Unemployed to the Point of Disabled?

One of the lesser-noticed realities of America’s jobless problem is the surge in people applying for disability insurance.

When times get tough, Americans tend to turn to the government for help. More people file for disability claims whenever the economy suffers a setback.  The implications this time around could be much greater than previous downturns as high unemployment is expected to linger for years to come.

In 2010, applications for disability insurance totaled 3.2 million, up from 2.6 million amid the height of the recession in 2008, according to the U.S. Social Security Administration. High unemployment and anemic economic growth has been a key factor, agency officials say. What’s more, the percentage of applications approved since 2008 has roughly stayed steady at about 35% to 37%.

It’s not as if more Americans suddenly become disabled when the economy goes sour. The program essentially functions more like a long-term unemployment program for the “unemployable,” says David Autor, economist at Massachusetts Institute of Technology.

This doesn’t mean there’s rampant fraud going on, although there might be some of that. The program hinges not just on personal health but also on employability. The benefits go beyond unemployment insurance — it includes medical benefits as well.

For more than two decades, the number of people receiving disability insurance benefits has grown substantially – mainly following congressional reforms in 1984 that liberalized the disability screening process. It made benefits much more accessible to workers with non-life threatening disorders, such as mental illness and back pain.