February 13, 2012
Robert Samuelson is unhappy that so many people without jobs are getting Social Security disability benefits. He notes the sharp rise in the number of beneficiaries over the last two decades.
He misses one reason that the number of beneficiaries could be rising. Many companies have striven to downsize to save money and increase their productivity. This downsizing effort is often touted as one of the factors behind the uptick in productivity growth in 1995.
However an implication of this downsizing is that less productive workers will lose their job. A worker who is downsized out of a job at age 50, who may actually have serious mental and/or physical problems that limit their ability to work, will have a very difficult time finding a new job. Such a person may well end up getting disability whereas in prior times a company may have been willing to keep them on the payroll until retirement.
Insofar as this is the case, the rise in disability recipients may be a direct outgrowth of faster productivity growth. The alternatives would be slower productivity growth (leaving these people on company payrolls) or letting them slip into abject poverty.
Comments