Art Cashin Explains What Happens To Those Who Stop Looking For Work

Tyler Durden's picture

While the government propaganda machine chugs along and tells us to move along, there is nothing to see in the plunging labor participation rate, it is just 50 year olds pulling a Greek and retiring (fully intent on milking those 0.001% interest checking accounts, CDs and 3 Year Treasury Bonds for all they are worth - they are after all called fixed "income" not "outcome") there is more than meets the eye here. Yet while we will happily debunk any and all stupidity that Americans actually have the wherewithal to retire in droves as we are meant to believe (with the oldest labor segment's participation rate surging to multi-decade highs), there is a distinct subset of the population that migrates from being a 99-week'er to moving to merely yet another government trough - disability. Art Cashin explains.

From UBS Financial Services

I’m Sick Of Being Unemployed - A couple of strange and rather disquieting reports circulated among the Friends of Fermentation yesterday. The topic was unemployment or, more specifically, where do those people go who have stopped looking for work. Their absence is credited with distorting the unemployment rate and making it lower than most expect or believe.

The reports I allude to, contended that many went on disability. In fact, they projected that nearly 25% of those not actively seeking a job had applied for, and been accepted, by disability - mostly Social Security.

One of the reports came from a site called SoberLook.com (a perfectly logical place for the Friends of Fermentation to be browsing). The Sober report quoted extensively from a report by JPMorgan. I was unable to locate the original JPM report but we’ll assume that Sober quoted from it correctly. Anyway, here’s a bit from SoberLook:

But how does one survive after losing the unemployment benefits? Clearly people struggle. One way to pay the bills however is to file for and receive the federal disability benefits - assuming of course one has a disability. Interestingly enough, the Great Recession and the slow recovery somehow generated many more disability recipients.

 

JPMorgan: As of January over 8.5 million individuals were receiving federal disability payments (an additional 2 million spouses and children of disabled workers also received disability payments). Since the onset of the recession and the subsequent slow recovery, this figure has accelerated and grown faster than the overall size of the potential labor force— currently 5.3% of the population aged 25-64 is on federal disability, up from 4.5% when the recession began.

The Sober report then goes on to look at the makeup and maladies of those going on disability:

JPMorgan points out that increases in the number of disability benefits recipients account for about a quarter of the decline in employment participation. Furthermore during recessions the number of new disability claims actually increases, even though the number of jobs with higher injury incidence (such as construction) generally declines. Try explaining that one... Half of the benefit recipients suffer from "mental disorders" and "musculoskeletal disorders" (such as back pain). "Mood disorders" alone account for over 10% of this group. And once someone starts receiving these benefits, it's almost impossible to take the off the program. In 2011 only 1% of the recipients lost their benefits because they were no longer deemed disabled. So how much is this program costing the US taxpayer? Apparently quite a bit.

 

JPMorgan: The cost to the federal budget of these programs has escalated along with the number of claimants, and now runs around $200 billion per year—more than the budgets of the Departments of Commerce, Energy, Homeland Security, Interior, Justice, and State combined.

 

Thus a quarter of people who drop out of the workforce and come off the unemployment benefits, simply move to receiving disability payments. And most stay there until they roll into the social security program when they retire - from their disability. The same source, a different program.

The other article on the disability phenomenon was authored by Robert Samuelson and carried by Real Clear Politics. It quoted extensively from a paper by David Autor of MIT. They cite a similar relationship of rising unemployment to rising disability application.

Autor attributes disability's expansion mainly to liberalized, more subjective eligibility rules and to a deteriorating job market for less-educated workers. Through the 1970s, strokes, heart attacks and cancer were major causes. Now, mental problems (depression, personality disorder) and musculoskeletal ailments (back pain, joint stress) dominate (54 percent of awards in 2009, nearly double 1981's 28 percent). The paradox is plain. As physically grueling construction and factory jobs have shrunk, disability awards have gone up.

 

For many recipients, the disability program is a form of long-term unemployment insurance, argue Autor and his frequent collaborator Mark Duggan of the University of Pennsylvania. Benefit applications surge when joblessness rises. From 2001 to 2010, annual applications jumped 123 percent to 2.9 million. On average, recipients start receiving payments at age 49 and keep them until 66, when they switch to Social Security's retiree benefits.

