Posted on 05/09/2012 4:48:22 AM PDT by SJackson
- FrontPage Magazine - http://frontpagemag.com -
Unemployment Numbers Scam
Posted By Arnold Ahlert On May 8, 2012 @ 12:50 am In Daily Mailer,FrontPage | 17 Comments
When the jobs data were released last week, it was revealed that only 115,000 new jobs were created, well below the 165,000 predicted by the media-anointed economic “experts,” and significantly below the 125,000 jobs-per-month pace required just to keep pace with the number of people entering the work force. Yet in an apparent paradox, the unemployment rate dropped from 8.2 percent to 8.1 percent. Presumptive Republican presidential candidate Mitt Romney explains half of it. “There is something about that 8.1 percent figure you ought to know,” he told a crowd at a town hall-style meeting in Cleveland yesterday. “You might assume that that number came down from 10 percent to 8.1 percent because of all the jobs that were created, and that assumption would be wrong. The reason that percent came down was because of all the people that dropped out of the workforce.”
Mr. Romney is correct. Much of the lower number is indeed attributable to the fact that 342,000 Americans gave up looking for work, and those people are no longer counted as being unemployed. Yet there is another, far more ominous element to the paradox that is part of the equation as well: the number of Americans receiving Social Security Disability Insurance (SSDI) has soared.
Since 2010, and directly coinciding with the time millions of Americans used up their 99 weeks of unemployment insurance, disability claims have risen by 2.2 million. And precisely like Americans who have given up looking for work, those receiving disability payments are neither counted as part of the workforce, or part of the unemployed. The rise in the number of claims is daunting. From December 2007 to April 2012, the number of workers receiving SSDI jumped 22 percent, from 7.1 million Americans to 8.7 million. According to economists at JPMorgan Chase & Co. and Morgan Stanley, that figure explains as much as one quarter of the decline in the labor force participation rate.
“How we measure and understand what’s going on in the economy can be influenced by the degree to which various public-support programs are available and being used,” said Michael Feroli, chief U.S. economist at JPMorgan in New York. “With a rising number of disability beneficiaries, there are both lower unemployment rates and lower participation rates.”
That’s an understatement. The latest drop in labor force participation, from 63.8 percent in March to 63.6 percent in April, represents the lowest rate since 1981–fully 31 years ago.
The Obama administration’s “solution” to the problem? “Workers on SSDI rarely return to the labor force, resulting in a loss to society of the economic contribution those workers could have made,” said a report written in December 2011 by the National Economic Council, Domestic Policy Council, Labor Department and President’s Council of Economic Advisers. “Thus, keeping the long-term unemployed in the labor force should be a priority.” Congress, undoubtedly influenced by election year politics obliged. In February, unemployment benefits were extended through the end of 2012 as part of the Middle Class Tax Relief and Job Creation Act. That move was likely buttressed by research from David Greenlaw, a managing director in New York at Morgan Stanley. In March, he noted that more than 99 percent of all SSDI beneficiaries remain in the program until retirement age.
In other words, give people a temporary extension in unemployment compensation, or they might go on the dole permanently.
A 2006 research paper written by MIT economist David Autor and Mark Duggan at the University of Pennsylvania’s Wharton School in Philadelphia gets to the nub of the problem. SSDI “appears in practice to function like a nonemployability insurance program for a subset of beneficiaries,” they wrote. Less-stringent screening procedures, more attractive benefits and a waning need for less-skilled workers have bolstered SSDI rolls, they added.
Autor followed up that report with one written in 2011, in which he contended that while the “SSDI program is a central component of the U.S. social safety net, it suffers from two substantial ailments that limit its effectiveness and threaten its long-term viability. First, the program is ineffective in assisting the vast majority of workers with less severe disabilities to reach their employment potential or to earn their own way. In fact, the program provides strong incentives to applicants and beneficiaries to remain out of the labor force permanently, and it provides no incentive to employers to implement cost-effective accommodations that would enable disabled employees to remain on the job….Second, the program’s expenditures are extremely high and growing rapidly.”
