As politicians are busy making hay out of lower unemployment figures, hidden behind the numbers are millions of Americans who have simply dropped out of the labor force and are resorting to desperate measures just to survive.
According to The Wall Street Journal, Ellen Marino, 62, is one of millions of Americans who lost their job when the economy crashed in 2008 and hasn’t found work since.
Marino was pressured to take a buyout after working for AT&T and related companies for 16 years. She spent months collecting $225 a week in unemployment benefits while looking for work in both Florida and Utah. With her husband struggling in his real-estate business, things became so bleak they decided to stop paying rent for their home in Florida and moved to Utah where they owned a condo.
But not even that helped for long as she was still unable to find a job – not even at the local Wal-Mart. Marino, who wears hearing aids and has had hearing problems most of her life, finally ran out money.
“I think the poor economy had a lot to do with not getting a job,” she said. “I have a good education and good experience and, OK, well, maybe I can’t hear as well as other people, but I’ve had that problem for years and always have been able to survive.”
In June 2009, when her unemployment benefits ran out, her only other option was to apply for Social Security disability benefits. “I applied for disability only because I didn’t know what else to do,” she said. “I knew we couldn’t live on no money, and I had to do something.”
Marino is just one of an estimated three million “missing workers” who are no longer participating in the labor force because they can’t find work. If they were to be counted in the monthly unemployment figures, that average would rise from 8.3 percent to 10.4 percent.
According to the Bureau of Labor Statistics, more than five million people have dropped out of the labor force since 2009 – the greatest decline in American history and the lowest participation rate in more than three decades. As of today, only about six in 10 adult American civilians are counted as part of the labor force.
What happens to these people when they drop off the government’s radar screen?
Experts say some become homeless and move into shelters while others move in with family members. There are those who resort to crime to get along while others rely on public assistance. And an increasing number are going the same route as Marino and apply for social security disability benefits.
Two new studies released this week reveal that there has been a surge in the number of former workers who applied for social security disability benefits when their unemployment checks stopped coming.
One study by Boston College research economist Matthew Rutledge found a spike in the likelihood someone would apply for disability benefits in the month his or her unemployment benefits expire.
These findings are similar to those contained in another study released earlier this month by the White House which contained preliminary research from White House Council of Economic Advisers Chairman Alan Krueger and Columbia Business School instructor Andreas Mueller.
“Their research, based on surveys of unemployed workers in New Jersey, looked at behavioral patterns of the jobless, including those without much savings to fall back on,” the WSJ reports. “The researchers found that 10 percent of jobless workers age 50 to 65 with access to less than $5,000 were likely to file for disability benefits when their unemployment benefits expired, while one percent of such people sought benefits when they had 50 weeks of unemployed benefits left.”
Some of the largest increases were found in the number of mental illness claims. According to Rutledge, when the economy was booming, only 33 percent of applicants were claiming mental illness. That number has jumped 10 percentage points since 2009 and is now at 43 percent.
“It could be because their health really is getting worse from the stress of being out of work,” Rutledge told the New York Post. “Or it could just be desperation — people trying to make ends meet when other safety nets just aren’t there.”
As a result, the government is mailing disability checks to about 10.5 million people, including two million to spouses and children of disabled workers, at a cost of about $200 billion annually.
Analysts say they are concerned about the growing ranks of Americans on disability because once they begin receiving it, they aren’t likely to ever return to the workforce.
The additional claims are also putting strain on Social Security’s disability fund which has been running short since 2005, and is projected to burn through its reserves by 2018, the Post said.
For many of the forgotten unemployed, applying for disability is the only standing between them and homelessness.
“People do this out of desperation,” said David Autor of MIT’s Department of Economics. “It’s the last thing people want to do. It’s not living the high life, but when people have exhausted their alternatives, it’s the only thing left.”
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