Job disability a headache for U.S. recovery
By Antonella Ciancio
WASHINGTON (Reuters) - Monica Soltes was excited 10 years ago to leave Merrill Lynch and start her own business as an independent financial planner in San Diego. After she fell off a porch at her cousin's cottage and broke her elbow, her dreams unraveled.
Following multiple surgeries that confined her to bed, Soltes was diagnosed with a hormonal disease that is weakening her bones. She also ran out of money, signed up for disability benefits and has been unable to work again.
The 47-year-old from Michigan is among the 8.7 million American workers on the U.S. disability rolls, an important part of the social safety net. Since the recession began in 2007, she has been joined by a record number of people seeking disability benefits, raising questions about the program's solvency and casting a pall over future prospects for U.S. economic growth.
Applicants soared to a record high of 2.94 million in 2010, and have held above 18 per 1,000 workers in the past three years - a far higher rate than in previous recessions.
"There are serious concerns that this increase in disability benefits is a type of 'hidden unemployment,'" said Richard Burkhauser, a professor of economics at Cornell University.
Even though only 35 percent of applicants are awarded disability, those receiving disability benefits now account for 5.6 percent of the working age population, up from about 4.5 percent in 2007. At this rate of growth, Burkhauser estimates that total would reach over 7 percent by 2018.
The problem is those on disability rarely return to work, reducing the overall size of the labor force and weakening the U.S. economy's growth prospects. Rising gross domestic product (GDP) depends upon a growing workforce and rising productivity.
Since the recession began, the share of Americans actively looking for work, known as the labor participation rate, has fallen to 63.6 percent from 66 percent in 2007. Continued...