 

Superficially, the case for overhaul seems overwhelming. Tougher eligibility standards would protect the genuinely disabled but limit benefits for others. Don't hold your breath. For starters, any crackdown could become a public-relations disaster. It might seem gratuitously cruel. Many recipients command sympathy. With low skills, their jobs prospects are poor. "People are driven into the program by desperation," says Autor. Nor are they rolling in money; the average payment is about $14,000 a year.

Another, rather familiar relationship showed up a bit later in the article:

Lawyers would also resist big changes. The Social Security Administration initially rejects about two-thirds of applications, but about half of these are appealed by lawyers and other professional advocates before administrative law judges, where the approval rate is between 60 percent and 75 percent. In a series of well-reported stories, The Wall Street Journal's Damian Paletta showed that the system is open to abuse. But it's also lucrative. Lawyers and other advocates are entitled to 25 percent of back benefits up to $6,000 per case. Their total payments approach $1.5 billion annually.

 

The larger budget quagmire now comes into focus. What the federal government does is so vast that it suffocates informed debate and political control. The built-in bias for the status quo reflects the reality that the various parts of government are understood, defended and changed mainly by those who benefit from their existence. However strong the case for revision (and it is powerful here), it is tempered by political inertia. What's sacrificed is the broader public good. The quagmire is of our own making.

So, when your unemployment benefits are running out and no potential jobs are visible, it’s almost natural to look in the mirror and wonder why you aren’t feeling good…..er…..make that well (sorry, Sister).

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Gully Foyle's picture

trav7777

Dude connections have always mattered in the US as well.

Nothing new in that.


Marco's picture

The REAL joke is that feudalism is completely compatible with both socialism and capitalism.

Omen IV's picture

we have systems of maintaining people so they dont go nuclear - pure and simple - there is a tug of war going on and the 1% controls the rules -  this is chump change for them -for peace and quiet while they loot and extract

only real solution is a national  industrial policy and a complete redo of the WTO and GATT participation for "only" those countries that have comparable wage rates / regulations / and work rules so there is no slavery (read foxconn)- today -  no way to ever meet $22 per day 10 hour day / 6 day week - obama new subsidy program is a joke

then you can trade - otherwise under the present circumstances we dont need 160 million people within a very short time  - not just blue collar but white collar including doctors and lawyers - without transactions lawyers dont have contract hours  - litigation runs out - docs need insurance payments  - if they are taken out -  they are off the air in big numbers  as well

system was virtuous - disposable income creates rich service sector which is now going to implode as well without it

the wheel could spin on its own forever and they intentionally broke the perpetual wheel

take the cost inflation as the devils trade for jobs USA

 

azzhatter's picture

A lot of handy man types running around doing cash jobs no longer participating in the scam the government perpetrates. Fuck 'em all but 6 Save the pallbearers

HungrySeagull's picture

And a few others who are making do with what they have as a offering no money taken.

yogibear's picture

With ever more jobs being outsourced overseas or taken by H1Bs the government keeps the population happy by letting them live off the government tit. More Food Stamps, welfare and Social Security Disability for everyone.  Both industry and the government are turning their backs on highly educated and overly qualified Americans. 

Kids in school are discouraged from being scientist or being productive because of global wage arbitration. Causing gollege grads to be burdoned with heavy schhool debt and lower wages if they can find a job.

Much of the US government's stimulus is being used to build up wealth and jobs overseas. The US government gets more debt and overseas products as a result.

 

unnamed enemy's picture

when it comes to outsourcing and H1Bs - the corporate masters of the universe are entirely responsible. they know that by hiring a us worker they can make 30% profit, but by hiring a chinese worker their profit will be 50% so because of their greed, jobs get outsourced. 

then when smeone brings up taxation - they respond by: well how much tax is enough? 30% 40% but nobody asks the question how much profit is enough?

if you think people overseas are building up wealth you need to do some thinking - the only people building up wealth are the 1%ers and they are truly citizens (owners) of the world.

 

SheepDog-One's picture

Hey look its all good, see! Pretty soon we'll all just get a Gubment disability check to live on, VOILA problem solved!

tickhound's picture

As soon as they lower the barrier to entry to include things like depression / anxiety.  Wouldn't shock me.   

