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Unemployment and Social Security Disability Claims: What's the Connection?

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Some politicians and pundits would have you believe that people whose unemployment checks ended are trying to get Social Security Disability (SSD) benefits fraudulently to replace their unemployment checks. This is part of the effort to demonize recipients of disability insurance payments and limit or end the program.

However, a new study suggests that this isn't really happening. An economist at the University of California, Berkeley decided to test the theory that displaced workers are using SSD as a type of long-term unemployment insurance.

No Correlation Between Unemployment Benefits and SSD

The researcher, Jesse Rothstein, reasoned that if the increase in disability payments was the result of expiring unemployment, there should be a correlation between unemployment claims ending and SSD claims increasing. When he reviewed the results of his study, however, he could not find any link between the two.

For example, when unemployment rates began to rise in 2008 and 2009, the government extended unemployment benefits, reducing the number of workers who exhausted unemployment. However, there was no corresponding drop in the number of people seeking SSD payments. In fact, it kept rising.

More recently, the government reduced unemployment benefits, which resulted in more people being cut off. However, there was no associated increase in SSD applications - the rate and number have remained flat and most recently have slowed somewhat.

However ...

Although the study did not find a link between expiring unemployment benefits and SSD claims, it did show a solid connection between the unemployment rate and SSD applications -- when the unemployment rate goes up, so does the number of SSD claims.

What does this mean? According to Rothstein, a hot employment market makes it much easier for disabled workers to find jobs they can do, despite their disabilities. When the economy is sluggish, there are far fewer job opportunities for everyone, including the disabled. Moreover, businesses are more likely to make accommodations for disabled workers already on the payroll than to hire a new disabled employee.

This information about SSD and unemployment was brought to you by Binder & Binder®, America's most successful Social Security Disability advocates. If you are having trouble with your SSD claim, call us to find out how we can help.

Source: Wall Street Journal, "Are Long-Term Unemployed Taking Refuge in Disability?" Jun. 14, 2013.

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