How large is the problem? According to a report by Richard Burkhauser and Mary Daly in the spring issue of the Journal of Policy Analysis and Management, a mind-bending 7 percent of the nonelderly adult population could be receiving disability benefits by 2018. That’s two years after the SSDI program will run through its trust fund, according to an April report by the Social Security trustees–which also reveals that the deficit of non-interest income will reach “$66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.”
As for the cost, the SSDI program has grown substantially as well. In January, the federal government sent disability checks to 10.5 million Americans including 2 million to spouses and children of disabled workers. That amounts to a record-setting $200 billion per year, much of which is driven by the spike in “mental illness” claims that now account for 43 percent of the total, a 10 percent increase in such claims prior to the economic turndown. Furthermore, the overall cost has more than doubled since 2001. Michael Feroli, chief US economist with JPMorgan, reveals the obvious reason behind the surge. “It’s not like other support programs, such as unemployment insurance, which you lose after a year or two,” he noted.
How are such numbers related to unemployment? Sitka Pacific Capital investment advisor, Mike Shedock, explains. First he notes that, despite the above total of 10.5 million disabled workers, Economic Research by the Federal Reserve of St. Louis reveals that there are 27.5 million non-institutionalized, civilian Americans 16 year of age and older with a disability. Based on a fraud rate of only 10 percent, the “civilian labor force would rise to 157,145,000 from 154,395,000. The number of unemployed would rise to 15,508,000 from 12,758,000.” If those people were counted among the unemployed?
The rate would be 9.9%. Shedock further notes that the jump in claims continued after the recession was ostensibly over.
Why is nothing being done to separate the fraudsters from the legitimately disabled? “It’s an epidemic nobody talks about because it could bleed into the sensitivity associated with legitimate recipients of social security disability insurance payments,” writes Townhall columnist Charles Payne. “The program provides money to people too young to get social security and unable to work.” Payne continues. “The problem is that so many young people, especially men, are claiming they are nuts. Yes, this is the biggest scam since the welfare queens of the 1980s, and it’s getting worse. They call it ‘the crazy check’ and there are wide swathes of men playing the system for these checks…It’s a national tragedy. When so many brave young men and women have been permanently injured fighting wars for this nation others can shuffle to their mail boxes and get paid.”
Indeed. While there is little question millions of Americans are legitimately disabled and well-deserving beneficiaries of America’s safety net, there is equally little question that there are substantial numbers of Americans willing to game the system. Furthermore, there is no question that any concerted effort to determine the distinction between the two groups will be met with the predictable cries of “heartlessness” such efforts invariably elicit.
Such resistance is amplified by election year politics. First, the president is running a divide-and-conquer re-election campaign whose success hinges on turning various sub-groups of Americans against one another. Second, an unemployment rate that can be “massaged” by omitting millions of discouraged and “disabled” workers from the labor participation force substantially helps to obscure the administration’s miserable economic record. Third, and perhaps most cynically, an ever-increasing number of dependent Americans who rely on ever-increasing government for their well-being–regardless of whether or not it bankrupts the nation in the process–is the mother’s milk of progressive ideology that Democrats and their standard-bearer in the White House hope to exploit at the polls next November.
And while this article focuses on disabled Americans it should also be noted that the number of Americans on Extended Benefits (EB) and Emergency Unemployment Compensation (EUC) has also soared. In 2008, approximately two million unemployed workers had received EUC or EB. As of October 2011, that number has increased nearly nine-fold to 17.9 million.
Amanda Henneberg, Romney campaign spokeswoman, illuminates the big picture. “After a doubling of gas prices, declining incomes, millions of foreclosures, and record levels of unemployment, Americans know they’re not better off than they were four years ago,” she said.
Maybe they do, but “better off” is a relative term for a substantial number of people attuned to the siren song of big government. It is no secret that many Americans actually prefer living off government than making the kind of life for themselves that can only be achieved by working hard and making sensible choices. Whether those Americans represent a majority of the voting public will be one of the central revelations of the November vote.