HungrySeagull's picture

I hope they dont do that.

That is what Bars and taverns are for...

now in the dry counties...

HungrySeagull's picture

No it does not solve the problem.

14 thousand or whatever minus your Medicare and medicine payments will limit you to a special place in hell when you realize that McDonalds is no longer in your world.

smiler03's picture

But wait a minute... I heard that everybody on welfare has a free house, a free SUV, free fuel, free mobiles, free food, loads of cigs and alcohol, an ipad, free healthcare and a huge TV and full cable package. You mean it's not true?

The same myth persists in the UK where all Daily Telegraph readers think the poorest have the best quality of life in the country. The wealthy certainly have some bizarre ideas.

My contribution to sorting out the disability issue is get lawyers out of the system completely, they surely are amongst the worlds biggest parasites.

 

rsnoble's picture

I already went thru this. I'm now totally for the Black market.  I didn't apply for disability, even though I may actually qualify due to 35% 3rd degree burns and sever nerve neuropathy.  I applied 3x a few years ago after it happend, got denied everytime and was in a wheelchair for almost a fkn year.

Then I see my neighbor with a "bad back" take his fishing boat to the creek and haul it down a 50' steep embankment every other day and laughs it away all because his shit is on the "list" meanwhile i've done almost everything under the sun to get by excluding gay sex.

And although im totally not gay if someone offered me 1 million cash id glady lose my anal virginity.  Truth be told im pretty sure a lot of guys would lmfao.

resurger's picture

lol +1

hope you get ya shit sorted out rsnoble

trav7777's picture

most guys are closet homo whores then...and you're all welcome to it

smiler03's picture

Hey Trav, I remember you admitting that you like to poke assholes. That makes you a closet homo user in my book! Lady boys and all that ;O)

HungrySeagull's picture

Reapply and keep applying until you get your Hearing. It might take two years...

When you pull your shirt up and show the Judge in that room the amount of damage you have.... You will get that and all the back pay due you.

Persistence is key.

Oh turn in your fishing man neighbor if he is abusing the system.

rsnoble's picture

Yeah pulling my shirt up would probably get me kicked out of the courtroom. LOL. Actually the tops of my hands got fried and my right forearm looks like a turkey leg. No kidding. It's a pretty screwed up disability. I can bench 300lbs for reps but I can't separate papers, zip up my own pants without a mirror etc. Yeah you see me typing. Trust me....I can't even pick my nose without stabbing my eye out lol. I sure's the fuck learned how to open a beer bottle though.

mkkby's picture

Video tape how "disabled" he is, then demand 1/2 each of his checks -- or else.

Clayton Bigsby's picture

My favorite irony is the "Disability Lawyer" display ads I'm seeing on this page as I'm reading the post - that rules...

HungrySeagull's picture

Not anymore they dont.

Duckduckgo with removal of the top Google ranked engines and such from your machine will ensure it.

Yes your ISP will retain the search activity for LEO's should they wish to subpoena it... but. *Shrugs.

prains's picture

With all this idle time, GILF websites should see a lot of traffic soon

Banksters's picture

Our society is about maintaining the debt slave/master relationship.    If it weren't, we'd live in a completely different world.

HungrySeagull's picture

I don't blame the people whose bodies or minds are broken by work but if there is anyone "Riding" the system, they will and should be found.

If they are not able to find work after 99 weeks that no one talks about anymore in MSM, then effectively they are bankrupt and qualify for SNAP, free cell phones and what have you.

At some point people do retire. Or are retired by the workplace determined to pay cheap young blood instead of the very large salary to a old man who has been in 40+ years with loyalty and skill.

Now on the other side of the coin, I have had contractors come do work on my home and some of the young folks will be the future contractors themselves some day.

The rest are in the Military who will take care of them well enough.

Piranhanoia's picture

There are lots of disabled people that want to work.  Many are very qualified for jobs that could adapt to them and cause a productivity jump pretty darn fast.

trav7777's picture

to hell with them, hire diversity

cosmictrainwreck's picture

sorry....not today. the WHORES goosed longs again...as they are prone to do

Dr. Engali's picture

I know of at least five people who are taking advantage of disability benefits who are quite capable work. all of them say they have some kind of back pain or chronic pain it won't let them work.

