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SSDI affects unemployment rates in NJ, elsewhere

More New Jersey Social Security Disability Insurance recipients than ever are unable to return to work. Readers of this blog will recall our February discussion of the increase in Social Security Disability Insurance application rates that accompanied our country's recent recession. The employment market, still showing a shortage of jobs for all Americans, is apparently not yet strong enough to offer opportunities for people with serious health issues.

The unemployment rate peaked among disabled individuals in August 2009 and June 2011, rising to 16.9 percent. In June 2008, the unemployment rate among the disabled was 9.3 percent. Unemployment among people who are healthy reached its highest recent level of 10.4 percent in January 2010.

Since the recession began in 2007, 1.6 million people in the United States joined the SSDI program.

The key figure in measuring the number of SSDI recipients who are not returning to work is the labor force participation rate. The participation rate measures the share of people who are of working age and who are looking for work or are working in a job.

In January 2012, the participation rate fell to 63.7 percent, its lowest rate in three decades. The January 2012 figure represented a drop in the participation rate of more than two percentage points since 2007. Economists estimate that SSDI recipients represent approximately one-half of one percentage point of that two point drop.

Some experts recognize that SSDI is usually considered a last resort for individuals with serious health issues. They argue that if people have access to extended emergency unemployment insurance, they may be able to stay in the work force.

The decision to go on SSDI is a difficult one for most applicants. It represents a realization that they are unable to work. Proving a disability to the Social Security Administration can be very challenging, especially for conditions that are difficult to diagnose. Individuals who are disabled and truly unable to work are entitled to assistance.

Source: Bloomberg, "Disabled Americans Shrink Size of U.S. Work Force," Alex Kowalski, May 3, 2012

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