The recent recession has meant unemployment for many people, including those in Wisconsin. Our state and federal government have a variety of safety nets for our citizens. Unemployment insurance is a safety net provided by the state for those who lose their jobs. Social Security Disability Insurance (SSDI) is a safety net provided by the federal government for those who are unable to work due to disability.
One of the difficult transitions that some people have been making in recent years is from unemployment to SSDI. Why? Because unemployment insurance requires that you search for a job, while disability insurance requires that you are unable to work. Both unemployment claims and SSDI claims have risen in recent years for a variety of reasons.
Social Security data shows that SSDI claims rose 22 percent between Dec. 2007 and April. A total of 8.7 million individuals are using their SSDI benefits. Of those claiming SSDI, 99 percent use their benefits until they are retirement age.
According to financial experts, there is a link between our national labor force numbers, currently at 63.8 percent of working or job-seeking adults, and the increase in SSDI claims. Data seems to indicate that the rise in SSDI claims is partially responsible for the decrease in unemployment rates.
In short, people are transferring from a state safety net into a federal one.
There are valid reasons for this movement from one program to the other. In a tight economy, it can be even more difficult for those with a disability to find gainful employment, compared to those without a disability. Employers may be unwilling to make reasonable accommodations. And in the case of those with diseases such as COPD, conditions can frequently worsen over time.
Experts point out that given current trends, seven percent of non-retirement age people could be receiving SSDI benefits by the year 2018. SSDI is scheduled to run through its trust fund in 2016. This seems to indicate that changes may be needed for the program's funding.
In future postings we will keep an eye on this issue.
Source: Bloomberg News, "Number of US workers claiming Social Security Disability Insurance climbs 22% in 5 years," Alex Kowalski, May 6, 2012