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SSDI
I was taught that stood for Supplemental Security Disability Insurance and not Social Security Disability Insurance. The use of “social security” by many, if I am correct, adds to the fraud. I’m certain “ss” was not accidentally chosen.
I also seem to recall that it is actually a welfare payment and NOT out of the Social Security fund. (Although, that is a bit of a fraud, too, since everything is really in just one big pot.)
We have people faking mental illness in order to get welfare. Conservatives would be wise to point that out.
Welfare queens were no less sensitive a category, but it still became necessary to fix that problem.
A start against this problem would be the same as the VA does with “disabled” veterans. They rate them from 10%-100% disabled. If they will do that with our vets, then they can do that with welfare.
Far better to make 10% of full payment to 2 million people than to make 100% payments.
And people think it is the 3rd world countries that are corrupt.
The participation rate is a subjective measure and highly subject to manipulation. The lower it goes and the more people are dropped from the unemployment equation, the better the numbers will look for the White House. This figure has been dropping sharply since Mr. Obama took office. Last month, an analysis at the Zero Hedge financial website noted that by extending the logic of reporting progressively fewer labor-force participants, “America will officially have no unemployed when the Labor Force Participation rate hits 58.5 percent, which should be just before the presidential election.” Maybe that’s the plan.
This statement is insulting. Most of these people have not "given up". They simply have run out of unemployment benefits
How many of the pundits and talking heads realize how difficult it is for the over 55s to get a job - even in Good Times. And the solution offered by those that do realize - "start your own business." Not always practical or even possible.
COSTELLO: I want to talk about the unemployment rate in America .
ABBOTT: Good Subject. Terrible times. It’s 9%.
COSTELLO: That many people are out of work?
ABBOTT: No, that’s 16%.
COSTELLO: You just said 9%.
ABBOTT: 9% Unemployed.
COSTELLO: Right 9% out of work.
ABBOTT: No, that’s 16%.
COSTELLO: Okay, so it’s 16% unemployed.
ABBOTT: No, that’s 9%.
COSTELLO: Wait a minute. Is it 9% or 16%?
ABBOTT: 9% are unemployed. 16% are out of work.
COSTELLO: IF you are out of work you are unemployed.
ABBOTT: No, you can’t count the “Out of Work” as the unemployed. You have to look for work to be unemployed.
COSTELLO: BUT THEY ARE OUT OF WORK!
ABBOTT: No, you miss my point.
COSTELLO: What point?
ABBOTT: Someone who doesn’t look for work, can’t be counted with those who look for work. It wouldn’t be fair.
COSTELLO: To whom?
ABBOTT: The unemployed.
COSTELLO: But they are ALL out of work.
ABBOTT: No, the unemployed are actively looking for work. Those who are out of work stopped looking. They gave up. And, if you give up, you are no longer in the ranks of the unemployed.
COSTELLO: So if you’re off the unemployment rolls, that would count as less unemployment?
ABBOTT: Unemployment would go down. Absolutely!
COSTELLO: The unemployment just goes down because you don’t look for work?
ABBOTT: Absolutely it goes down. That’s how you get to 9%. Otherwise it would be 16%. You don’t want to read about 16% unemployment do ya?
COSTELLO: That would be frightening.
ABBOTT: Absolutely.
COSTELLO: Wait, I got a question for you. That means they’re two ways to bring down the unemployment number?
ABBOTT: Two ways is correct.
COSTELLO: Unemployment can go down if someone gets a job?
ABBOTT: Correct.
OSTELLO: And unemployment can also go down if you stop looking for a job?
ABBOTT: Bingo.
COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to just stop looking for work.
ABBOTT: Now you’re thinking like an economist.
Here is my understanding concerning SSDI and SSI:
SSDI is Social Security Disability Insurance, is part of the Social Security program, and is cash benefits awarded to wage earners who become disabled prior to reaching the age that would qualify him/her for regular Social Security benefits.