HungrySeagull's picture

If they are truly in pain, you will see that they will not enjoy life as much as you are. They would be sitting near bottles of medicines and visiting doctors.

Now if they laugh and tell how they are using the "System" turn them in. It's that simple.

Dr. Engali's picture

I know that they're taking advantage of the system. But I don't believe in to see something say something policy. I'll let them sort it out on their own it's their conscience. They have to live with themselves.

HungrySeagull's picture

Social Security always had a system in place as does Unemployment.

I am not referring to the Snitch system that recently was imposed on all of us by the newly created DHS.

Since Bin Laden is dead ding dong... we should dismantle and retire that DHS.

But no. Like all things American, it's like crab grass and weed that sprouts everywhere.

NidStyles's picture

I don't sit near bottles of medication. That's why I take them, so I don't have to sit near them.

Stevious's picture

Try it, you'll be ignored.

Let's look at the Pharmaking and nothing else.  A friend is on disability due to "mood disorder."  Subsidized rent (her place is nicer than mine), SNAP, subsizided electricity and heat, and then...free medical.  One day while visiting I noticed she had half a dozen boxes of Restasis (for dry eye syndrome which I have) on her kitchen table.  I said: "you have dry eye syndrome?" She answered: "Yes, but that stuff doesn't work for me."  "Oh," I responded, "then why to you have half a years supply?"

She said: "They just come in the mail, every month."  Consider: A month's supply cost ~$140, let's say that Medicare pays 1/2, or $70, so that's $840/year.  Now consider that restasis is plain 'ol Cyclosporine.  A month's supply bought from a Canadian pharmacy, by a leading drug manufacturer (who probably made the Restasis) costs about $25 a month or less.  So the "net profit" to someone buyng the Restais via Medicare is $600/year.  Now multiply this times her dozen other meds...  Get the point?  Welfare or disability....in many cases it's a profit machine...a huge one. 

We're as set in our ways and as corrupt as the Greek's are, and I fear that within 4 years we are going to meet the same fate.

 

Crumbles's picture

Are you certain it is Years, rather than Months ????

HungrySeagull's picture

Shit. And my doctor keeps an very hard eye on meds if I need them, and not one day longer.

I have a trauma kit to take care of those who may live but no medicines worth a goddamn other than a bottle of Jack Daniels for them.

Mercury's picture

Shit, what percentage of public sector employees don't retire in their 50's with a "disability"?

HungrySeagull's picture

Or a private sector worker in a Utility who has been told that his position will be or is eliminated and has a choice. Retire and take pension or keep working pending termination with no pension.

That was valid for many who had pensions until those are removed from current employments due to the expense.

Dr. Richard Head's picture

Being a government worker IS a disability....to the human race.

optimator's picture

The ones that retire in their 40's,

Milestones's picture

Firemen and cops--damn if it don't seem like a majority retire in their early 50's with at least a partial disability on top of their retirement pay.

I know of 4 or 5 personally and they all got partial disabilities.          Milestones

dwdollar's picture

This just emphasis the fact that we are well north of 50% of the population being dependent on some government handout. So... even if you had legitimate elections, it still wouldn't be enough.

HungrySeagull's picture

The Nation is getting older, no doubt. That too shall pass as they die off in the next 10 or 25 years or so. (Myself included)

roadhazard's picture

If you can't get medicine a lot of people die quick. There must be a brazillion Type2's for starters.

trav7777's picture

that can go away if they are just underfed for a while.

ebworthen's picture

 

 

Moral Hazard.

The bailout of the banks and corporations, the non-prosecution of blatant theft (Mozillo, Corzine, etc.), the loss of individual rights, the rubber stamping of corporate financed elections and candidates, the insider trading and bribery ("lobbying") of CONgressional representatives, Crony Capitalism, privatized gains with socialized losses ad nauseum has led many formerly hard working, law-abiding, work ethic, proud Americans to say "fuck-it" and milk the corrupt system that they have worked to fund for 30+ years.

Moral Hazard.

HungrySeagull's picture

That could be true. And some said fuck it and bankrupted or walked away from house loans or even student loans.

Some are even saying fuck it to citizenship and now have to pay a fee to the State Department and IRS to do so.

Shizzmoney's picture

You have to pay to leave......ha!  Only in fucking America.