Tags: Disability | Payments | Unemployment | Rate

Disability Payments Push Unemployment Rate Lower

By    |   Wednesday, 11 January 2012 09:39 AM

Many commentators have noticed that the unemployment report includes an estimate of the number of people in the work force. Historically, this has averaged about 65.8 percent of the population over the age of 16 and now stands at 64 percent.

If the work force participation rate rose to its average, then unemployment would top 11 percent, according to many of these commentators.

Some workers have likely left the labor force because they are accepting government benefits like Social Security disability payments. More than 9.5 million adults draw these benefits, about 6.2 percent of the number of adults in the labor force. Benefits can total more than $1,200 a month and are tax free. In many cases, additional benefits provide assistance for housing, food and medical care.

In 1960, the number of adults drawing disability benefits was less than 1 percent of the number in the work force.

The increase in the number of adults receiving disability benefits from the government explains nearly half of the decrease in the labor force. Other government programs could explain even more of the decrease.

There are undoubtedly a number of flaws with the official employment data. Unfortunately, it seems like the estimates of the number of people who want a job may not be one of them. This number may be declining because workers are truly leaving the work force, finding that government benefits offer more rewards than work.

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Wednesday, 11 January 2012 09:39 AM
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