age adults in America, the trend look much less daunting. The chart above shows that the rise in the number of people going onto SSDI flattens before recessions (the gray area signify periods of recession). Thereafter, as a result of economic contraction, the trend increases again before reaching a state of symbiosis with the improving economy. The Mendoza Line shows the average number of people on SSDI as a percentage of the working-age population.

Though the number of people on SSDI continues to increase even after a recession ends, this has more to do with the fact that more Americans are working past the age of 50. Last year, the Congressional Budget Office (CBO) reported that due to the decrease in the population over 50 in America, the amount of money that the federal government spends on disability insurance is expected to decline in 25 years. Specifically, the CBO projects that by 2037 “spending as a share of output will have fallen slightly” because of this demographic shift.

In my next piece, I will examine how much workers over the age of 50 are contributing to the increase of people on SSDI.