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SSA disability applications soar as unemployment skyrockets

As the unemployment continues to remain relatively unchanged in the last few months what has changed is the increase of Social Security Disability Insurance (SSDI) and Supplemental Security (SSI) Applicants. Many laborers who have a disabling health condition and who have been unable to find suitable employment have simply stopped looking for work and have left the labor force by the thousands.

According to the data provided by the Social Security Administration (SSA), in the month of April, when the U.S. Bureau of Labor Statistics reported the labor forced declined by 342,000 workers, more than 225,000 workers applied for Social Security disability benefits. The SSA also stated that another 90,000 disability applicants were enrolled in the disability program.

What does this mean? This means that while it appears the unemployment rate is shrinking it is more likely that the decline in the unemployment rate is due to the decrease in the actual labor force participation rates. For instance, this April, although the population is growing, the labor force rate is at to 63.6%. In a recent article published in Investor Today it is noted that that rate is the lowest it has been since 1981.

Although the government is touting a declining unemployment rate it is clear that the real unemployment rate, if we were to include those who simply stop looking for work, would be much higher. What if the number of workers who were looking for work in June of 2009 continued to search? According to the data the unemployment rate would be at approximately 11%.

As mentioned above, many of the exiting workers simply stopped looking for work and applied for SSI or SSDI benefits. This could pose a real problem for the Federal Government as these workers and many of their dependants qualify for benefits. According to the SSA, so far this year a whopping 539,000 dependents and spouses have also begun to get benefits.

Will this trend reverse? Not likely and what is even more concerning is the general tendency of workers who receive disability to fail to return to the workforce. This is not surprising given that many claimant’s conditions frequently get worse as they age and their ability to retrain or compete for work with healthier younger work applicants is unlikely.

But what about claimants who would like to return work? The SSA does offer work programs such as the Trial Work program to allow claimants to return to work for a short period of time and continue to receive payments while they “test the waters,” but the threat of losing health insurance and a guaranteed monthly cash payment is often not enough to lure the claimant back to work, especially if the outcome is uncertain.

The economic downturn has been difficult for many families and since President Obama has taken office an estimated five million workers and their families have begun receiving SSI or SSDI benefits.

What does the Obama Administration say about the workers who have abandoned the workforce in droves? The Obama administration's economic advisers this is a “loss to society” especially considering the huge economic contribution many of these workers could have made to the economy if they had been able to find employment.

The general consensus is if you can work it is imperative that you keep trying to work. SSDI and SSI are only for claimants who have a VERY severe health condition which does not allow them to perform any type of work.
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