Disability the Hidden Unemployment Program in Southwest Virginia East Tennessee
The poverty ridden Tri-Cities Bristol Virginia-Tennessee is suffering a shrinking workforce. Listed as the 5th most impoverished community in America in 2011 economist Steb Hipple of ETSU noted on 3-12-2014:
The annual data for 2013 reflect the growing weakness in the labor market. Employment in the metro area decreased by 1.6 percent to 225,589, well below the figures for 2011 and 2012. However, the number of jobless workers only increased 0.5 percent to 18,157, while the unemployment rate was relatively steady at 7.5 percent.
The disparity between job losses and the small change in unemployment conditions is due to a large number of workers leaving the regional labor market, as shown in the 1.4 percent drop in the labor force to 243,746.
While our young people many college graduates flee the region that can't be the only reason. There's a new early retirement program that's taking the region by storm. It's called Social Security Disability.
One of my favorites used by a number of perfectly healthy adults some in their 20s that I know personally is for "social anxiety." I kid you not it's real.
Chana Joffe-Walt of NPR's Planet Money wrote Unfit to Work has noted the same trends I've documented in this region for years. I've disputed the official unemployment figures for years because so many simply drop out of the workforce and give up.
A plant closes firing hundreds of people while the tax payers buy-subsidize a handful of say call center jobs (sometimes costing as much as $250,000 per job) leaving one wondering what happened to all the other workers? They go on disability.
The number of people getting on disability like all welfare programs is directly related the economy and available jobs. With no prospect for jobs and state welfare uncertain SSI and SSDI are the path many choose.
According to www.ssa.gov applications for disability surged from 2.1 million in 2006 to over 2.9 million by 2010 with over 2 million people approved in 2010-11 alone peaking from a steady march upward in 2010 and hovering at 2.8 million.
The 10.8 million on disability (8.7 million are disabled workers) is costing taxpayers $10.7 billion a month ($128 billion annually) and the average disabled worker gets $1,129.51 or $13,500 a year.
Now try minimum wage at $7.25 an hour even if one got a full 40 hours a week (not likely) is only around $1169 per month or $13,920 a year. In addition those on disability also get Medicaid plus other free stuff.
That cost is over three times the cost of housing assistance at $40 billion and state/local corporate welfare at $81 billion. Other charts show for example the average monthly benefit in $681 in 1994 to 1,110 in 2011. Yet the value of labor for the unskilled and uneducated has plummeted in real terms for years.
A government study in 2012 noted three reason for the massive growth of disability payments:
1. Changes in Demographics and Growth of the Labor Force Part of the growth in the DI program reflects the aging of the large baby-boom generation (people born between 1946 and 1964).
Older people suffer from debilitating conditions; moreover, the program's qualification standards for older workers are less strict than those for younger workers because older people are assumed to be less able to adapt to new types of work.
The growth of women in the workforce has led to an even more rapid growth in disability payments than men.
We do have a large older population due to the steady out-migration of young people fleeing the poverty wage economy of this region. That is particularly true for those with education and skills, thus a surplus of the uneducated.
2. Changes in policy that favor say back pain and that to quote, "legislation allowed applicants to qualify for benefits on the basis of the combined effect of multiple medical conditions, each of which taken alone might not have met the criteria."
This here is the biggie for this region in my view. To quote,
Changes in Opportunities for Employment and Compensation Whether people apply for DI benefits is strongly affected by the design of the program, the opportunities people have for employment, and the difference between the DI benefits an individual would receive and the compensation (earnings and benefits, including health insurance) associated with working.
When jobs are plentiful, some people who could qualify for the DI program may choose instead to work. Conversely, when jobs are scarce, such as in economic downturns, some people with disabilities may find that their employment opportunities are especially limited, and they will instead choose to apply for DI benefits.
Indeed, in the aftermath of the recent severe recession, applications for DI benefits reached a historic high, exceeding 2.9 million in calendar year 2010.
Many people who have been out of work for long periods find it hard to reenter the labor force, especially at their previous wage level, and they may ultimately turn to the DI program for support.
Once they have been awarded benefits, only a very small percentage of DI participants permanently leave the program to return to the workforce.
So looking at the poor education levels and the poverty wage scales paid in this region is why we have a flood of disability claims. At one time pride kept many off the welfare roles, but today it's socially accepted.
Looking at the data for this region two figures stand out is that most of the poor families did not work even if married. An interesting statistic is "native born" as opposed to "foreign born" I assume means grew up here versus moved here which is mostly far more affluent retirees.
24.1 percent of those that grew up here are in poverty versus only 6.6 percent of move-ins, much of that 6.6 percent is likely immigrants and many illegal aliens.
Referring back to Unfit to Work NPR noted in 1961 only 8.1 percent of disability was for back pain and 9.6 percent mental; today it's 33.8 percent back pain and 19.2 mental and developmental disorders.
My brother-in-law in his mid fifties got it for diabetes and being illiterate, his son for drug use and a car accident, while an associates 25-year-old daughter got it for "nerves" another common ailment in this area.
Southwest Virginia is sandwiched between three of the seven highest disability states with number one West Virginia at 9 percent of its workforce disabled, Kentucky at 8.1 percent, and Tennessee at 6.5 percent. Demographics wise Southwest Virginia is little different than the rest of Appalachia.
We also have a meth and prescription drug epidemic that makes many people unemployable assuming they even want a job. Because of so many being disabled with back pain and similar ailments prescription drug abuse is a massive problem because so many drugs are prescribed.
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