SSI is Supplemental Security Income, is a means-tested “welfare” (cash benefits) program for no income or low income individuals who are either aged, blind or disabled and who do not have enough income to subsist without this supplemental income from the government. It is separate and apart from the regular Social Security program. Further, anyone eligible for SSI also qualifies for Medicaid, a program that provides health care services to low-income families and individuals.
Both SSDI and SSI are administered by the federal Social Security Administration, and in theory have two different funding sources. SSDI is “funded” via payroll taxes and SSI is funded via normal tax revenues (and with the Medicaid costs, part of the costs are paid for with state “matching” dollars).
Up until the late ‘60s or early ‘70s, welfare benefits for individuals who were aged, blind or disabled were handled by the states. The federal government then took over these state programs and created the federal SSI program (with the blessings of the states who were eager to not have to pay for these programs any longer, except for a portion of the Medicaid costs).
Chicago political mob + MSM cheerleading = turning chicken sh!t into chicken soup.
Thank you so much, Let it be so.
I’m not happy with “mental health” being used as a scam to get benefits from either fund, but I’m glad to have the right understanding.
In either case, I still think that if veterans who have served their nation honorably, and some at great cost, can have their disabilities rated and percentage of full payment made based on that rating, then the same should be true for SSI and SSDI disability payments.
Very well said. They do that with vets that have put their lives on the line for our country, SS should absolutely do that with the home work force.
Think of the cash cow when they are now “diagnosing” kids left and right with:
ADHD
OCD
Autism
Aspergers
Which usually comes from LOB (Lack of Belt)
I’m sure there are those children with TRUE disabilities but when I see a kid “being a kid” and jumping up and down or engaged in some generally annoying behavior, I don’t think “ADHD” or “Austism” I think of the old fashioned cure, a quick swat and “CUT THAT OUT!”
Not to be insensitive, but if an able-bodied person can't find a job after two years, I question their will to work.
And before lambasting me, I didn't say the job had to be for the same pay, same title, same industry, and generally the same location as the one they lost.
That’s a great point and that alone must be costing a bunch.
Very insightful article, especially the SS disability part and specifically the mental illness claims.
Does anyone here know how attorney’s get paid for handles SS Disability claim cases where someone has been rejected by SS?
I’ve seen advertisements on TV relating to this ‘service’ that include a notation that there is no fee to the person claiming a disability. So, who pays the attorney?
Now, I suspect that we pay through some sort of mechanism within SS, since that’s the only third party that theoretically has funds.
An attorney who represents a rejected claimant who subsequently is found entitled/eligible for benefits may petition for a fee of up to 25% of the past due benefits ... which can be considerable, as these claims often take years to run their course (often in Federal Court).
As they say
“Follow the money’
There’s been quite a medical/educational complex set up to service (and make money from) the “ever increasing” numbers of such children.
SSI, Supplemental Security Income, is a needs-based program implemented by Title 16 of the Social Security Act and administered by the Social Security Administration but funded out of the general revenues of the U.S. Treasury. Some states "supplement" the basic federal payment.
SSI is primarily for those who are aged, blind or disabled and are NOT INSURED under Title 2 of the Act (although an SSDI recipient may be eligible for SSI if his SSDI benefit is low enough). To receive SSI an applicant must demonstrate they have very little or no income and few assets (some assests, such as a wedding ring or funeral plot are ommitted from the calculation).
To be legally eligible for SSI you really, pretty much, need to be "dirt-poor".
More information at www.ssa.gov.
I am going to go out on a limb and suggest you have never applied for a job that paid less than your previous job, or required a great deal less skills than you previously used.
Most employers won't touch you because they feel you won't stay, you will be unhappy, you will always be looking to move up.
Thanks so much. That was one of life’s little mysteries in my world, now solved. Of course, the real interesting part is that SS must screw up on a regular basis, RE: Rejecting valid cases, for there to be sufficient money to be made to pay for TV advertisements, along with accrued time on each case to pay the attorney.
It seems that we are all screwed and doomed although it will take years to suck the blood out of all of us to provide for the ever increasing weak and lame.
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